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Kyle Bass On Hyperinflation, And Other Less Relevant Things

Tyler Durden's picture




 

"The number one performing stock market in the last ten years has been Zimbabwe - in nominal terms" - that is the most memorable soundbite of Kyle Bass' presentation to David Faber at the Bearfoot Summit, because unfortunately, in real terms investors have lost all their money. In this series of key presentations in which Bass recaps not only all his previous positions on hyperinflation, but pretty much everything previously noted on the topic on Zero Hedge, Bass focuses on what is the most "convex" product to imminent hyperinflation. Spoiler alert: it is not stocks. In fact, Bass says to shun stocks by and large, as in real terms (note not nominal), stocks will underperform a hyperinflationary system. This confirms what we have been observing for the past months ever since the latest FOMC regime, when gold has benefited far more from "money deluge" expectations that risk assets. In other words, those who are betting on a rising tide emanating from the inkjets' liquidity spigot, will do far better to buy gold than stocks.

Must watch interview series with Kyle Bass

Part 1

Part 2

Part 3

 

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Wed, 10/06/2010 - 14:24 | 629899 pyite
pyite's picture

I'll bet Zimbabwe's markets, such as they are, have improved significantly since they finally put the nail in the coffin of their currency.

Wed, 10/06/2010 - 14:58 | 630030 hugolp
hugolp's picture

Krugman said it failed because it wasnt big enough. If the government had printed a bit more money it would have solved the crisis.

Wed, 10/06/2010 - 15:51 | 630197 Red Neck Repugnicant
Red Neck Repugnicant's picture

Obama is from Africa.

The US is looking more and more like Zimbabwe.

Coincidence?  I think not.

I knew this would happen if we elected Obama. How much longer until we all live in dung houses? 

Palin/Beck 2012

Wed, 10/06/2010 - 16:06 | 630226 tmosley
tmosley's picture

Nice job putting words in other people's mouths.

Dumb shit.

Wed, 10/06/2010 - 16:08 | 630230 MaxVernon
MaxVernon's picture

Let me get this right, you'd like to have a re-tard as president? 

Wed, 10/06/2010 - 16:13 | 630248 Rasna
Rasna's picture

Since I didn't see the <sacarasm on> signal...

Make that 2 retards counting the VP pick...

As I've said before, the dumbing down of America continues...

Wed, 10/06/2010 - 16:26 | 630297 RobD
RobD's picture

Speaking of retards has anyone every produced Obama's IQ number? What was that.....crickets? I thought so.

Wed, 10/06/2010 - 16:51 | 630411 Red Neck Repugnicant
Red Neck Repugnicant's picture

Crickets!!

LOL!

Fuck N A !  That's funny. Obama is dumb because the school system in Kenya only teaches kids how to plow dirt and chase cows.

Wed, 10/06/2010 - 17:08 | 630455 Quantum Nucleonics
Quantum Nucleonics's picture

Obama is "dumb" because they teach socialism, social justice, and other liberal "arts" topics at Columbia and Harvard, rather than stuff that actually works in the real world.

Wed, 10/06/2010 - 17:19 | 630490 Red Neck Repugnicant
Red Neck Repugnicant's picture

That's why I went to an vocational school, like ITT Tech.  In 6 short weeks, I was on the fast track to a new career.  I had job placement in two weeks and now my family is proud. 

Harvard?  Barf. Try getting a job as an English major.  Do you know any Shakespeare companies?

America needs workers, not thinkers.

Palin/Beck 2012 

 

Wed, 10/06/2010 - 18:43 | 630661 Chappaquiddick
Chappaquiddick's picture

Well if you vote for Palin then you're guaranteed no thinkers - she's so dumb she doesn't even know where America is never mind Africa!

You Republican scum - you need taking outside and gunning down.  You and your kind fucked the world over and just for good measure you want a tax cut too - fuck you and your mother and Palin and Bush and the rest of your cretinous brood.

Only joking.  Do you like puppies?

Wed, 10/06/2010 - 20:31 | 630876 harveywalbinger
harveywalbinger's picture

I'd wager chappy & republi-tard are one in the same troll. 

If not, I guess chappy's just kinda slow to believe any of that shite to be legit.  There be a neo-progressive republi-crat behind that troll-bait. 

Wed, 10/06/2010 - 20:43 | 630904 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i like ya, chappy, i like puppies until they grow up.

Thu, 10/07/2010 - 04:44 | 631530 Chappaquiddick
Chappaquiddick's picture

Great puppies Kathy!

Wed, 10/06/2010 - 22:27 | 631094 Cui Bono
Cui Bono's picture

"That's why I went to an vocational school, like ITT Tech. In 6 short weeks, I was on the fast track to a new career. I had job placement in two weeks and now my family is proud."

"in fact, my company van has new stickers that say "The Original New York Steamer"......

for the love of God don't google it up...... CB

Wed, 10/06/2010 - 23:36 | 631253 GeorgeHayduke
GeorgeHayduke's picture

You should use Palin's full name: Sarah Elizondo Mountain Dew Herbert Camacho-Palin. Proudly ushering in the idiocracy 500 years early.

Wed, 10/06/2010 - 23:55 | 631286 technovelist
technovelist's picture

+2505 electrolytes

Wed, 10/06/2010 - 21:48 | 631011 cat2
cat2's picture

Wall Street and Politicians... Hmmm short Harvard.

Wed, 10/06/2010 - 21:31 | 630983 Rusty Shorts
Rusty Shorts's picture

"plow dirt and chase cows" eh?

Wed, 10/06/2010 - 16:28 | 630304 RobD
RobD's picture

Oh ya old Sheriff Joe is a real genius I hear.

Wed, 10/06/2010 - 16:44 | 630351 Red Neck Repugnicant
Red Neck Repugnicant's picture

I can assure you that if Palin was President, the problems that confront Amurica would be solved by now (or at least, almost solved).   

We need Amurican mavericks/heros, like Palin and Beck.  Not some African witchcraft doctor trying to give the poor and lazy a free cow.  

Alaska is close to Russia.  Palin had to eat breakfast every day while Marx raised his scary head in Alaskan airspace. What is Africa close to...Australia?  Yeah, the Australians are really threatening. Whatever.  

Go Amurica!  Restore the red, white and blue! 

Wed, 10/06/2010 - 16:56 | 630427 Calmyourself
Calmyourself's picture

How do you fit so much dumb in such a little brain?

Wed, 10/06/2010 - 17:03 | 630447 FEDbuster
FEDbuster's picture

Troll ALERT!

Wed, 10/06/2010 - 17:17 | 630486 markar
markar's picture

Who did you get to take the math test for you to post here?

Tyler, is cheating on the math question grounds for expulsion?

Wed, 10/06/2010 - 17:39 | 630533 ToddGak
ToddGak's picture

How do people not figure out that Red Neck Repugnicant is the Stephen Colbert of ZH?  A liberal posing as a teabagger.  Rock on Red Neck, I get it.

Wed, 10/06/2010 - 17:46 | 630551 MsCreant
MsCreant's picture

Yup!

Wed, 10/06/2010 - 18:42 | 630660 tmosley
tmosley's picture

No, he's posing as a liberal caricature of a Tea party member.

Notice how no-one calls liberals a bunch of faggots?  Yet you people claim that a whole group of people dip their testicles into guys mouths.  Why is that?  What are you going to call us next?  Niggers?  Kikes?  What?

Wed, 10/06/2010 - 19:01 | 630688 Bendromeda Strain
Bendromeda Strain's picture

He's just a teenager, posing.

Wed, 10/06/2010 - 17:51 | 630558 Lets Hang Parliament
Lets Hang Parliament's picture

"What is Africa close to...Australia?"

Cape Town to Perth 6000 miles. And that's about as "close" as I would ever want to get to you, you muppet. Of course I am making an heroic assumption that you have the slightest idea where Cape Town and Perth actually are...

Wed, 10/06/2010 - 18:30 | 630620 Red Neck Repugnicant
Red Neck Repugnicant's picture

I meant Austria. 

Africa is close to Austria.  

Palin/Beck 2012 

Wed, 10/06/2010 - 18:44 | 630664 tmosley
tmosley's picture

No Iraqi ever called me a teabagger.

Wed, 10/06/2010 - 20:13 | 630842 thermroc
thermroc's picture

TOO FUNNY!!!

Wed, 10/06/2010 - 17:11 | 630464 rocker
rocker's picture

Didn't we do that for eight years. Yup.

Wed, 10/06/2010 - 17:12 | 630468 Crisismode
Crisismode's picture

Calling Palin a re-tard is an offence to all retards.

.

Wed, 10/06/2010 - 17:29 | 630511 Dolar in a vortex
Dolar in a vortex's picture

It's retard. Glass houses and all.

Wed, 10/06/2010 - 21:12 | 630952 IQ 145
IQ 145's picture

  Look, it's a choice between one retard and the other retard; you should try out the retard that doesn't hate business; that's all.

Wed, 10/06/2010 - 17:56 | 630571 infotechsailor
infotechsailor's picture

LOLZ @ GLENNBECK!!!!!

Judging from all the Junks I think the sarcasm is lost on people... 

 

Wed, 10/06/2010 - 18:45 | 630666 tmosley
tmosley's picture

No, it isn't.

Wed, 10/06/2010 - 19:41 | 630767 lilimarlene1
lilimarlene1's picture

I really hate disinformation schmucks. I don't like Beck, and, while I like Sarah, I don't want her as president; but your comment is really meant to make anyone associated with the aforementioned out to be nothing more than a dirt rube, as though that, too, were the worst thing one could be. Plenty of Upper West Siders who are rich, and educated, and liberal who are actually bad people (not to mention hypocrites) than  some poor dirt rube.

Further, neither Sarah nor Beck have advocated the racist position you have aligned yourself with.

You are a disinformation schmuck. Maybe you are in a twist because the majority party is not handling things well at all and overplayed their hand. But, deal with that. Don't try to insinuate what is not.

Wed, 10/06/2010 - 20:37 | 630892 harveywalbinger
harveywalbinger's picture

Republi-crat is just heeding O's demo-tard call to action.

Wed, 10/06/2010 - 20:49 | 630905 Red Neck Repugnicant
Red Neck Repugnicant's picture

Disinformation?

Like Hitler and death panels and birth certificates and eugenics?

or

The sort of disinformation that one spreads/believes when they were suddenly afflicted with retrograde amnesia on January 20, 2009?

Bigotry/hypocrisy 2012

Wed, 10/06/2010 - 22:26 | 631090 UninterestedObserver
UninterestedObserver's picture

If anyone here really thinks they have a choice in a politician or that  their vote actually matters they shouldn't be allowed on this site because they are fucking useless/clueless and beyond help.

Wed, 10/06/2010 - 20:34 | 630885 prophet
prophet's picture

I guess if you go back far enough we are all from Africa.

Wed, 10/06/2010 - 21:36 | 630996 Rusty Shorts
Rusty Shorts's picture

Yep. It is true.

Wed, 10/06/2010 - 14:29 | 629900 hedgeless_horseman
hedgeless_horseman's picture

Quite in the gallery....now speaking on the 18th ...beautiful day-just a little wind...just off the fringe....Kyle has a lay he is familiar with...the pitch...looks good......................GOLD BITCHES!!!!!!!!!!!

-------------------------------------

God bless our troops, especially our snipers.

Hat-tip to Larue Tactical of Larue, Texas

Wed, 10/06/2010 - 14:36 | 629942 NOTW777
NOTW777's picture

+10

Wed, 10/06/2010 - 17:22 | 630497 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1500 meters!

Wed, 10/06/2010 - 22:56 | 631172 hedgeless_horseman
hedgeless_horseman's picture

Tough shot.  800 meters is more within my ability.

I do wonder how many readers that junked me realize the interview is on a golf course in LaRue, Texas.

Wed, 10/06/2010 - 20:47 | 630914 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

got COIN, babe?

Wed, 10/06/2010 - 14:25 | 629906 Sudden Debt
Sudden Debt's picture

I've got my gold and silver boots on!

NOW LETS DROWN THIS ECONOMY!!!

WHOEHAHAHAHAHAHAHAHA!!!!!!!!!!!

Wed, 10/06/2010 - 14:28 | 629914 bigdumbnugly
bigdumbnugly's picture

thats's it. 

i'm trading in my mobile home and all the miscellaneous transmissions, push mowers and whatnot in the yard for a gold kugerrand.

see ya in tahiti.

Wed, 10/06/2010 - 20:40 | 630898 harveywalbinger
harveywalbinger's picture

Come on... Tell us what you really think about 'Joe Sixpack', Mr. Bernanke. 

Wed, 10/06/2010 - 14:31 | 629918 carbonmutant
carbonmutant's picture

"There is an inherent nonlinearity in the system"

More on the hubris of trying to impose linear solutions on a nonlinear problem,

Wed, 10/06/2010 - 14:32 | 629930 cossack55
cossack55's picture

That is because it is a circular system (read Circle Jerk).

Wed, 10/06/2010 - 15:53 | 630202 NoTTD
NoTTD's picture

Don't forget "firing squad".

Wed, 10/06/2010 - 17:42 | 630537 cougar_w
cougar_w's picture

I'll submit that anyone on the inside admitting that the system is non-linear is pretty impressive.

You won't hear Bernanke saying something like that. Well maybe if he's being quoted in The Onion you might.

Non-linear systems are almost completely beyond the ken of normal humans. We seem to have evolved from being completely blind to them, the same way we cannot see IR radiation, or sound. A few biologists (incl yours truly) can talk about non-linear systems and not say things that are completely stupid, but only because we've had extensive Zen training. This shit will mess with you.

For the rest of you, accept that non-linear systems are inherently and famously lethal. Know too that you are living right now in the middle of one -- in the middle of the biggest and most complex non-linear machine the universe has ever seen constructed -- and it is well positioned to eat you one of these days. I'm not even joking; there are a lot of people that are slated to vanish eventually and they won't know what ate them and none of the survivors will have any idea where everyone else went.

Wed, 10/06/2010 - 18:31 | 630629 Japhy Ryder
Japhy Ryder's picture

How come when I read your posts, I can't help but think of a "hot, mature, open-minded, worldly, intelligent, biology chick" ?

Wed, 10/06/2010 - 19:25 | 630733 Conrad Murray
Conrad Murray's picture

Because you're lonely.  See internet rules #29 and #30.

Wed, 10/06/2010 - 19:51 | 630795 cougar_w
cougar_w's picture

No cause to be mean. We are all here riddles wrapped in a mystery inside an enigma. It is the nature of this work we are doing. That it is a work have no doubt. I am a maker, I know good work when I see it.

The work. Of the moment.

 

Wed, 10/06/2010 - 20:00 | 630821 Conrad Murray
Conrad Murray's picture

I was just teasing, apologies to OP if offense taken.  Was hoping the rule reference would make it clear:

http://encyclopediadramatica.com/Rules_of_the_Internet

Wed, 10/06/2010 - 20:26 | 630864 cougar_w
cougar_w's picture

I didn't know there were actual rules. And I was puttering around back when we were building the place.

Rule #30 used to be rule #1. It was for a time the only truth. I still hold by it; there are no women on the Internet, but there are a lot of pretenders. It doesn't bother me, though in vengeance I pretend to be a cat.

Sorry real ladies, I'm too old to change now. Besides, you don't exist so get over it.

Though I really am a cat. You can ask my wife.

Wed, 10/06/2010 - 20:51 | 630919 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

I was puttering around back

who's back would that be, cheetah†

Wed, 10/06/2010 - 19:39 | 630759 cougar_w
cougar_w's picture

You were doing just fine up to "chick".

That I write about strong female voices is part of the mis-direction. I'm Pagan, you don't get too far on that journey without confronting She Who Is the Foundation of the World. If you are male and married for long, then you've met Her. A real class-A strategic bitch, am I right? Ain't it fantastic?

Biologists find Her eventually. Once they get past dissections and insect collections. So I get it from both directions.

I've actually started on novel on the topics important to my life. Holy cow, what an undertaking. Everything from technology to ancient demons to the fall of Man to running simulations backwards from the future to understand what went wrong when. I'll finish it some day, before the heat death of the universe.

In the meantime meet Fortran, my literary and technological psycho-pomp on this journey into reflective darkness:

http://madscienceunlimited.com/fiction/theexchange.html

Maybe you gotta be a man to come up with something like Fortran. Or a biologist or a software engineer, or a Pagan, but it probably helps to be all those. That said, I'm not sure where her sister came from. Her sister sorta scares me, sometimes. Her sister has more a hold on me than I like to admit. Or maybe I do like it and maybe that's the scary part. The unmaker is coming ... in about another 2500 pages.

 

Wed, 10/06/2010 - 20:20 | 630857 Kali
Kali's picture

Hey, you gossiping about me?  : )

Wed, 10/06/2010 - 20:31 | 630877 cougar_w
cougar_w's picture

I'm sorry, yes I may have been a bit. But you are so dark and cool and mysterious -- what can I say? We each worship you in our own way after all, even if we don't intend do, even if only at the very end.

Please don't devour me. At least not until the book is done.

Wed, 10/06/2010 - 20:33 | 630882 Kali
Kali's picture

Fortunately, I love felines of all kinds.  Maybe I will use you as my foot warmer. ; )  Kali Yuga is here.  Whatever you choose to call it.

Thu, 10/07/2010 - 01:51 | 631441 StychoKiller
StychoKiller's picture

All hail Kali!  Obey her demands or die (probably in horrific ways I really don't want to think about!)

Wed, 10/06/2010 - 21:24 | 630971 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

“The Exchange" or The Firebird Goes to Wall Street

in about another 2500 pages, how long can this go on. really cheetah.

your a weird bird pussy in cisco. hummmmmm


Wed, 10/06/2010 - 22:16 | 631057 Japhy Ryder
Japhy Ryder's picture

Allow me to replace the word "chick" with "feline".

I must say you stand out as quite an individual in the Zero Hedge world.  And I mean that in the most respectful way.

Wed, 10/06/2010 - 23:01 | 631188 Lux Fiat
Lux Fiat's picture

Perhaps Diamond and Fortran add another member to their family, named Pascal. 

It's been a long time since I read one of her books, but it reminded me somewhat of Cherryh.

Thu, 10/07/2010 - 00:07 | 631308 technovelist
technovelist's picture

Excellent! Do you have a projected publication date for the book? I hope it will be available in a Kindle edition.

Wed, 10/06/2010 - 14:32 | 629931 Rodent Freikorps
Rodent Freikorps's picture

Is there a Somali Pirate fund I can buy into? That seems like a good business model going forward.

Wed, 10/06/2010 - 21:22 | 630966 IQ 145
IQ 145's picture

 There you go; good old sane humor.

Thu, 10/07/2010 - 01:52 | 631443 StychoKiller
StychoKiller's picture

They make money the old-fashioned way:  They steal it at gunpoint!

Wed, 10/06/2010 - 14:33 | 629937 Mako
Mako's picture

The only reason the Zimbabwe hasn't fully collapsed is the same reason German never fully collapsed in the 20s, the global credit system is still functioning.  Once the system goes, and it will, it always does, there isn't going to be any place to hide. 

Gold is just like everything else, riding on a functioning credit system.

Wed, 10/06/2010 - 14:35 | 629940 TheGreatPonzi
TheGreatPonzi's picture

Gold will crash? That's what you say?

Wed, 10/06/2010 - 14:41 | 629949 Mako
Mako's picture

I would expect wild and spikes swings in both directions as the system comes to an end. 

That has been what you are seeing over the last 3+ years, wild spikes up and down in virtually everything. 

Once the global system collapses, you will get less and less for it in production terms because production is a direct result of a functioning expanding credit system.  Production will come to a stand-still just like last time. 

We are only at the very beginning of the collapse phase, after collapse will be the really bad part... liquidation of the non-funded liabilities.  The system based on the equation is a deal with the devil, then everyone is surprised when they get burned to a crisp.  

I don't see people walking around, I just see a bunch of unfunded liabilities walking around once liquidation come up to bat.

 

Wed, 10/06/2010 - 15:26 | 630127 Jewelsnorth
Jewelsnorth's picture

Your closing statement seems like a perfect sig line.

Thu, 10/07/2010 - 11:43 | 632348 blacksheep
blacksheep's picture

Picture it on a t-shirt with that kid from Sixth Sense, "I see unfunded liabilities"

Wed, 10/06/2010 - 15:38 | 630158 tmosley
tmosley's picture

I'm still waiting on you to define your terms.  Define the following terms: inflation, deflation, hyerinflation, and hyperdeflation.  You claim that hyperdeflation occurs after hyperinflation, but that has never happened in history.  Hyperinflated currencies are ALWAYS abandoned or reissued (ie zeros are chopped off, and old notes become invalid after a trade in period).

Interesting note, Byzantium had credit markets, yet they went for 1000 years without a systemic collapse (and fell only to a debt fueled Turkish Empire which quickly collapsed on itself).  The reason?  Who knows?  I'd bet it had something to do with the fact that they relied on the exchange of gold as currency, and never used paper for transactions.  Unlike later gold standards, the government did not keep a huge hoard of gold and issue banknotes against it.  Rather, the people traded gold (as well as silver and bronze) coins directly.

http://en.wikipedia.org/wiki/Byzantine_coinage

Wed, 10/06/2010 - 16:14 | 630255 fearsomepirate
fearsomepirate's picture

Byzantium fell because various emperors bankrupted the national treasury by building monuments to themselves, and a growing bureaucracy gradually stifled trade.  They eventually couldn't afford national defense, since they couldn't pay their soldiers.

Wed, 10/06/2010 - 16:28 | 630302 tmosley
tmosley's picture

Learn your history.  Their crisis began when they started a campaign of military adventurism.  This was best exemplified in the change of their military structure from a defensive one to an offensive one: http://en.wikipedia.org/wiki/Byzantine_Empire#Crisis_and_fragmentation

This problem was furthered by decision to "help" the economy by debasement of the coins.  Of course, under a freegold system, such actions would have been impossible.  Sadly for the last citizens of Rome, they allowed the government to control the coinage, and they used that power to start their campaign of militarism that lead to their decline.  Had they not taken such measures, Latin might not be a dead language today.

Wed, 10/06/2010 - 16:35 | 630335 francismarion
francismarion's picture

 

 

Learn your history.  Byzantium spoke Greek.

And Latin is not dead. Ever heard of the Romance languages? Just dialects with some new stuff thrown in.

Stone soup. Yummy.

Wed, 10/06/2010 - 16:44 | 630371 tmosley
tmosley's picture

Ok, ok, you got me.  But language is not important.  The cause of economic collapse is.

And yes, Latin is a dead language.  The Romance languages are not Latin.  They are barbarian languages that have been heavily influenced by Latin.

Wed, 10/06/2010 - 19:30 | 630743 fearsomepirate
fearsomepirate's picture

a)  Learn your math.  Byzantium didn't fall until the 15th century.  The Wikipedia section you linked covers the 11th century.

b)  Learn your sources.  Wikipedia is not the best source of info in the world.  In particular, Wikipedia entries on history tend to neglect important economic details, in this case the way Byzantine emperors in the 13th and 14th centuries emptied the treasury.

d)  Learn your logic.  Just because I didn't mention the series of exhausting wars the Byzantines and the Persians fought prior to the explosion of Islam across the Middle East and North Africa doesn't mean I don't know about it or that I'm excluding it from the account of Byzantium's slide into bankruptcy.

The point is that various Byzantine empires gradually bankrupted the country, both with ill-advised military ventures and with "restore the glory" building projects.  And you're confusing the two empires.  The Western empire killed itself with debasement; the East kept living for another thousand years on the gold standard.

Wed, 10/06/2010 - 21:51 | 631016 tmosley
tmosley's picture

a) so?  I was talking about what made the Eastern Roman Empire last so long.  Why should I only talk about the end?  Talk about illogical.

b)No, Wikipedia is a great source.  If you want better sources, they are listed at the bottom.  I don't have time to write a fucking dissertation for you.

c) learn your alphabet

d) I don't give a shit about what caused the fall of Constantinople.  I care about what made it last longer than any other empire in the West in the past 3000 years.  This was due almost entirely to the continued use of cold coins in circulation.

Further, I am NOT confusing my Empires.  The Eastern Empire began debasing their GOLD coins, something the Western never had an opportunity to try.  This was one of the factors which lead directly to it's demise.

Wed, 10/06/2010 - 22:33 | 631114 UninterestedObserver
UninterestedObserver's picture

Try having a logical conversation it will do wonders for you.

Wed, 10/06/2010 - 15:43 | 630171 StarvingLion
StarvingLion's picture

What 'equation'?  If a TBTF bank is utilizing securitization why would they care about interest when its been replaced by upfront fees? 

All I see is newly invented forms of "Money" secured by an IRS and a prison building system.  'Interest bearing' is hardly a limitation.

Wed, 10/06/2010 - 16:17 | 630265 tmosley
tmosley's picture

He claims that any system that utilizes credit will collapse because interest is an exponential function.  Even one based on gold.  He claims that you have to have more and more base currency to service this "function" and when you run out, it collapses.

This is a misunderstanding of the world on the highest order.  Though he is correct in saying that the current system will collapse, he claims that it will be a deflationary crash.  Therefore, he says to short equities.  What he can't seem to understand is that there is a limited amount of debt in the system, but there is no fundamental limit to the amount of monetization that can occur.  

Further, he fails to understand the source of gold that funds interest payments under a gold standard--it comes from consumer spending.  There is no need for an ever expanding supply of gold.  He claims it is all in the math, but his understanding of math is clearly less than that of a college freshmen, who would understand some simple calculus.  Namely, that as the rate of savings increases, the interest rate decreases.  He assumes a 100% savings rate among the citizenry will yield some sort of interest payment, but if everyone saved everything, then there would be no-one taking loans by definition, and no interest paid.  That is a limit function.  When people spend money, they receive a good or service.  The provider of that good or service can then use the money gained from their labor to pay back said loan.  No-where is there a requirement for the expansion of a money supply.  1+1=2, and 10,000,000,000+10,000,000,000=20,000,000,000.  Math doesn't change just because the numbers get big.

Wed, 10/06/2010 - 22:36 | 631120 UninterestedObserver
UninterestedObserver's picture

Where the hell is there a limited amount of debt? We can't be talking about the current situation here are we?

Wed, 10/06/2010 - 16:55 | 630425 Bear
Bear's picture

Mad Max to the max?

Wed, 10/06/2010 - 22:23 | 631081 merehuman
merehuman's picture

I dont see people walking around, i see points of life animating temporary

bodies. We are the energy we seek. The material world is only one aspect of our lives while human

Wed, 10/06/2010 - 16:22 | 630261 BorisTheBlade
BorisTheBlade's picture

Gold is just like everything else, riding on a functioning credit system.

The whole fabric of society is dependent on the more or less smoothly functioning monetary and credit system, especially as leveraged as the Western one. Inflation, even if perceived something positive 'within acceptable limits', when it becomes high or very high creates such enormous pressure on the system that it ruins fundamentals of what people get used to thinking as law & order.

The practical problem with the gold is not that it doesn't appreciate nominally to offset the effects of the high inflation, the problem that it does. And with so many people around becoming impoverished almost overnight, there won't be a lack of individuals or institutions (government being the biggest one) trying to take what one thinks belongs to him.

And maybe even Prof. Roubini is right by labelling gold 'a barbarous relic', the trouble again is that the society at large will look more 'barbaric' once the functioning credit and monetary system collapses.

Wed, 10/06/2010 - 22:19 | 631073 No More Bubbles
No More Bubbles's picture

the trouble again is that the society at large will look more 'barbaric' once the functioning credit and monetary system collapses.

 

It already has collapsed, they are just pretending it hasn't.  It's kind of like the terminal cancer patient feels OK the last few days before they die.  It's like a flush of endorphins flowing through the body giving this sense that all is well.  Kind of like high-flying BS stocks give a false sense of security.....

It's such a stupid game we play, just waiting for the REAL recogntion of how totally screwed we are........

 

 

Wed, 10/06/2010 - 18:01 | 630583 goldfreak
goldfreak's picture

Mako said in on 05/12/2010

 

gold will have wild swings just like the markets have been swinging... DOW from 6600 to 11200 gold from $730 back up to $1240.  

Wed, 10/06/2010 - 20:29 | 630872 thermroc
thermroc's picture

Wrong. The credit system rides on gold.

There will be deflationary crash, but it won't be denominated in dollars.

Wed, 10/06/2010 - 14:49 | 629948 Conrad Murray
Conrad Murray's picture

Faber + Bass = entertainment.  The last time I saw Bass on Strategy Session was just as good.  Faber knows exactly what is going on with this crazy country, and he tees up the "management" view for Bass to wreck.  Faber keeps his shill facade while letting Bass lay it bare.  Perfect.

Wed, 10/06/2010 - 17:26 | 630507 Zeilschip
Zeilschip's picture

Kaminsky seems to know what he's talking about as well. Heck, even Santelli thinks now QE2 is getting too much!

Wed, 10/06/2010 - 17:39 | 630526 FEDbuster
FEDbuster's picture

Agreed, Bass is kind of a Peter Schiff lite.  CNBS have been avoiding the "gold bugs" like Schiff, Faber, Rogers, etc...  They might go Col. Jessep on them:

http://www.youtube.com/watch?v=5j2F4VcBmeo

I would love to see Schiff tell Erin Burnett and Jim Cramer, "You can't handle the truth".

Wed, 10/06/2010 - 14:38 | 629951 chistletoe
chistletoe's picture

Here is a chart of the Zimbabwe Industrial Index ...

 

from 70,000 to 33,000,000 in one year ...

 

http://forum.goldclubasia.com/showthread.php?t=87

Wed, 10/06/2010 - 14:50 | 629993 Conrad Murray
Conrad Murray's picture

The Zim charts, along with the indexes in terms of gold charts, really say it all.

Wed, 10/06/2010 - 14:39 | 629953 truont
truont's picture

those who are betting on a rising tide emanating from the inkjets' liquidity spigot, will do far better to buy gold than stocks.

Agreed, but what about "gold stocks"?

Wed, 10/06/2010 - 14:39 | 629955 roymunnson
roymunnson's picture

The people who end up doing well...........yes........please go on.....

Wed, 10/06/2010 - 14:41 | 629960 B9K9
B9K9's picture

Don't make the mistake of assuming the power-elite care either way. The beauty of being emotionally detached is that one can dispassionately evaluate investment potentials clear of any prejudicial bias.

Will the US economy recover and povide a mechanism for continued, organic interest bearing loan growth? Or will hyper-inflation ensue as a result of monetary (over)stimulation efforts resulting in gold going to $50k/oz?

Think of this situation as Sophie's choice, except in our current predicament the power-elite could hardly give a shit which outcome occurs. The ultimate imperative is to preserve core capital in order to restart the game here or elsewhere. It really doesn't matter as long as continuous loan growth secured by real productive assets is achieved.

Human nature dicates that man will always want something for nothing - greed, sloth, etc. make it so. It is such a powerful driver that it is exceeded perhaps only by the mad desire for pussy. More than anything, arch criminals understand motivation. And as long as mankind desperately wants something for nothing, and is willing to debase themselves to any degree no matter the consequences, then money changers will be there to lead them to debt peonage.

And so it begins anew, same as it ever was.

Wed, 10/06/2010 - 14:49 | 629981 Mako
Mako's picture

If there is a power elite, not much they can do to stop this. 

All the so called power elite can do is give you back a portion of what you work for, when you are no longer supplying the equation what it needs, not much the power elite can do to help you.

The smart ones try to hiberate and stay out of the way of the coming storm, pass it on to their children.  In 3-6 decades, start the process back up. 

All any item(Gold, silver, house, land, water, food, stock, internet stocks, tulips, etc) you wish to selll can do is go to it's max then collapse.  The higher the rise, the bigger the fall comes to mind.  This will be the biggest fall to date of humans being on this floating rock.

Wed, 10/06/2010 - 16:32 | 630322 apberusdisvet
apberusdisvet's picture

According to recent reports, the power elite (or at least the wealthiest ones) are buying gold by the ton.

Wed, 10/06/2010 - 20:38 | 630895 thermroc
thermroc's picture

Wow, you put yourself up as a cold dispassionate thinker, yet you still haven't moved beyond pricing everything in dollars. Amazing.

Wed, 10/06/2010 - 14:53 | 630010 Rodent Freikorps
Rodent Freikorps's picture

Yeah, we need to keep the price of poon high enough to keep males heading off to work.

Wed, 10/06/2010 - 21:07 | 630944 harveywalbinger
harveywalbinger's picture

Already been done: 

half

Wed, 10/06/2010 - 15:46 | 630172 Seer
Seer's picture

"Will the US economy recover and provide a mechanism for continued, organic interest bearing loan growth? Or will hyper-inflation ensue as a result of monetary (over)stimulation efforts resulting in gold going to $50k/oz?"

Given that there's ZERO chance for ANY type of perpetual growth, I'd say the former can be ruled out.  As to the later... well, there's plenty of evidence to suggest that this is the most probable outcome (clearly there is logical support for this).  But... EVERYTHING comes to an end: gold too will become trinket-like one day (when the next ice age hits I don't think it'll be a game piece).

I'd like to point out the false logic in Bass's statement that taxes need to be drastically slashed in order that we can jump back on the growth bandwagon.  The question that no one asks is: and how long will THAT growth continue?  Keep in mind that ALL of these folks WANT changes to occur, as it's the point of inflection at which they make their money (as you, k9k9, suggest, none of them care which way things go as long as they stay in power/control).

The real choice going forward is whether we want to piss off TPTB or we piss off the masses.  Hint: there's a reason why TPTB pay such homage to the military/police establishment; if these folks turn then TPTB are doomed; and, I'd offer that with wide-spread pain on the masses will eventually shift the praetorian guard over to the side of the masses (hm... family? or, "nation-corporate state?").

Wed, 10/06/2010 - 17:25 | 630503 StarvingLion
StarvingLion's picture

ultimate imperative is to preserve core capital

The world wants to gamble.  I guess owning the 'house' is core capital.

continuous loan growth secured by real productive assets is achieved

Transaction volume in currency speculation far exceeds that. 

Old style banking is no longer relevant.

Wed, 10/06/2010 - 14:43 | 629968 HarryWanger
HarryWanger's picture

Moral of this story: Don't even THINK about going short any time in the next several years. 

Wed, 10/06/2010 - 14:51 | 629998 Mako
Mako's picture

Sounds like what someone told me in the 80s in Japan, then in the 90s, then in the 00s, then in the 10s. 

"Money for nothing and your chicks for free"

 

Wed, 10/06/2010 - 14:52 | 630004 HarryWanger
HarryWanger's picture

But that's exactly what this implies. Hyperinflation inflates stock prices. Yes, you won't really be making any money but you'll be doing a hell of a lot better than being short I would assume.

Wed, 10/06/2010 - 15:01 | 630027 Mako
Mako's picture

And you would have lost your ass with this line of thinking.   Your theory rest on the false assumption humans can inflate to infinity.   There is no lasting win against the monster, you can win all the battles for say 60-80 years but in the end it always wins the war.

The Japanese are still trying to ignore the obvious, I figure the Japanese will be in the collapse and liquidation process for probably 60-100 years from the 1989 peak.

The Japanese are real lucky the rest of the world was there to save them, of course that is coming to an end as well.

Wed, 10/06/2010 - 15:03 | 630057 HarryWanger
HarryWanger's picture

It's not "my theory" it's in the story above. That's the point of the story. So being short would be akin to suicide, no?

Wed, 10/06/2010 - 15:07 | 630067 Mako
Mako's picture

How did it work out for him with his Japanese holdings?  There is no reward without risk, if someone is saying one-side of the bet is a no brainer, well... I don't see why anyone would give you a return on that.

You are coming to the end of the system, if you are quick you might be able to make some profits even now.  I have no idea what you do with all those profits once the system disappears though. 

Wed, 10/06/2010 - 15:31 | 630141 StarvingLion
StarvingLion's picture

By your logic, my multicellular body is coming to an end, the Sun is coming to an end...no kidding, EVERYTHING eventually ends so whoopdee doo.

You fractional reserve banking experts HAVE NO PREDICTIVE capability.  

Wed, 10/06/2010 - 15:50 | 630194 Seer
Seer's picture

At issue is timing... How will our multicellular bodies fare in this collapse?  How are you hedged?

Wed, 10/06/2010 - 19:03 | 630671 Hephasteus
Hephasteus's picture

So after coming here for a year and being an ASS you all of a sudden are capable of logical thought. Same thing with the financial sytem. We could have been talking implimenting a real, decent system to take over at crash but no. It has to crash and go wild fucking kingdom with the hopes that the maniacs in charge can pump enough fucking zoloft into their system to undepress and undefeat themselves and take back over.

Vote Petraeus 2012. This bitch is cocktailing crystal meth, ritalin and methalphenidate!!

Ok never mind. I was confusing you with another troll.

Wed, 10/06/2010 - 21:59 | 631034 kathy.chamberli...
kathy.chamberlin@gmail.com's picture

ok babe settle down. im goin smoke a bowl and try to relate. your avatar is a peanut?

Thu, 10/07/2010 - 00:28 | 631337 Hephasteus
Hephasteus's picture

Stop talking to me. There's a lot of people on here who smoke pot but I can still tolerate them. You however have broken your brain.

http://ask.metafilter.com/65428/Shortterm-memory-loss-continues-12-days-...

http://www.nida.nih.gov/researchreports/marijuana/marijuana3.html

You're already imparing your balance. I'm not going to respond to you emotionally or sexually in any way. You're a walking leaking fog of stupidity and I got shit to focus on. Go away.

 

Wed, 10/06/2010 - 15:47 | 630183 doggings
doggings's picture

depends who youre shorting surely? theres always going to be companies getting in trouble.

& I too would like to go long on a mixed basket of Somali pirates someone should knock together an ETF

Wed, 10/06/2010 - 15:01 | 630047 MsCreant
MsCreant's picture

But if the hyper inflated dollars are not worth anything????

Wed, 10/06/2010 - 19:07 | 630708 Bendromeda Strain
Thu, 10/07/2010 - 02:06 | 631453 StychoKiller
StychoKiller's picture

Around $85/ton!

Wed, 10/06/2010 - 14:45 | 629976 Comrade de Chaos
Comrade de Chaos's picture

If/When Hyperinflation hits, it will be all about assets denominated in currencies that do not experience inflation (given there will be any available), gold and real estate (physical real estate).

It won't be the END of the world but the most people especially those who save and senior citizens will be screwed.

There is still time, I think unless QE light becomes QE heavy crude.

Wed, 10/06/2010 - 15:27 | 630131 Jewelsnorth
Jewelsnorth's picture

Like the giant Rai Stones that Yapese use for currency I suppose.

Wed, 10/06/2010 - 16:27 | 630287 Comrade de Chaos
Comrade de Chaos's picture

My bet would be DEUTCH MARK, SWISS FRANK or CANADIAN YUAN (lol.)

If hyper inflation hits, EU will be no more; Canada will sell its resources to the highest bidder to pay pension obligations; everyone who will have any resources left, will be hiding those or themselves from populist governments at the destination Alpine slopes.

Wed, 10/06/2010 - 14:44 | 629978 PlausibleDenial
PlausibleDenial's picture

Here is an interesting look at credit.  Yep, the Fed's unlimited credit....

http://dshort.com/articles/guest/Peter-Williams-on-Treasuries-101006.html

Wed, 10/06/2010 - 15:22 | 630119 Rusty_Shackleford
Rusty_Shackleford's picture

How and when is the US going to produce a surplus to pay down the debt?

 

 

Now that's funny.

Wed, 10/06/2010 - 17:52 | 630561 FEDbuster
FEDbuster's picture

The US Treasury Debt is a black hole that will suck in every available investment dollar as fear of loss of principle blinds the masses of it's destructive power.  A fiat "Death Star" of wealth destruction.

To avoid the trap, one must look for a tangible, transportable asset that takes labor to produce and is scarce.  Something recognized worldwide for centuries as money.  Dare I say it, GOLD bitchez.

Wed, 10/06/2010 - 14:45 | 629983 Edna R. Rider
Edna R. Rider's picture

You mean people won't be willing to pay $5,000 for an iPad?  C'mon, get serious.

Wed, 10/06/2010 - 14:51 | 630001 HarryWanger
HarryWanger's picture

People will sell their children to get an iPad.

Wed, 10/06/2010 - 16:06 | 630217 Seer
Seer's picture

Not sure why people flagged you...

I'd state the people have ALREADY sold their children for all this crap.  People have a bunch of rapidly depreciating assets (McMansions, HDTVs, SUVs etc.) by which they've hocked their childrens' future for.  Our children are now being left with the tab.

I saw how ugly this was going to get when several years ago the UAW, under enormous pressure, sided with their retires and current workers, propping up pensions and healthcare while agreeing to drastically cut wages for new workers.  How this fit into the current melt-up is that these current and retired workers' set the stage for being trapped in their homes, unable to sell these "nest eggs" as the "replacement" crop of new workers wouldn't have the wages to support purchasing them.

Clearly the decisions have been poor.  Whether any "good" ones could have avoided the inevitable is another story (not likely, given that systems based on endless growth will ALWAYS collapse).

One path leads to despair and utter hopelessness, the other to total extinction. Let us pray that we have the wisdom to choose correctly. -- Woody Allen

Wed, 10/06/2010 - 16:30 | 630317 HarryWanger
HarryWanger's picture

Bingo!

Wed, 10/06/2010 - 19:21 | 630727 Red Neck Repugnicant
Red Neck Repugnicant's picture

When you get a chance, read the Gossage and Vardebedian Papers.

One of my favorites.

Wed, 10/06/2010 - 21:39 | 630999 IQ 145
IQ 145's picture

 very good; I like the Woody Allen quote. One of my favorites is from Walt Kelly's Pogo; "We have met the enemy and he is us "

Wed, 10/06/2010 - 16:29 | 630309 Bear
Bear's picture

Maybe first born.

Wed, 10/06/2010 - 15:01 | 630041 Comrade de Chaos
Comrade de Chaos's picture

Hyperinflation = price for an Ipad will double every other week. So yeah, you will convert your salary into whatever holds value right away and if you have any extra left for whatever(doub it), you will be happy to shed 5K for I-PAD.

Wed, 10/06/2010 - 14:49 | 629992 carbonmutant
carbonmutant's picture

"US debt issuance has worked for the past few years and people are chasing what has worked..."

http://img713.imageshack.us/img713/2636/corpdebt.jpg

 

Thu, 10/07/2010 - 02:09 | 631459 StychoKiller
StychoKiller's picture

All good "Cargo Cults" will come to an end!

Wed, 10/06/2010 - 14:57 | 630026 wiskeyrunner
wiskeyrunner's picture

Federal Reserve is handing out free money, there is very little risk in going long the indexes. Step right up and get your free money.

Wed, 10/06/2010 - 14:59 | 630032 gmak
gmak's picture

Imagine if all the JGBs were cashed in and used to buy food. Does anyone think $100 for a gallon of milk is unreasonable?

If you take a bunch of money out of one asset class and put it into another asset class, assuming that the cash paid for the first asset class didn't come from the second one, then the second asset class is going to see a material rise in price.

Wed, 10/06/2010 - 15:01 | 630044 rumblefish
rumblefish's picture

can someone explain bass's math....I am missing something. if there is $100 in the system and you print $10, how is that devaluing by 15%?

Wed, 10/06/2010 - 15:17 | 630106 Conrad Murray
Conrad Murray's picture

You're referring to the 4:00 mark in video #1.  Go back and listen to it again.  What he is saying is that when Ben and Barry print up that extra $10, thus debasing the currency by 10% in nominal terms, it also has an effect on people's faith in the fiat.  When you and I, or more importantly foreign entities, start to think, "Hey, there is a real lack of responsibility over there", the currency is not only debased by that 10%, but perhaps another 5% due to lost faith(the only thing actually backing the fairy money).

That's my take on it anyhow.  Could be way off.

Wed, 10/06/2010 - 15:01 | 630045 rumblefish
rumblefish's picture

duplicate

Wed, 10/06/2010 - 15:04 | 630058 bankonzhongguo
bankonzhongguo's picture

I thought you said, "Kyle Gass."

Tenacious D bitchez.

http://www.youtube.com/watch?v=Co2Zt615P5M

Wed, 10/06/2010 - 15:04 | 630060 carbonmutant
carbonmutant's picture

microcosm of cnbc (faber) trying to marginalize the issues...

"Is housing really important to this economy?" - david faber

"It's the single largest asset class in the world". - Kyle Bass
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