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John Embry Sees Hyperinflation If Fed Continues On QE Path, Expects Silver At $50
Veteran PM expert, Sprott's John Embry, whose observations on the lack of a bubble in precious metals we posted recently, and which came just before the CFTC's own disclosure that there may be extensive manipulation in the silver market, as well as a lawsuit filed against JPM and HSBC for silver price manipulation, shares his latest thoughts with Eric King in a traditionally contrarian insightful interview. In a nutshell, Embry is confident the current Fed policy will lead to hyperinflation, and that he would not be surprised if silver hit $50 within the next few months.
Full interview can be heard here.
When asked about Art Cashin’s comments on hyperinflation Embry replied:
“I’m another person that worries hugely about hyperinflation, I mean the monetary path that they appear to be following, I guarantee you will lead to hyperinflation.
Regarding gold:
I think we are still on track post the US elections and the next FOMC meeting, if we get some indication of considerable QE on the horizon, I think that will be fuel again to send the gold price up from here and to get it to 30%+ return for the year.
On a gold squeeze:
I think it could very well happen this time because the physical
market is robust, and I’m told there’s not a lot of physical gold
available right now...We could very easily overrun the shorts at Comex
and force them to cover, even though they have extraordinarily deep
pockets. If that happens, we are going to see some really spectacular
price moves as a result....I think that’s why when these things move, all the gold stocks, I
think you’re going to feel like your hair’s on fire they’re going to
move so fast.”
On Precious Metal manipulation:
"GATA
has been getting a terrible abuse for their views on this subject. I've
always believed they were dead right, that there is abundant evidence
that on the whole the markets are manipulated. And now that this is
starting to become maybe more common knowledge I think it could have an
outsized impact on the price of these things, because if these guys can't continue to play the game they played, I think the prices could go crazy."
Regarding the US dollar:
“What it’s really going to collapse against is hard assets...I really don’t think people have any idea the extent to which the standard of living can fall in North America, particularly in the United States. I mean when a currency collapses against everything else, basically that is saying that the standard of living is going to fall. In fact, it could fall by 30, 40 or 50% just to pick some wild numbers, is not out of the question. Things have been pretty good for the last 60, 70 years in North America, and they think they’ll be good forever. It isn’t going to happen that way.”
Regarding the economy:
"We've got false hope here because of this paper generated recovery, but it's unsustaintable because we haven't dealt with any of the underlying issues. When this thing starts to implode again it's going to get very unpleasant."
As a reminder, John Embry has been in the business for 48 years. At the
beginning of the secular bull market in gold, John was the only
mainstream (RBC Capital at the time) institutional individual to
proclaim the bull market in gold. RBC was saying that’s not the message
of the bank, so John was taking a lot of heat for his stance.
Fortunately for all of us Eric Sprott hired John out of the mainstream
and the rest is history.
Again link to full interview here
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Can someone explain why in many commodity futures and other markets they are increasing their initial and maintenance margins?
See here: With effect on 01 Nov 2010 @ 09:30 AM CET, both the Initial and Maintenance Margins for Hang Seng China Enterprises Idx (HHI), Hang Seng Index (HSI), and Mini Hang Seng (MHI) will increase by 11%, 7% and 7% respectively.Futures Margin Update: With effect on 29 Oct 2010 @ 02:00 PM CET, both the Initial and Maintenance Margins for Mini S&P/MIB Index (MINI) and FTSE MIB Index (SPMIB) will increase by 8% and 4% respectively.Saxo Bank (Switzerland)
Maint. margin increases are normal during price rises.
SILVER BEOTCHEZ!!!!!!!!!!
http://www.cinvalo.com.au/collection1.jpg
Thx
Shame on me, pritty embarassing!
Blue Horseshoe LUUUUUVS silver
Blue Horseshoe LUUUUUUUVS stock right now- you know what to do!
Yes, and also increased volatility. The Bernanke Put adds no value, but creates massive liquidity. Frankly, I'm surprised the exchanges aren't more worried. There is nothing but bad behavior, running stops, fake orders... reminds me of the old pork belly days. Wild, wild, west.
Because futures contracts are highly leveraged and they are expecting volatility to increase in the near term.
Long J Silverrrrrr!
Silver is the balm in your palm for the storm approaching. Gold will fold. It's lure is of old.
In dark times, Silver (moon) shines brighter.
And 48 years is all very well and he may know better, but the rules are gone, not changed, gone!
ORI
http://aadivaahan.wordpress.com
It's also effective against germs and werewolves!
So they tell me. Silver spoons in mouths and all.
ORI
http://aadivaahan.wordpress.com
Is gold the better bet than silver? I don't know.
Buy and hold both! Buy some platinum too for even more diversity.
"I fuckin' hate werewolves." Tyler said as he loaded his revolver with silver bullets. He aimed high. "Fuckin' hate them."
I think the Fed and big banks have an app for that...
Whats the bets Uni Michigan spikes up and the euro poos its pants?
I agree with his comments but I kept waiting for Miss-Piggy to interupt - "Kermyyyyyy"
This is probably good news for Sprotts new silver ETF. Timing is everything.
The only "hyperinflation" I'm seeing is in retail and consumer stocks.
Coinstar/Redbox up 12%, 44% of its shares are sold short.
Robot
What are we going to do if Jamie and HSBC can't prevent gold from going over 4000 through the Crimex? I mean how are we going to reinvent ourselves and convince people we actually predicted the rise in gold.
Any suggestions gentlemen as to what Robot, JW and I should do when gold passes 4000?
Buy.
Robot
you can't just post the gold chart when it drops you know, this might give the goldbugs the suspicion that you're just a troll and then they will think you and I are the same person
Jon, I know things are getting tough for you now, but you're doing a heckuva job with your #1 objective -- providing cover when this thing blows sky high and the unwashed buy in at the peak.
-- Kitco Mgmt.
JonNadler
You can't just post comments like this, or people will think you are troll. Better ax those gold & silver bugs or you're outahere!
JPM -- Top Management
I know DoChen
Am running out of ideas to scare goldbugs with here, you know. The dam thing just goes up no matter what I say.
And Robo here just posting charts of gold only when gold goes down doesn't help.
Especially when Robotroll posts a live chart... this one was posted when gold was at 1330:
by RobotTrader
Click the link to view it now: #677332 ... so what was your point again, Robo? Paper will continue to diminish.on Wed, 10/27/2010 - 02:35
#677332
Gold up again. Robotroll must be puking up blood. lol
When silver hits $50, and Chilton is still busy investigating, I wonder what the premium over spot will be. $10? $15?
Been on my mind lately too. My guesstimate will be based on suspected phys shortage, $12 on ASEs.
That's saying something, considering silver was $12 an ounce not too long ago.
Physical PMs for the holiday gift season. Only 3 shopping days left...
Too funny!!!
"Physical PMs for the holiday gift season. Only 3 $hopping days left..."
minor mod, other than that a "best" comment.
Good God you read my mind!
All the little kiddies are getting silver in their stockings this year.
A well deserved + $1340 as well as a + $24.
Great Christmas gift idea...
The U$DX needs a test of the previous low of 72 hit Q1 2008......say by around March2011?
Will a significant breakdown below this level occur in 2011?.....hmmm...
Timing is everything. If we here at ZH are remotely close to picking THE tipping point correctly, you don't have much time left to buy gold or silver. I say you, because I am already in phase 2 of my investment strategy- converting gold ETFs into physical. Also, supplies have been stockpiled since phase 2. You can't eat gold or silver.
I just got me some extra clips for my (favorite) heater. Gotta practice: drop empty clip, shove in new one, fire. Tee Hee.
...i often read and hear it stated that "america's standard of living is going to fall" but what is the point of reference? 1930? 1950? 1776? 2008? the way it looks to me...the standard of living has already fallen...spin it as much as you wish...there still exists that freedom to spin...it really makes no difference when a country, its leaders, and the people they serve do not know what "the standard" should be.
...disclosure: i have been and will continue to venture into the physical silver "standard of living" like a there is no tomorrow.
The standard of living has been boosted by unsustainable borrowing. That borrowing came to an end for the consumers but government has taken over in their place and is borrowing to fund all sorts of free give aways that boost the standard of living.
That too is unsustainable in the long run and eventually anyone whose wealth is denominated in dollars will expereince a significant reduction in standard of living. It's starting to occur right now as the dollar loses relative value to other currencies (especially gold/silver) but will come home to roost when all the things people need to live eventually get priced so high that people spend every cent they have buying food, clothing and energy. That's where inflation and the devalued dollar will show up. We're starting to see it now but the end user prices haven't gone up......yet. They will.
The REAL standard of living began to fall in the 1980's. That was a "whole 'nuther" tipping point. Keep silver and gold on hand but don't forget about things to barter.
What is the "real" standard of living? A median income today can buy more food, more computer, more TV, more clothing, more communication, and more travel than it could in 1980. A variety of medical treatments are much cheaper, and of course that's not even counting those that didn't even exist 30 years ago. And don't even compare the cars of 1980 to today; that's not even fair. Back then, 200 hp was considered a lot, and you were lucky if your car lasted to 100,000 miles.
"Things" do not equal standard of living.
Indeed. The things you own, end up owning you.
And that's why you let go of all your flaming worldly possessions. You move into a toxic waste part of town, and you have to come home to see the latest abomination on Zerohedge.
Uh, "median income". Ha! That's why it takes two breadwinners working, often, more than one job each, to buy the crap you mentioned. Crap isn't standard of living. If you look at "standard of living" stats, we have been declining for 3 decades now.
You seem to be a consumer junkie.
On people like you relies the SYSTEM!
Your life is quite garbage.
...it seems one's point of reference depends on their age and how "well off" they feel they are...my point is that it is a rather subjective statement...i believe it really began when we removed 90% silver in our coinage in 1965...i have experienced the decrease in purchase power, as we all have, from that point of reference and it is quite clear where it is going from this point on...i know your point on barter, but isn't that what the exchanges do day-in and day-out? they do call themselves "traders"...with some bordering on "traitors".
It really depends on what people mean by "standard of living" and this is a very important semantic discussion.
In almost every way you can consider, the "standard of living" has gone only up for all Americans - the standard referring to the quality of material goods and services afforded. However, the "standard" also incurs responsibilities such as increased taxes, insurance premiums, fees, etc. that increase the burden of the standard. These burdens in part should not be necessary and people should question the existence of them.
This leads to the more important measurement - "Quality of life". Quality of life can decline in the face of an increasing "standard of living". I believe this is happening in the US now. Are people happier? Much of a society’s happiness comes from the quality of personal and familial relationships and inner dialogue. Have the burdens of an increased standard of living negatively affected these qualities of life? I am almost 60 years old and have never seen the level of personal alienation in the US as great as it is now – broken families, lack of civility, spiritual life, etc.
Perhaps we will see a turning point. Some people I talk to are starting to feel that they would rather live with less if they could get some of those intangibles back into their lives. Going forward, this is where the concept of growth should be - GQP.
...i agree...and i'm glad i am not alone in this perception...thank you.
Yes. When a mother will kill her child because he's interrupting her Farmville time, yes.
http://jacksonville.com/news/crime/2010-10-27/story/jacksonville-mom-sha...
oh, the joys of The Welfare State replacing the family unit. Of course, with Obamacare, we are in a full sprint towards the socialist utopia of Norway, where female suicide rates are 33% higher than in the U.S., for example.
http://en.wikipedia.org/wiki/List_of_countries_by_suicide_rate
Do Americans want more wealth confiscated and then resdistributed by the state?
Our public coffers in America are raided by career politicians and their cronies at the expense of little old ladies and orphans who are going to be freezing this winter as they decide between buying food or paying their gas bill as the money printing continues by our beloved Federal government.
Yes, we are heading towards the full "Socialist Utopia" of Norway, where the spirit of individual liberty and property rights has been crushed and replaced by State rule "for the common good".
http://www.aftenposten.no/english/local/article1189799.ece
Or, perhaps we will head straight into some form of quasi-Soviet Union where vast amounts of people become dependent upon the State (even further) only to have this State inevitably collapse under the weight of corruption and unrealistic expectations. Oh, the 'paradise' of more and more State control and central economic planning.:
http://en.wikipedia.org/wiki/Holodomor
Anybody out there still up for individual liberty and self-reliance? Anybody out there care to return to our U.S. Constitution?
Not many. However, you could interest me in the Articles of Confederation. Anything else will just reset the "big game" with new players. Not interested.
i'm with you on that one, brother. I'm glad you took it one step further in the direction of decentralization of power. bravo!!!
The Articles of Confederation were trashed in order to draw up the Consitution which was all about a strong federal central government which most of the founding fathers really wanted. The Bill of Rights were added at Jefferson's insistance to give us some powers as individuals. Articles of Confederation were all about strong state's rights. The United States was supposed to be a loose confederation of states that came together for purposes of protection when the time called for it, but otherwise were more or less independent in many respects. This would have been the best way to go for liberty but it also would have made it very difficult for central banking........
+1, PRECISELY.
fyi - interesting interview from daniel hannan that is circling: The New Road To Serfdom, a Warning From Europe To America.
http://www.humanevents.com/UncommonKnowledge.php
You read my mind. This is deflationary, yes?
Good question. One that I frequently roll around in my head. I look at the house I grew up in and the life we had and compare it with today. That same house is now unaffordable for a single income middle class family. Only the rich can live there now and the quality of the neighbourhood has worsened. So while we had less gadgets (you don't miss what you never had) life seemed simpler then because Mom stayed home with us and we had the freedom to play on the roads. Crime and traffic was not a concern. If a lower standard of life means we have fewer modern luxuries but more freedom, I'll take it. I embrace the opportunity to work hard if it means I have more control and see the fruits of my labour. But if a lower standard of living means even more enslavement and further deterioration of the environment and quality of our lives I fear for what the future holds.
can anyone get more wealthy than this?
>>can anyone get more wealthy than this?<<
Family is the great wealth protector and multiplier. It is the single greatest power against the System and why TPTB have done every thing they could through legal and psychological warfare to destroy it. As we evolve into a lifeless society of individuals the State will be required and even petitioned by its own brainwashed citizens to get more involved in the lives of the citizenry. Lack of family will make the citizenry poorer and more susceptible to the ever-present psychological attack.
+1
i've often wondered if 'the pill' and abortion have furthered dependency on "The State" because having children once was the retirement plan, not reliance on a state or corporate pension promise (carrot on a stick).
once upon a time, and elsewhere in the world, the young take care of the old in their family, and everyone lives together; further, if the neighbor lady is not fortunate enough to bear children, then we mow her lawn, bring her pie, and generally look after her, too. simple stuff.
these governments WILL break their promises, because governments lie, and the mobs will rule with this collective force until it is dismantled and local people have their lives and wealth back.
very sad, indeed. protect yourself!
The Women's Lib movement on university campuses was funded by government organizations and corporations in a bid to destroy the family structure, broaden the labor pool, and cheapen the cost of labor. They were very successful. Welcome women to liberation - corporate slaves now you are. Oh, you're free are you? - well let me see you quit your job. Wake up.
Also it is very easy to distribute assets and income internally to children and other family members without any taxation. TPTB knew that family must be destroyed.
thats making way too much sense!
fyi - interesting interview from daniel hannan that is circling: The New Road To Serfdom, a Warning From Europe To America.
http://www.humanevents.com/UncommonKnowledge.php
Sure there are probably some shorts in the silver market.
But probably not as many shorts trying to pick a top in the high tech sector.
By the way, when is Eric King going to interview a few CEO's of some software companies?
New 2-year highs today.
Salesforce.com has run from $20 to $115 in 2 years. With a P/E ratio over 200. And 11% of the float is still sold short.
Meanwhile, only 2% of PAAS shares are sold short. So what is so exciting about a sector where there is very little short interest?
I don't get it. Vast fortunes have been made playing tech stocks, not silver.
Everyone is still thinking there is going to be this "great economic collapse". But it never seems to happen. And everyone is harping on the "OTC Derivatives bomb", when in reality, most derivative bombs happen to be festering on the balance sheets of many gold producers, which cannot even make new highs when gold is over $1,300.
Yet these high tech stocks are skying in the midst of a huge recession.
Robot
you can't just post the gold chart when it drops you know, this might give the goldbugs the suspicion that you're just a troll and then they will think you and I are the same person
hey robo will gas be less than $3 / gallon in your neck of the woods over the weekend? no sarc, just askin'
I have a trucker friend who told me last nite avg price he's paying nationwide for diesel is $3.50. I dont see gas going down anywhere as Robo keeps saying, its going up and set to go WAY up over the coming weeks.
tell him to hit up wendy's instead
http://www.youtube.com/watch?v=QEX1YFXYTdI
Robo it just makes you look silly when you say things like 'I keep waiting for the economy to be bad, because these here stawks just a-keep on goin on UP'!
'Vast fortunes have been made playing stocks'...well assuming you've sold I guess. Otherwise youre just a potential bagholder as stocks can open anywhere Monday, depending.
Your posts have gone from OK months ago, to CNBC stock fluffer cheerleader status today, dont you feel embarrassed when you post this drivel?
Im so looking forward to the day soon when 20% gets suddenly removed from this stupid illusion of an equity market and RoboT jumps on zerohedge and yells 'WHEW wow sure glad I planned and fully shorted those stocks at the top and was long silver from $8'!
"Yet these high tech stocks are skying in the midst of a huge recession."
Its a good point. The reversal will be an atrocity.
Yea like RoboT is trying to feign ignorance to whats actually going on? RoboT you really need to take a break I think, if it's actually the case you dont know how ridiculous you look. Im seriously wondering if youre a CNBC or FED employee these days.
let's inject some reality into these garbage charts that Robo likes to show us
go to www.stockcharts.com
in the 'Symbol' box, type 'swh:$gold'
scroll down to 'Chart Attributes' and change 'Periods' to 'Weekly'
hit 'Update' button
what you are looking at is the performance of SWH relative to gold
which would you rather have your money invested in?
~
in this modern age of monetary debasement we have to learn to think in terms of relative values - all paper assets are being repriced in terms of the precious metals - if you continue to value your wealth in fiat currency you will wake up one day in the not too distant future to find that your wealth is gone
some other relative values of interest:
$INDU:$GOLD
$SPX:$GOLD
~
I suppose that Robo wants us to think we are missing out by not playing in the stock markets - I have two thoughts relative to that:
1. stocks are for suckers
2. only liars pick tops and bottoms (much less consistently pick winning stocks!)
S&P purchasing power relative to precious metals is actually NEGATIVE for the year. Yet stock worshippers such as RoboTrader only sees stock chart boners, relative to nothing....'I onlyyy have eyesssss...for youuuuuuuuu.... dearrrrrrrr'!!
Awww thats sweet....RoboT is IN LOVE with stawkees! Gee when is the honeymoon and where are you 2 going?
Right on.
Stocks for the long run is a joke that retirements will get broken on.
The fact that miningstoks are lagging the gold
is really a bullish sign in my few,profits of these
companies will skyrocket.
The fact that miningstoks are lagging the gold
is really a bullish sign in my few,profits of these
companies will skyrocket.
the silver market is short about 45 years worth of PAAS's yearly production.
Robo does not care - he is busy posting boner charts to make himself feel important.
Robo what exactly is your point aside from cluttering up this site with your drivel. I can pull up charts like Ford that are 14 baggers that blow away those names. Most stocks were decimated by March 2009 and so we experienced a huge bounce. I am of the opinion that this is only a bounce and we will be going lower at some point.
P.S. - Has Eric King contacted you yet for the interview - he said he was looking for someone to debate Peter Schiff on gold and discuss these bombs festering producer balance sheets.
how much euro wil usd 50 be?
15 or 150
Silver at $50? When? That's the most important question! If silver could break $30 Q1 nest year, I would whole-heartedly say "Thank God Almighty!" For silver, the fundamentals are strong but the cartel is a bit too powerful...:(
He said "next few months", so 3-4 months.
Silver at $50? When? That's the most important question! If silver could break $30 Q1 nest year, I would whole-heartedly say "Thank God Almighty!" For silver, the fundamentals are strong but the cartel is a bit too powerful...:(
Sprott's silver trust priced. PSLV.
Thanks, been waiting for this.
Just dumped slv for pslv.
Better to have the real thing:
Ag!
Sprott's silver trust priced. PSLV.
Thanks for the tip israhole. Jumped all over that one as it is still available for the $10.00 issue price.
On playlists: A while back I said one I dropped would be my last regular playlist. And indeed were it not for a flash of inspiration from a Deadmau5 show it would have been. I freshened the aforementioned playlist up with some tracks not in it before.
With re-posting it I also am making this appeal: Step forward ZHers with playlists to share. I present a GoogleDoc with easy steps to make your own playlist and protect your anonymity.
How to make a ZH playlist (a GoogleDoc): http://tinyurl.com/3x636zy
and Freshy Fresh (a refreshed playlist): http://www.youtube.com/view_play_list?p=B64086D4A6EDA49C
naaah, I'm lazy. I won't even do an avatar..you think im gonna go do a playlist? you got a good thing going sans the second to last one. keep it up steak.
As you wish jam master cow.
Rock
http://www.youtube.com/view_play_list?p=8B62C5F1B41EA1ED
+10 Dirty Woman, bitchez
This is the first time I've listened to one of the playlists you posted. I like it!
Sprott lists physical silver trust
http://www.reuters.com/article/idUSN2920728520101029
Turk forecasts breakout in silver:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/10/28_J...$30_in_Less_Than_18_Days.html
I am very overweight in silver and over the last year my account is way above my expectations but the last thing I want to see is $50 Silver in the next few months, Yes it would be nice on paper but hyperinflation probably means no goods or services to buy with my gains and probably much worse off and thats before tax,
I hope the Fed dosnt QE II and I dont mind silver having a correction sub $20 as Silver would top $50 without hyperinflation in the next 5 years anyway,
The Grains price explosions of late shows we are now in hyperinflation and oil will follow suit if the Fed cranks the QE II lever, I dont think they are that stupid,
The Bill Gross Pimco statement I think is BS to soften the markets at the small or lack of QE II in November by the Fed, I am a bull longterm for silver but be carefull buying at $24 today with leverage because a sub $20 during November is a very real possible outcome like buy the romour and sell the news,
Good Luck We need it lol.
The FED will not QE 2 in any amount near what is commonly expected. The survey is just additional jawboning/cheap increase in expectations... when push comes to shove, the treasury is broke and can do nothing but psyops to make up the difference. Our faith is waning.
Needless to say, QE 2 or not, silver may go to $50 in a few months... who knows.
The fed has no choice but to buy up all the excess bonds to fund the USG.
You guys who say there will be no QE2 cannot apparently do basic math.
There is NO WAY for the USG to self-fund without QE
2 part plan required. (1) no more budget deficits and (2) cause money to flee from other investments/force it/increase taxes.
The plan only has a limited span to be enacted, if at all...
I'm not saying it's going to be successful, our policy makers are between a rock and a hard place. I'm just saying it's their only option. A large QE 2 is a certain and immediate precursor to a loss of faith in the currency.
They'll print while they can get away with it. Basically QE is going to taper off towards the pole of austerity.... eventually being no QE (I consider QE to be unemployment, wellfare, etc.). We'll also have domestic defaults before we have international defaults... meaning, SS, medicare, retirements, etc.
Getting some of this shit in order will buy us some more time.
The end is the same, hyperinflationary depression, we just disagree on the road to get there.
I recall a bunch of posters saying, "don't buy silver at $19, because it looks like it'll drop back down to $12. That will be a great entry point." Well, so much for $12. I have a feeling that this $20 call will fail like the others that came before it.
And yes, I question your integrity as a poster. You do a disservice to those that have no silver. I understand if you are loaded up to the gills, and wouldn't mind adding at lower prices. But if a reader that has nothing in his/her possession reads your post, he/she may miss out if silver ramps up to $35. What then? "Don't buy at $35, wait until it pulls back to $24"
how much euro wil usd 50 be?
Can somebody explain to me how the transfer of wealth occurs with Quantitive easing? I realise that inflation is on the cards and higher prices but how does the extra money paid for a litre of diesel for example find it's way to the banks at some later stage. I just want to know is there some direct taxation on the people to pay for this banker bailout?
a) it "find's its way" well before the commodity exponential ramps
b) corporations pass their PPI onto you
c) it debases our currency, which will eventually cause us to borrow money at rates like Greece instead of the pittance we're allowed now (and taxes will be needed to cover that vig)
d) the wealthy generally are less affected because they don't consume as much as most in the areas that will be hardest hit by inflation (wheat not caviar)
e) the wealthy generally aren't as exposed because they have hard assets galore to store value
http://www.youtube.com/watch?v=5KsvStAf5L0
The trasnfer of wealth is theoretical, on paper. They print and 'put us in debt', now to the tune of $150,000 per american taxpayer or whatever, but that assumes the taxpayer gets busy in a second job that doesnt exist or even a primary job which is increasingly rare now to 'pay it back'. The transfer of wealth theory assumes a lot!
Its really not a transfer from one to another, theyre just building a big open air prison. Next theyll get busy with reducing the population.
The transfer of wealth occurs because the bankers double their money while yours is cut in half. This occurs because of the printing and thus debasement of paper currency. Things are only valuable relative to their scarcity. Increase the supply, decrease the price or value of a dollar. So the banksters get higher and higher bonuses while your savings and wages are worth less and less.
Very quick diminishing returns on that theory of wealth transfer...so they just print faster and they take more worthless dollars than you get? So what? In the end of that, everyones broke quick.
Its simple, he who spends the new money first wins. Since the banks and oligarchs are first in line to spend the newly created money they win. The new money spends like the existing money the first time it is spent, IE buys the same stuff. As the system realizes there is more money chasing the same level of goods prices adjust accordingly.
Now if the Fed just mailed us all checks then roughly we would all stay the same, but it filters through the banking and finance system first so they get the first spend of the new money.
There it is: first to spend the new money wins.
Who loses? The last ones to get the money.
Motto of this story? First rats off the ship win. Buy PMs ASAP.
well reasoned, Shameful.
In my mind, fiat paper currencies are simply a bi-product of the desire for control under a tax regime. the Welfare State, a byproduct of fiat money, is often used to justify the existence of fiat paper money. However, the major reason that fiat "legal tender" exists is because 'barter' cannot be collected as payment by our overlords. In other words, large governments, and privately owned central banks, need a standardized currency so that they may tax us into serfdom. This is the only reason that "money" exist. otherwise, folks would simply barter with anthing they wished, including gold and silver, as they have for thousands of years.
further, if a finite amount of gold/silver are bartered only for productive efforts by clever or hard-working individuals, then unproductive individuals (dumb and lazy) will simply not gather any gold or silver for bartering elsewhere (for food and shelter). Of course, an inability to gain food or shelter (barring any philanthropic intervention) limits the ability of an individual to procreate. In other words, unproductive workers will not be able to feed their children; or, if they do have children, then their children will starve (barring any philanthropic intervention).
This dynamic forces unproductive individuals to either change and become productive, or starve and become extinct; this basic system of barter discourages unproductive, anti-social behavior, and encourages peaceful, productive behavior. Productive individuals are paid in a finite amount of gold/silver, or with any other valuable asset (tobacco leaves?) or service (a returned favor), and move up the socioeconomic ladder.
Productive individuals will (in general) have many more children because they can feed them (for example). Upon their death, this accumulated savings of gold/silver will be divided among their children. If the individual children are not productive themselves, however, then eventually (perhaps over several generations) they will exhaust their inheritence of gold/silver and move down the socioeconomic ladder.
After all, it cost gold/silver in barter to obtain food and shelter, so even a large amount of gold/silver will dwindle as it is peacefully traded to other productive individuals for their goods and services. Importantly, if they (the children of a productive benefactor) loan this inherited gold or silver to an unproductive enterprise then it is lost. However, if they finance aproductive operation then they are rewarded for their good decision with a return of more gold/silver. As the 'risk-taker' they win. The borrower wins from the capital backing of his/her idea. The customer wins by gaining a valuable good or service (that otherwise would not have existed) in return for peacefully trading their gold/silver. EVERYBODY WINS.
Of course, this is very different than what we have now. Today, a wealthy child can be given shares in a bank, for example. This bank can "fractionally reserve counterfeit" 9 whole units of fiat paper money for every 1 unit of true 'wealth' that has been deposited. In essence, the individual who deposits 1 unit of wealth into a bank for safekeeping has earned this through peaceful, productive behaviour. However, the banker has not produced any good or service. No true wealth has been traded, only destroyed when the bank is allowed to lend 9 units of paper money to borrowers in return for interest that is paid in units of wealth (from productive behavior).
It is important to note that a depositor actually finances the destruction of their own wealth by enabling the counterfeiting. Additionally, the banker can make at least 8 bad loans but, if the 9th loan returns both principal and interest, then the banker can still manage to return the original depositors unit of wealth and pocket the difference. Of course, this is very different than all other (non-banker) individuals who must chose borrowers with great care or risk losing each unit of wealth entirely. Finally, if a banker does get all 9 loans wrong and this 1 unit of wealth deposited is absolutely lost forever, then the banker can simply close as a business with no liability to themselves resulting in the taxpayer (other productive individuals) making the depositor whole again under the letter of 'the law'.
Only fiat currency can enable this type of counterfeiting at the expense of the poor, for example, and the most productive individuals who have no such privilege to 'legally' counterfeit, because only paper money can be multiplied out of thin air. Gold and silver cannot. In other words, fiat paper currencies favor the existing rich bankers and their children.
Without fiat paper money, the existing rich would need to teach their children truly productive behavior if their children were going to succeed like everyone else. When gold and silver are utilized as items for barter (rather than fiat paper money), an unproductive child of wealth will continue downward in their trajectory of dwindling resources until they demonstrate productive behavior, and only then will they reap the rewards in gold and silver in the same way as someone else (who may have come from lessor means than them, for example). Re-empowering gold and silver as both simple and natural items for barter ensures this fair process and prevents counterfeiting by the rich at the expense of the poor.
Importantly, all productive individuals with gold/silver can make individual value judgements as they relate to helping their neighbors in need. Unlike the Welfare State, productive individuals can descriminate between the widow/orphan versus the drug addict.
Further, productive individuals who wish to pool their resources for mutually beneficial public works projects, for example, will do so at their own risk because the endeavor will only be possible with a surplus savings of gold/silver rather than the counterfeiting that takes place today. As we know, counterfeiting hurts the most those individuals who are born with the least fiat paper money by retroactively enslaving them through the debasement of their hard-earned wealth.
The only two true and honest purposes of a bank are to (1) keep a productive individual's gold or silver safe from robbers for a fee, or (2) match an individual lender of gold or silver to and individual borrower of gold or silver for a fee. All other activities including centralized money planning, fractional reserve counterfeiting, and fiat paper money are designed by bankers to serve bankers (and their children) at the expense of those on the bottom.
A spirit of neighbors rewarding neighbors for productive behavior (that which perpetuates mankind) along with neighbors punishing neighbors for unproductive behavior (that which burdens our progress) is the closet we can come, in my mind, to perfecting the organic efficiency and stability of decentralized and peaceful free trade for the purpose of advancing civilization within the boundries of earth and perhaps beyond.
Opening up our regional economies to competing currencies, including gold and silver, and eliminating the fraudulent practices aforementioned, will be the greatest step towards restoring liberty in America again where it once flourished without tyrannical central bankers and their fraudulent and wicked ways.
http://www.globalresearch.ca/index.php?context=va&aid=10489
http://www.save-a-patriot.org/files/view/whofed.html
You got it. 100% correct.
EZYJET PILOT When you buy your petrol food or whatever and it costs X % more and your income is flat its being transferred from you,
How does the banks get your wealth?
Savings rates are low below inflation banks make money, Banks buy the things you pay more for in advance so they make money, Heres the kicker the QE Money goes to the banks buying their toxic wast at par, Your Taxes go up to pay the interest and principle to you guessed it, The Banks.
FullHedge: "...[B]e carefull buying at $24 today with leverage because a sub $20 during November is a very real possible outcome like buy the romour and sell the news...."
I agree one need always be careful dicking around with leverage. But a sub-$20 forecast is an extension of the behavior of Old Silver. We are beyond the ($20.90) run price. This metal is not Old Silver, but transformed.
Reducing all Comex paper that currently prices all Comex physical silver -- just simple math -- yields a physical price approaching $70 an ounce. Today. By magnitudes we cannot imagine, people are discrediting paper. It is a short one-off to realize metal prices paper.
Silver is the poor man's gold. Our beloved country is experiencing a huge bull market in poor men today -- just waking up.
I doubt we'll get hyperinflation.
That's because there's very little pricing power built into the US economy. Wages and incomes were marching in reverse during Q3. There are diminishing employment and advancement opportunities. Credit is not widely available to the masses and consumer credit interest is at 16%. And, perhaps most importantly, the government controls the incomes of nearly 40% of the population (direct and indirect).
There will continue to be inflation, however, in all things that people and businesses need. You know the list and the list is long and growing. Commodities and raw materials are just the start. A report this week shows college tuition going parabolic. Check your cable and wireless bills lately? Banks across the country are raising all service fees and doing away with free checking. Healthcare and insurance rates are bubbly.
Proof of biflation has shown up in major earnings reports in key industries: Proctor and Gamble missed earnings and cited increased costs which can't be passed on. And that's The consumer staples giant. Apple's is projecting lower margins, same reasons. That's discretionarys. Big steel companies including the biggest in the world, Arcelor Mittal also missed and cited increased raw materials costs with low demand for steel. Forget about X. 3M lowered its outlook, same reason, and they make everything. Even businesses are not spnding (core durables dropped hard this week).
Finally, governments can and do impose price controls including price freezes. Sound like communism? Well that's what happened in the US in August 1971 when President Nixon imposed a wage and price freeze which ultimately lasted for 3 years. That was in response to the inflation and dollar devaluation which happened within days of slamming shut the gold window.
Finally, governments can and do impose price controls including price freezes.
Two words: Black markets.
You think it can't happen here in "the civilized" (HAHAHA!) West? When the government imposes price controls, a funny thing tends to happen: SHELVES GO EMPTY. If and when that happens, don't you think people would be willing to pay a little extra on the side to the "evil hoarders" (in truth, smart folks who comprehended the utter stupidity of government actions in advance) to prevent their families from dying of hunger? Yup.
Hehe. I do think it can and will happen. During Nixon's 3-phase wage and price control plan, black and grey markets thrived. There were many complaints of unfairness and double dealing. Still, shelves did Not go empty. Hoarding was not pervasive at that time. But the inevitable happened: inflation crept in and went bonkers just a bit later. Taking the currency off gold was a key strategic error in US economic history.
ALso let me point out that gold started its meteoric rise during this period as a result not only of inflation but loss of faith in the currency.
Gordon_Gekko, good to see you back!
I prefer the word "stockpiling" to "hoarder".
... or "saving", or even better, "recapitalizing".
As physical gold will be used by CBs for this purpose, and by the entire market thereafter, it is here that the greatest gains in purchasing power will be made.
It will be a good time to buy physical gold for as long as it is available.
The unknown is when this availability will end, and the market revalued. Physical gold will then, after a period of unavailability, become available once more, at the new price, solely for use as the store of wealth par excellence.
All those holding physical gold through this revaluation will be recapitalized.
Talking his book, obviously. Not that it can't happen, but come on.
BUY. GOLD. ONLY GOLD AND NOTHING ELSE.
I have not seen you in a while - were you busy filming Wall Street Money Never Sleeps?
Hahaha, yeah!
Silver is good too. Also, one should always have preparedness supplies, including at least a month's worth of food, potable water, and any medicine you need in case of natural disaster.
BUY. GOLD. ONLY GOLD AND NOTHING ELSE
I don't know about that statement. What if you decide to convert some metal to fiat? There's that pesky new law of reporting sales over $600.00 come 1/1/11. Are you going to place an add in Craigslist and risk being robbed or shot?
Meh, this is why I like silver and its hassle free liquidity. You can sell small amounts to stay under the radar. You can even sell small amounts via public sites without drawing too much attention.
Buying gold is easy, selling it, not so much. Well, unless you plan to pay taxes or risk getting shot over it. Just my two cents.
shit dude...don't try to sell a car or jewelry or a motorcycle or something. Someone on CL may rob or shoot you.
WTF do you people do all day that you have time to come up with this crazy shit?
C'mon Trav, cars, boats, and the like, are not liquid and easy to carry. If you try to sell high-end jewelry or precious metals, yes, you may end up dead. It's already happened to one idiot dumb enough to advertise a diamond ring.
http://www.aolnews.com/crime/article/diamond-ring-ad-on-craigslist-leads-to-murder/19469483
My point is valid, but if you want to be naive, suit yourself.
Only gold? Silver has no future here? I'm way more heavily into gold then everything else combined but seems like silver has had a good run and will have a good run into the future.
Silver at $24.50 now. Gold at $1358.40 now.
I have no problem holding both...physically, of course.
@ Grordon_Gekko
Physical gold, yes. Big time.
But, since I do not KNOW what will happen, I want some diversification:
-- other PMs, some stashed overseas
-- lead and lead delivery systems
-- physical food stored away if so inclined
-- medicines
-- etc.
37 Full Hedge said "Savings rates are low below inflation banks make money, Banks buy the things you pay more for in advance so they make money, Heres the kicker the QE Money goes to the banks buying their toxic wast at par, Your Taxes go up to pay the interest and principle to you guessed it, The Banks."
Thanks for the reply, I don't understand if the Fed just invented the money out of thin air why do we pay extra taxes to pay for the interest and principle? If the money is going directly to the banks then the treasury is not involved and hence there are no bonds issued as a result of the QE money. Therefore, there is no debt because the Fed just invented it anyway.
I'm probably hopelessly of the mark here, but I just want to get my head around how exactly I'm getting screwed.
Here is a Bloomberg article that is so out of character for a Bloomberg article that I thought it was worth bringing to ZH posters...
" Gold Will Outlive Dollar Once Slaughter Comes: John Hathaway"
Commentary by John Hathaway
"Oct. 29 (Bloomberg) -- The world’s monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications.
The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system."
further along in the article....
"
The prospects for an orderly unwinding of the extreme posture of global monetary policy are zero. Bernanke, Jean- Claude Trichet and Mervyn King, his counterparts in Europe and the U.K. respectively, are huddling en masse upon the most precarious perch in the history of monetary affairs. These alleged guardians of monetary stability, in their attempts to shore up the system, have simply created the incinerator for paper money. We are past the point of no return. Quantitative easing may well become a way of life.
No Freak Occurrence
The consensus investment view seems to be that the credit crisis of 2008 was a freak occurrence, unlikely to repeat. That is wishful thinking. Monetary policy has painted itself into a corner. Based on our present course, there will be more bubbles and more meltdowns.
Financial markets and institutions sense trouble, as reflected in the flight to supposedly safe assets such as Treasuries and corporate-debt instruments with paltry yields, as well as the reluctance to lend by commercial banks. We are stuck in an epic liquidity trap. The irony is, if global central banks succeed in creating inflation, the value of these safe assets will be destroyed. It is a slaughter waiting to happen."
and further down yet...
"
The breakdown of the monetary system will be chaotic. When inflation commences, it will be highly disruptive. The damage to fixed-income assets will seem instantaneous. Foreign-exchange markets will become dysfunctional. The economy will become even more fragile and unpredictable.
Gold is an imperfect, but comparatively reliable, market gauge for the extent of current and future monetary destruction. The recent acceleration in the dollar price of the metal to $1,381, a record high in nominal terms, coincided with talk of a new round of quantitative easing and highly visible discord among major nations on trade and currency-valuation issues.
Naysayers’ Bubble
Naysayers point to gold’s price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency. The Fed is organizing an attack on the dollar’s value, believing that this is the most expedient way to defuse deflationary market forces. The man in the street is unaware, a perfect setup. Inflation can only be successful when the public doesn’t see it coming.
The sudden torrent of commentary on gold isn’t the sign of a bubble. Anti-gold pundits provide a great service to those who grasp this historical moment: They facilitate the advantageous positioning of the one asset most likely to be left standing when the dust settles."
http://noir.bloomberg.com/apps/news?pid=20601010&sid=aLigPpbxbK24
EZJET PILOT You are asking the correct questions and I strongly reccomend you look at a blog www.fdralloveragain.blogspot.com
The US government does not issue currency or US Dollars, The power to issue currency is the Fed and the Fed is a private bank and not part of the US government although they are very close.
The US Government can issue debt Treasury bonds and pay interest from tax or adding new bonds,The Fed can print or create currency from thin air, When the Fed buys these bonds or MBS toxic waste with thin air the money supply grows hence higher prices are to be expected this is QE.
Things are many time more complex than this and FDRs blog is 1st class, Fdr is an extreme deflationist and thats for me is his flaw but 1st class anyway, another blog www.fofoa.blogspot.com is another very good read with a hyperinflation bias These people are much better than me regarding the area of knowledge you and everyone should know after you read these sites you will see money as things and currency as nothing but a medium of exchange backed by debt.
Have a good prowel at these sites they are a good read.
I second the fofoa.blogspot.com recommendation.
But, you will need time to get his take, which is very sophisticated.
I will take a look at fdralloveragain.blogspot.com, thanks 37!
Many thanks. I understand the fiat money concept, how there is not enough money in circulation to pay the interest on the debt, but I just want a deeper understanding. I thought the Airbus was convoluted but it pails in significance to this.
The FDR site explains the basics of money and banking like why an Apple always falls down and not up, Its an eye opener. Hope this info helps.
Blue Horseshoe loving silver implies a pump and dump. Are you saying that is what Sprott is doing?
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