John Williams Discusses The Reasons For The Upcoming Dollar Dump

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Fri, 12/17/2010 - 18:43 | 814131 Spitzer
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Euro/Freegold bitchez

Fri, 12/17/2010 - 18:55 | 814152 Shameful
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Ah even in Freegold the Euro would take a brutal pounding.  From what I've read over at FOFOA he acknowledges they would take a devaluation only under that scenario they would survive.  So if one believes that Freegold will come then they should hold 100% gold and not touch the Euro.

Fri, 12/17/2010 - 19:07 | 814183 Spitzer
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Anything but dollars.

Even Rainbowtrader gets this, but something tells me that I will do better with my gold and gold stocks then he will with US resturant and retail stocks.

Fri, 12/17/2010 - 19:25 | 814227 TheProphet
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What about Renminbis?

Fri, 12/17/2010 - 19:34 | 814249 tmosley
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Those will do very well once the Yuan is allowed to float.  Assuming they export their inflation back to the US, it might even do better than gold.  As a spike, might even do better than silver.  I won't be risking it though.  Who knows what is going on in the minds of their central bankers?  You don't want to have to bet on the actions of a few people, because they could act illogically.

Fri, 12/17/2010 - 21:32 | 814555 gloomboomdoom
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Do you ever consider the possibility of a "De-Peg" lowering the value of the Yuan?

Cause that is what is going to happen if they allow the "Float"

Fri, 12/17/2010 - 22:17 | 814684 tmosley
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You don't know much of anything, do you?

The Chinese maintain the dollar peg by purchasing every single dollar that comes into thier country at the peg rate, and selling dollars for the same rate on any Yuan leaving the country.  Dropping the peg means that a) they aren't printing Yuan anymore, and b) they don't need thier dollar stockpile any more.

Fri, 12/17/2010 - 22:42 | 814728 Spitzer
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Exactly.

China is the creditor.

Sat, 12/18/2010 - 06:39 | 815261 Non Passaran
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And by extension c) they are not exporting any more. (Not that they wouldn't want to, but the US may not be able to buy as much since China won't want to accept USD.) So how, then, RMB becomes so valuable?

Sat, 12/18/2010 - 11:12 | 815358 Spitzer
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they will consume their own production just like the US did after WW2 when they converted thier production to consumer goods.

Sun, 12/19/2010 - 05:48 | 816720 eatandtravel
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The Chinese will consume their own goods?  Like all the houses? 

China is a lot more fragile than you think. 

Sat, 12/18/2010 - 11:15 | 815360 tmosley
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Because everyone around the world now needs RMB to purchase Chinese manufactured goods.

Fri, 12/17/2010 - 21:55 | 814634 AmCockerSpaniel
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China does not have to do or say anything. Just knowing they are in the same room is enough.
Sat, 12/18/2010 - 03:51 | 815204 dark pools of soros
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which of their 7 billion empty rooms are they in???

Sun, 12/19/2010 - 05:50 | 816721 eatandtravel
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I know.  People are clueless about China.

Sat, 12/18/2010 - 08:06 | 815286 Ted K
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Let me tell you friend, you never know when Chinese bureaucrats will stick their fingers in your pie.  It is a highly highly corrupt nation. Not just the government. Lying and Cheating is in Chinese' Chinese blood (read 99% Chinese nationals will fuck you in the ass while smiling after you just handed them your last winter coat).

Special Addendum: They especially love to fuck "Laowai".  Consider yourself warned


Sat, 12/18/2010 - 12:25 | 815412 Bolweevil
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Teddy K: "That's not my belly button."

Wen: "That's not my finger."

Fri, 12/17/2010 - 18:44 | 814132 the rookie cynic
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Mr. Williams also notes in his article: "The earlier all-time high of $850.00 of January 21, 1980 would be $2,391 per troy ounce, based on November 2010 CPI-U-adjusted dollars, and would be $7,840 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.

In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce has not been hit since, including in terms of inflation-adjusted dollars.  Based on November 2010 CPI-U inflation, the 1980 silver price peak would be $139 per troy ounce and would be $456 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars."

I guess I'm still a buyer until the world gets its shit together.

http://therookiecynic.wordpress.com/


Sat, 12/18/2010 - 01:09 | 814989 The Hopp
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Anytime anyone asks me where I think gold and silver are going?  I look them straight in the eye, put one hand on their shoulder, take a sip of my heineken, and tell them politely "It's going to the f*ckin moon." 

Fri, 12/17/2010 - 18:44 | 814134 RobotTrader
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How about a debate between Nic Lenoir and John Williams??

Nic seems to think that the dollar is going to rally, the Euro is going to crash, and all risk assets are going to go down in a flaming heap....

LOL...

Fri, 12/17/2010 - 18:49 | 814143 Spitzer
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Nic just forgot that the dollar is not backed by gold. 2008 did not change ANY long term trends.

Fri, 12/17/2010 - 19:13 | 814201 jdrose1985
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I'd love to see you go into any bank in the EMU and demand gold for your euros haha you'd be in a padded cell within the hour.

Dollars grant access to oil..you keep your "gold" and ill retain access to oil.

Fri, 12/17/2010 - 19:38 | 814259 Spitzer
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You have allot to learn.

Nobody said anything about a gold backed Euro. The ECB floats the price of gold and its funny you mention oil because that is one of the pillars of Euro/freegold.

When the paper gold system die's, so does the US petro dollar system.

By suppressing the price of gold in the paper markets the parties to the oil-US$ dollar scheme were able to make gold artificially cheap in US dollars. The ME oil producers could then pick up under-priced physical gold in various ways with the US$ profits from their oil sales. This wasn't US Govt gold. It was gold supplied by other parties such as dollar bloc allies (including Australia and Canada) and privately owned gold.

Oil was therefore artificially cheap in terms of US dollars as well for all purchasers of oil who could access US dollars cheaply. Obviously the major beneficiary was the USA.
One of the ways this scheme was disguised was through funding gold miners via gold loans (repayable in gold) and by purchasing the forward sales from gold miners undertaken as part of their hedging programs.

The key element in this scheme was focusing the attention of gold 'buyers' on the paper price of gold. In Western minds this IS the price of gold to this day. In Eastern minds the price and value of physical gold is the real benchmark.
While  foolish Westerners shuffled pieces of paper around thinking that they were becoming rich, wealthy Easterners were accumulating real wealth, real jobs and hard assets.

The ME oil producers will realize the real profits of their oil for gold scheme when the dollar dies and freegold sets in. Then nobody will have the privilege of cheap oil like the US did, that will be history.

 

 

 

 

Fri, 12/17/2010 - 20:20 | 814360 yakmerchant
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You got the PetroDollar thing almost nailed.  You forgot the part when U.S Dollar hedgemony ends,  a false flag event gets set off that is blamed on Saudi Arabia and the U.S then will go in and pilfer their gold.  The U.S will then roll out a the new gold backed Dollar or join in some Euro backed Free Gold system.   Why do you think we have all our military crap over in the middle east still?  Plan A is to ensure the PetroDollar ponzi continues as long as possible, and if that plan fails, to basically steal all the gold in the middle east.    The freegold idea is basically the biggest poker game in the world.   The country with the biggest stack will have a giant advantage. 

Fri, 12/17/2010 - 21:42 | 814616 MarkS
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Except that maybe you both forgot that the value of gold outside of a 'store of value' has virtually no use.  Oil on the hand is needed for transportation, production, and as a commodity for other petroleun based products.  And, we are probably sitting on 100 years of nat gas and their other sources of power generation.

Seriously, do you really think that Europe is better positioned than the US for any of the stuff going given that they are leveraged far more than we are and their demographics mean the end to their political/economic systems...I'll take the $US over Euro.

And China is going to export inflation back to the US?  Really?  How exactly are they going to do that?  Let's see...by making more stuff to stick in warehouses and call it exports?  Why don't you look at IMPORTS globally - they have been flat since Q2 of this year and a weighted basis have actually fallen.  Given the drop in IMPORTS in the US from China it would seem hard for China to export inflation wouldn't it?

I find it surprising the talk of 'false flag' events and false numbers coming out of the US governement without a concurrent belief that other countries aren't capable of the same thing.  Do we have problems?  Of course but, they are no bigger than any other large nation and some are even a lot less problematic.

Plan A - get out of your mother's basement

Plan B - Take off your tinfoil hat and live a little  

 

Fri, 12/17/2010 - 23:03 | 814758 Spitzer
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Except that maybe you both forgot that the value of gold outside of a 'store of value' has virtually no use

If you still don't understand gold then you have no capacity to comment on anything else. ME oil producers would rather just have their oil stay in the ground then exchange it for a stack of paper IOU's.

I'll take the $US over Euro.

I could have guessed that. You don't seem to realize that Europe did not have this oil/gold advantage that the US has had. Europe is already used to paying a real market price for oil, the US is not. That is why gas is more expensive in Europe.

 

 

 

Sat, 12/18/2010 - 01:59 | 815082 sharkbait
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Gas is more expensive in Europe because of taxes.

Sun, 12/19/2010 - 00:35 | 816506 IQ 145
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 That;s correct of course. Spitzer is completely delusional.

Sun, 12/19/2010 - 03:12 | 816664 Spitzer
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 hint hint

The Euro is worth more then the US dollar.

Fri, 12/17/2010 - 23:24 | 814813 tmosley
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How do they export inflation back to the US?  Oh, I don't know, maybe they could use their vast stockpile of dollars and dollar denominated assets to purchase commodities?  What the hell do you think will happen to the commodity complex when a trillion dollars is dumped on top of it?

You don't even understand basic economics.  Why exactly do you think imports from China have dropped?  Because prices are too high, which has pushed down demand.  Push that to the extreme.  Why do you think people starve during hyperinflation?

You think our problems are no big deal just because a bunch of other people have the same problem?  I guess you are fine with getting AIDS, then, since a bunch of other people have that too.  Or Hep C.  Or Ebola.  Take your pick.  

Christ, "live a little"?  What the fuck is wrong with you?

Sat, 12/18/2010 - 01:13 | 815004 wareco
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Gee aren't those dollars supposed to be worthless by then?  Oh, and why have imports dropped from China?  How about consumers have gotten off the credit tit.  They are not buying as much crap since the housing ATM card has been taken away.

Sat, 12/18/2010 - 02:24 | 815120 XPolemic
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Gee aren't those dollars supposed to be worthless by then?  Oh, and why have imports dropped from China?  How about consumers have gotten off the credit tit.  They are not buying as much crap since the housing ATM card has been taken away.

OR ... China is decoupling from the US (slowly), and will dump those dollars in due course. Then you will have to buy your own dollars, with dollars! SOUNDS LIKE A PLAN! A stupid plan to be sure, but a plan none the less.

BTW, the US banking/political/military cartel have already attempted to steal middle eastern gold, IN IRAQ! Unfortunately, Euro says NO!

 

Sat, 12/18/2010 - 14:49 | 815621 DosZap
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Mark S,

"And China is going to export inflation back to the US?  Really?  How exactly are they going to do that? "

They are already doing it, by using Treasuries to buy Hard assets, hand over fist, farmland, and mines(rights to them, making ,forming partnerships ), with every PM's miner that has large reserves.

And using US Treasuries cashed out to do so.

So, when these M3 dollars start making their way home, who's currency will be Hyper Inflated then?.

Sure not China, (they have written us off), they are de facto buying the future of the globe.

Fri, 12/17/2010 - 20:36 | 814410 BigDuke6
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Who's the fat blonde in your avatar?

Fri, 12/17/2010 - 23:11 | 814786 BrosMacManus
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ouch...

Fri, 12/17/2010 - 23:30 | 814828 masterinchancery
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Until the coming day when only gold provides access to oil. Of coursek the US might then start exploiting its shale oil.....

Sat, 12/18/2010 - 01:11 | 814999 blunderdog
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It'll be a strange day.

The reason the dollar is the oil-exchange currency is because of the Saudis.

And the reason the Saudis are so gung-ho to take dollars is so they can buy our military equipment.

If there were another country with military technology on-par with the US, we'd have lost that sweet deal a long while back.  The shine's coming off both US military and the Saudi production dominance.

Strange days comin'.

Sat, 12/18/2010 - 02:32 | 815138 XPolemic
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The reason the dollar is the oil-exchange currency is because of the Saudis.

And the reason the Saudis are so gung-ho to take dollars is so they can buy our military equipment.

 

Not true, unfortunately. A cold war arrangement between the US and SA was to exchange oil for treasuries. SA was guaranteed military intervention by the US in the event of an invasion from anywhere (and even called that chip in for Kuwait). SA buys very little military equipment for the dollars they hold. The service is not equipment, but protection.

The US then got to bankrupt the Soviet Union by controlling the price of Oil. The side effect of this arrangement was for all Oil to be traded in USD. SA still doesn't want to be invaded, but now has a choice of protectors (if it so wishes).

If the Gulf States decide to form a Gulf wide currency, that is backed by France, Russia, China, then it is all over for the USD.

 

Sun, 12/19/2010 - 05:53 | 816722 eatandtravel
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If the Saudi royal family want to remain in power, the dollar is it.

Sat, 12/18/2010 - 02:33 | 815139 XPolemic
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The reason the dollar is the oil-exchange currency is because of the Saudis.

And the reason the Saudis are so gung-ho to take dollars is so they can buy our military equipment.

 

Not true, unfortunately. A cold war arrangement between the US and SA was to exchange oil for treasuries. SA was guaranteed military intervention by the US in the event of an invasion from anywhere (and even called that chip in for Kuwait). SA buys very little military equipment for the dollars they hold. The service is not equipment, but protection.

The US then got to bankrupt the Soviet Union by controlling the price of Oil. The side effect of this arrangement was for all Oil to be traded in USD. SA still doesn't want to be invaded, but now has a choice of protectors (if it so wishes).

If the Gulf States decide to form a Gulf wide currency, that is backed by France, Russia, China, then it is all over for the USD.

 

Sat, 12/18/2010 - 04:00 | 815209 dark pools of soros
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you know a war would break out first...  and who knows.. the dollar could survive while the world burns

Sat, 12/18/2010 - 10:54 | 815344 blunderdog
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A Gulf-wide currency?

Is that a joke?

As Dubya once said, "They look the same to me."

Sat, 12/18/2010 - 14:56 | 815638 DosZap
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Yeah,and the Saudis import 9-11 terrorists to fly Jets into the Twin Towers, what a trade deal.

We have such wunnerful fwends.

Fri, 12/17/2010 - 19:09 | 814181 Rogerwilco
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@robo

What happened during the last (post Lehman) dust up? Did stocks hold up? PMs to the moon? How about that Euro, or the Asian currencies?

No, when TSHTF all the rats ran into Uncle Sam's barn, and some even paid extra (neg yields) to get in. But you're a smart, global-minded, chart readin' trader who knows that this time will be different.

We'll see who has the last lol.

Fri, 12/17/2010 - 19:11 | 814189 Spitzer
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 Post Lehman ?

Gold was up $25 the day of the flash crash. That was pre $1200 gold too.

Fri, 12/17/2010 - 19:20 | 814216 Rogerwilco
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It didn't stay above $1K until 2009. The only reason gold is above $1K is Bernanke's misguided QE. Watch what happens to PMs when the punch bowl is empty.

Fri, 12/17/2010 - 19:34 | 814254 traderjoe
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The minute the punchbowl is taken away the banks collapse. Then confidence is lost and the currency falls apart. Gold rises substantially. Deflation equals collapse through hyper-inflation.

Fri, 12/17/2010 - 19:36 | 814257 tmosley
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Please point out at least one example of a case where money printing was initiated and then stopped prior to destruction of that currency.

Fri, 12/17/2010 - 21:47 | 814628 Rogerwilco
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Sure, the USA, and the year was 1981.

Fri, 12/17/2010 - 22:21 | 814688 tmosley
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They weren't monetizing the debt back then.  As such, they weren't really printing money.  They were increasing the money supply by flooding the world with credit, but that is quite different.

Try again.

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