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Matterhorn Asset Management There Will Be No Double Dip... It Will Be A Lot Worse

Tyler Durden's picture




 

THERE WILL BE NO DOUBLE DIP…..

by Egon von Greyerz – Matterhorn Asset Management

 

No, there will be no double dip. It
will be a lot worse. The world economy will soon go into an accelerated
and precipitous decline which will make the 2007 to early 2009 downturn
seem like a walk in the park. The world financial system has temporarily
been on life support by trillions of printed dollars that governments
call money. But the effect of this massive money printing is ephemeral
since it is not possible to save a world economy built on worthless
paper by creating more of the same. Nevertheless, governments will
continue to print since this is the only remedy they know. Therefore, we
are soon likely to enter a phase of money printing of a magnitude that
the world has never experienced.  But his will not save the Western
World which is likely to go in to a decline lasting at least 20 years
but most probably a lot longer.

The End of an Era

The hyperinflationary depression that
many western countries, including the US and the UK, will experience is
likely to mark the end of an era that has lasted over 200 years since
the industrial revolution.  A major part of the growth in the last 100
years and especially in the last 40 years has been built on an
unsustainable build-up of debt levels. These debt levels will continue
to swell for another few years until the coming hyperinflation in the
West leads to a destruction of real asset values and a debt implosion.

In the last 100 years the Western world
has experienced a historically unprecedented growth in production, in
inventions and technical developments leading to a major increase in the
standard of living. During the same period government debt, as well as
private debt have grown exponentially leading to a major increase in
inflation compared to previous centuries.

Until the early 1970s the growth in
credit to GDP had been going up gradually since the creation of the Fed
in 1913.. But from 1971 when Nixon abolished gold backing of the dollar,
virtually all of the growth in the Western world has come from the
massive increase in credit rather than from real growth of the economy.
The US consumer price index was stable for 200 years until the early
1900s. From 1971 to 2010 CPI went up by almost 500%. The reason for this
is uncontrolled credit creation and money printing. Total US debt went
from $9 trillion in 1971 to $59 trillion today and this excludes
unfunded liabilities of anywhere from $70 to $110 trillion. US nominal
GDP went from $1.1 trillion to $14.5 trillion between 1971 and 2010.  So
it has taken an increase in borrowings of $50 trillion to produce an
increase in annual GDP of $13 trillion over a 40 year period. Without this massive increase in debt, the US would probably have had negative growth for most of the last 39 years.

Total US debt to GDP is now 380% and is likely to escalate substantially.


The coming hyperinflationary depression
and the credit and asset implosion that is likely to follow will most
probably lead to the end of a 200 year era of growth for the Western
world. If only the excesses from the 1970s were corrected we might have a
circa 20 year decline. But more likely we will correct the era all the
way back from the industrial revolution in the 18th century and this could take 100 years or more.

So after the tumultuous and very painful
times that we are likely to experience in the next few years, the West
will have a sustained period of decline. All the excesses in the economy and in society must be unwound.
These abnormal and unreal excesses are not just corporate executives,
bankers, hedge fund managers or sportsmen earning $10s to $100s of
millions but also a total collapse of ethical and moral values as well
as a breakdown of the family as the kernel of society.

Most people believe and hope that this
major trend change could not happen today with all the measures that
governments have at their disposal. But very few people comprehend that
it is precisely the government interference, controls and regulations as
well as money printing that have created the problems in the first
place. Power corrupts, and the more pressure a government is under the
more they intervene. Because they believe that their interference in the
economy will save the country – read Obama, or the world – read Gordon
Brown. Little do they understand that each interference, each
regulation or each dollar or pound or Euro printed will exacerbate the
problems of the economy manifold.

Governments now have two options;
continue to spend and print money like the US or introduce austerity
programmes like Europe. Whichever way they chose will not matter since
they have reached the point of no return. The economy of the West cannot be saved by any means. But governments both in the US and in Europe will still apply the only method they know which is to print money.

Government is Stealing from the People

Very few people understand that money
printing is a form of robbing the citizens of their money and their
work. Money is supposed to be a medium of exchange for goods and
services equalling the value of the good or the service produced.  For
example, an individual works extremely hard to earn an annual wage of
say $40,000 which he receives in the form of paper money. The
government, due to its mismanagement and incompetence simultaneously
prints $40,000 in order to cover its deficits. So the government has by
pressing a button produced the same amount of money that a man had to
work a year for. This is what is currently taking place all over the
world and which will accelerate in coming months and years leading to a
total destruction of paper money. Paper money has completely
lost its function as a medium of exchange or a store of value. This is
why gold is gaining and will continue to gain value against perishable
paper that is called money.

Deflation Inflation or Hyperinflation

The only reason that the US could build
up such a major debt is that the US dollar has been the reserve currency
of the world and therefore the US has been able to finance its debts
and deficits internationally. The US has now reached a point when debts
have to increase dramatically for the country just to standstill. Like
all Ponzi schemes this one will also come to an end – and this very
soon. The US dollar will decline dramatically and lose its reserve
status and the US government will be unable to finance its deficit in
any market. This process will lead to endless money printing, collapsing
treasury bonds (substantially higher interest rates) and the dollar
becoming worthless in a hyperinflationary black hole.

Let us just reiterate that
hyperinflation arises as a result of money printing leading to a
currency collapse and not from demand pull. The slight deflation that we
are experiencing currently is a prerequisite for hyperinflation. The
fear of a deflationary implosion forces governments to print money,
leading to a collapsing currency which historically has always been the
cause of hyperinflation.

Real M3 (source: Shadow Government
Statistics) is falling at an unprecedented rate. This is the precursor
to economic decline, quantitative easing and inflation (see early 1970s
in the chart).

Many “experts” make the analogy between
the deflationary period in Japan since the 1990s and the US today. In
our view the US is in a totally different situation for the following
reasons:

  • In the early 1990s Japan could still export their production to the rest of the world.
  • In the current downturn all countries (even China and
    India) will suffer and there will be no one to export the problems
    to.
  • The ability to export made Japan a creditor nation with major
    payment surpluses.  US are a major debtor and have been for 25
    years.
  • Japan had a very high personal savings ratio at the time (which
    has now disappeared). US has had a declining savings rate for
    years (the US savings rate is now going up which it always does in a
    downturn).
  • The balance of payments and the personal savings surpluses made
    it possible for Japan to finance their budget deficit without
    resorting to QE. Very soon he US will only be able to finance their
    deficits with QE and so will most of the rest of the Western
    world.
  • Japanese unemployment in 1992 was 2% and went slowly up to 5%
    by 2000 where it is now. Real US unemployment is 22% and
    increasing.
  • Many major sovereign states are now virtually bankrupt and the
    financial system is on life support. This was not the case in the
    1990s.

The above are some of the reasons why
the current US situation is totally different to Japan. QE will
accelerate in the US and worldwide.

What will make this process so much more
complex than the world has ever experienced is that the same
development is likely to take place in many countries around the world
simultaneously. It will most probably happen in the UK, the rest of the
EU and most other European nations. Due to the total interdependence of
the world financial system, it will be difficult to forecast which
countries can withstand the coming worldwide tsunami of money printing
but many Asian countries probably stand a good chance.

Can we be wrong in our forecast of a
hyperinflationary depression? Yes, of course we can. But the alternative
can only be a deflationary collapse which would be unacceptable to
(dropping money from) helicopter Bernanke and deficit demagogue Obama as
well as most other governments.

Conventional wisdom and most
experts say that we will not have inflation but deflation. The problem
with most conventional wisdom is that it is only conventional without an
ounce of wisdom. When have the world’s so called experts, politicians
etc ever been right on the current crisis? They will be wrong this time
again.

The “conventional wisdom experts” also
say that it will be years before we can see inflation or hyperinflation.
In our view it can happen a lot faster. The world economy is resting on
a foundation of matchsticks. All that is needed is a change in
confidence or psychology for this fragile foundation to crumble. Falling
currencies, rising bond yields and falling stock markets could very
quickly result in a vicious and fast spinning hyperinflationary circle.
The frailty of the financial system could make this happen like a flash
fire.

Wealth Creation

Banks and the financial industry have
throughout history existed in order to finance production and trading of
goods. But in the last 100 years and especially in the last 20-30 years
it has become a major industry in its own right and an important but
unproductive part of the economy in many countries. Today, the financial
industry is too a great extent involved in trading for its own and
clients’ accounts, creating a raft of obscure instruments that only
benefit the banks and as well as financing consumption rather than
investment. All of these areas are totally non-productive and the only
beneficiaries are the participants in the financial industry. And the
rewards have been absolutely astronomical. In investment banking, hedge
funds and private equity in particular, the most massive wealth has been
created. Many players have become billionaires or created fortunes of
tens to hundreds of millions of dollars in the last 10-15 years just by
shuffling money around. In the past fortunes were created by building
factories and industries. But today any normal employee working in Wall
Street or the City in London will, by just showing up to work, make
hundreds of thousands to millions of dollars. This is the proof
of a world totally out of balance when people dealing in money become
the richest segment of society. Since this activity contributes very
little to the prosperity of a nation (but very much to its participants)
it is not sustainable.
The biggest reason why it exists is the
massive amount of money that governments have created or printed and
the fact that the financial industry has developed into a fractal wealth
creation machine for the benefit of its participants.

For the last 40 years in particular the
rich are getting richer and the average person has seen very little
increase in real income. In the US, the real annual income of the bottom
90% of US families has increased by only 10% since 1970. And in the
expansion between 2002 and 2007, median US household income dropped
$2,000. The perceived increase in wealth for the majority of
Americans derives from an increase in their debt level not from an
increase in real earnings. So the improvement in living standards that
the average American and many other Western countries have enjoyed in
the last 40 odd years is primarily based on debt – debt that can never
be and will never be repaid with normal money.

On the other hand, management has
achieved a major increase in income and wealth. In 1973, chief
executives in the US earned 26 times the median income. Today they earn
300 times. This enormous widening of the gap between the top few percent
in society and the masses is morally and socially unacceptable. When
the bad times start in earnest, this is likely to lead to major social
unrest and violence directed against the privileged.

The Focus will Shift

For a major part of 2010 the focus has
been on the problems within the EU starting with Greece, then Spain,
Portugal, Italy etc. The problems in Europe are major and many European
countries as well as the European financial system will lead to massive
money printing. Although the problems in Europe are very serious, the US
economy is in a much worse state. The diversion of the focus away from
the problems in the US economy onto Europe has suited the US
Administration perfectly. It can hardly be a coincidence, for example,
that US rating agencies downgrade the Sovereign debt of Greece and Spain
on the same days as Treasury auctions are held. But the problems in the
US economy are deteriorating at a rapid rate; factory orders, consumer
confidence, existing home sales, retail sales, the ECRI index (Economic
Cycle Research Institute) are all falling more than expected and real
unemployment, personal bankruptcies (will exceed 1.6 million in 2010),
trade deficit, state and federal deficits are all increasing.

The ECRI index is an important leading indicator. It has now fallen for 10 straight weeks.

There are three insurmountable problems in the US economy that are of a magnitude and gravity which can only be remedied by money printing:

  • Federal and state deficits will soon escalate at an
    exponential rate. The US Federal debt has increased from $ 8
    trillion in 2006 when Bernanke took office to soon $ 14 trillion.
    Many forecasts expect this debt to go up to nearer $ 20 trillion in the
    next 5 years. In our view it will be substantially higher. Add to
    that interest rates of 15% or higher and the American people will
    work just to pay taxes that don’t even cover the interest payments
    on the federal debt. This is why the US will either default or more
    likely print unlimited amounts of money.
  • The real unemployment rate is now 22%. Since 2007
    over 8 million Americans have lost their jobs and it will get a lot
    worse.  Non-farm unemployment in the 1930s reached 35% and we
    would expect this level to be reached in the next few years.
  • The financial system is bankrupt. Banks are failing
    at a much faster rate than last year. To date circa 110 banks have
    failed. More seriously the assets of the failed banks are only
    worth an estimated 30-50% of their balance sheet value. Banks are
    valuing their toxic debt at phoney values with the blessing of the
    government. But even debt that today is considered safe will soon
    turn toxic with the consumer coming under enormous financial
    pressure. Add to that the OTC derivatives held by US banks of at least $
    400 trillion. A big percentage of these are worthless and there
    are virtually no reserves to cover potential losses.

Within the next few years, the three
areas above are likely to result in the biggest money printing programme
in world history and simultaneously lead the US (and many other
countries) into the abyss.

Markets

There has probably never been a period
in world history which has caused the amount of wealth destruction that
we are likely to see in the next few years. If we are correct in our
assumption that the West will see a correction of the excesses of the
last circa 40 years but more probably of the last 200 years, since the
start of the industrial revolution, we could see a total annihilation of
the assets that have been fuelled by the credit bubbles. The spike in
asset values in the last 100 years, which is unprecedented in history,
is likely to be corrected by a waterfall which could start at any time.
We will issue a separate report in the next 10 days covering our market
predictions and the importance of physical gold for wealth preservation
purposes.

16th August

Egon von Greyerz

 

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Mon, 08/16/2010 - 10:40 | 523717 ricksventures
ricksventures's picture

i believe it when i see it, but 2012 would be a good year for that....lets see the end and celebrate it with an ak 47 and a stolen bottle of don perignon (stolen from a the house of paul krugman) and bunch of slaves from local villages

Mon, 08/16/2010 - 11:09 | 523747 hedgeless_horseman
hedgeless_horseman's picture

When things get really rough, the Irish steal cattle and women. 

Although, I do like Dom, and this Titanic is indeed a very nice ship.  I think I will have some lobster bisque, poached salmon with beurre blanc, pickled cucumber salad, and a nice white Bordeaux.  There is still plenty of time before the iceberg hits.

Peaches and ice cream with a little liquor.  Cigars and brandy to follow in the lounge.  There is a band playing.  It is much nicer waiting there, rather than getting in the lifeboats and waiting.  Those Mae Wests are so uncomfortable.

 

Mon, 08/16/2010 - 11:20 | 523807 NoBull1994
NoBull1994's picture

"The Worst Case Scenario" is worth reading: http://seekingalpha.com/article/134820-the-worst-case-scenario-someone-has-to-say-it

Key line:  "By 2012, there will be a general feeling that the nation is in immediate danger of blowing up or coming apart at the seams. This fear will be justified, given that the U.S. has always been held together by the promise of a continuously rising material standard of living—the famous “pursuit of happiness”—rather than any ethnic or religious ties. If that goes, so could everything else. We were lucky in the 1930s—we may not be so lucky again."

Mon, 08/16/2010 - 12:12 | 523925 Whats that smell
Whats that smell's picture

I also think things look bleak, that was a good article you have there.

Had not read it before. One thing being omitted from many of these scenes I feel will take place is a large war. The US just has so much military hardware it will be used. Most people just do not care anymore about how wars are fought and the reasoning behind them. Ike was correct about the military-industrial complex. It is the largest wild card by far.

 

Mon, 08/16/2010 - 12:16 | 523931 Ripped Chunk
Ripped Chunk's picture

Large war is a certainty right now.

Tue, 08/17/2010 - 14:57 | 526615 tamboo
tamboo's picture

don't forget the mossad false flag that will stampede the goyim into supporting it.

Mon, 08/16/2010 - 12:16 | 523935 WaterWings
WaterWings's picture

...with international players on US soil to the chagrin of Twinkie-heads and deluded-"educated" alike.

Mon, 08/16/2010 - 12:17 | 523936 arnoldsimage
arnoldsimage's picture

that wasn't a bad call by that guy. nailed several observations.

Mon, 08/16/2010 - 13:05 | 524022 hedgeless_horseman
hedgeless_horseman's picture

Speaking of nailed...we are all saved...the next killer app has arrived.  Get long!

http://today.msnbc.msn.com/id/38724232/ns/today-entertainment/

Mon, 08/16/2010 - 13:25 | 524139 downrodeo
downrodeo's picture

I've stopped asking, "what will they think of next"...

Mon, 08/16/2010 - 17:02 | 524699 DaveyJones
DaveyJones's picture

only half the audience will duck

Tue, 08/17/2010 - 15:28 | 526725 tamboo
tamboo's picture

what bullshit, there's 3-d porn that you guys at sec could be downloading now:

http://tracker.zaerc.com:666/torrentDetails.jsp?torrent_id=13421

http://tracker.zaerc.com:666/torrentDetails.jsp?torrent_id=13424

http://tracker.zaerc.com:666/torrentDetails.jsp?torrent_id=13064

get free glasses here (they'll probably have a heavy backlog after the feds readings this place their orders):

 

http://www.rainbowsymphony.com/freestuff.html

more 3-d flicks:

http://cinemageddon.org/doku/doku.php/fanpages:3d_anaglyph_project

Mon, 08/16/2010 - 11:44 | 523853 Captain Archer
Captain Archer's picture

Women just take your money.

Tue, 08/17/2010 - 14:56 | 526602 tamboo
tamboo's picture

the titanic is a far more apt metaphor than most realise.

just remember that the jesuits were infiltrated just like everything else.

http://www.world-mysteries.com/doug_titanic1.htm

Mon, 08/16/2010 - 10:48 | 523719 Chris1
Chris1's picture

Matterhorn Asset Management? Come on. An asset management group specialised in gold might be considered biased.

Mon, 08/16/2010 - 10:53 | 523752 Turd Ferguson
Turd Ferguson's picture

Fuck you. Classic liberal, sunshine-pumping argument. "Avoid the message, attack the messenger".

Google Egon von Greyerz. Go to the Matterhorn website. Read their shit. They have been spot-on in their analysis and this latest missive continues the trend.

The Great Keynesian Experiment is coming to an end. Perhaps a wealth retracement back to 1880 levels might be overdoing it a bit but the times ahead are quite unpredictable and we will be lucky to survive with any wealth and freedom intact. 

Mon, 08/16/2010 - 11:18 | 523803 juangrande
juangrande's picture

"avoid the message..." agreed, but conservatives do the same damn thing. ever watched Fox. 

Mon, 08/16/2010 - 11:31 | 523824 Turd Ferguson
Turd Ferguson's picture

Whatever. I suppose I shouldn't have included the adjective "liberal" if that's the only thing you took from my argument.

Again, where is someone refuting von Greyerz's facts? Would someone like to take the other side of the argument regarding wealth creation and destruction? 

My first comment has now been "junked" twice a/o 11:29. Again, no arguments to counter just anonymous junking if you disagree.

Mon, 08/16/2010 - 12:02 | 523902 Let them all fail
Let them all fail's picture

dude, chill out - and by the way, liberal does not equal print money until the world has run out of ink, this action has been rampant by both parties, its a political necessity to avoid the collapse rather than a party-specific action.  Its stupid, not partisan.

Mon, 08/16/2010 - 12:17 | 523934 Turd Ferguson
Turd Ferguson's picture

In this case, the use of "liberal" was appropriate.

Though both Repubs and Demos are responsible for this mess, it is the domain of the sunshine-pumping liberal to continue to recommend the accumulation of more debt to solve the debt problem. Most conservative/libertarians are in the mindset of strict austerity and benefit cuts.

I am in the camp that neither will work. Debt is now compounding at an exponential rate that has exceeded any chance of service by GDP growth. The end is near.

Mon, 08/16/2010 - 12:36 | 523984 Let them all fail
Let them all fail's picture

Sure, "strict cuts is the solution, just make sure not to cut anything that affects me" sounds more like it - maybe in a political theory class what you say is true, in reality not so much

Mon, 08/16/2010 - 12:40 | 523997 Turd Ferguson
Turd Ferguson's picture

"I am in the camp that neither will work."

Mon, 08/16/2010 - 14:15 | 524279 Pope Clement
Pope Clement's picture

Turd- Don't bother treating a programmed douchebag with grandfatherly kindness, fuck him he is part of the problem living in a limited beta version of linguistic consciousness that is only B or W, either/or, Dem or Rep. I do hope the tard wakes up eventually...

Mon, 08/16/2010 - 12:34 | 523976 Ripped Chunk
Ripped Chunk's picture

"Both parties" ????  There is only one party in the US. There are 2 carefully designed and well deployed marketing "philosophies" that are used to maintain order.

The Dem. vs. Repub.  Liberal vs. Conservative and the alignments of the various "news" outlets to fuel these "philosophical" arguments are all nothing more than a made for TV/PPV event like WWE wrestling. The outcome is predetermined on an if so-and-so is elected then this strategy is executed, if not then our other equally destructive strategy is deployed. 

Divide and conquer is the oldest crowd control strategy known to civilization.  

Please look up te defenition of a one-party political system. The word "Fascism" will come up over and over again.

Mon, 08/16/2010 - 12:38 | 523988 Turd Ferguson
Turd Ferguson's picture

"Both parties" ????  There is only one party in the US. There are 2 carefully designed and well deployed marketing "philosophies"

 

Point well taken. One party is taking us to hell on a bullet train, the other would use a street car. Same destination, however. Nothing can save us now. Debt is growing exponentially. Debt is now unmanageable and attempts to contain it are unsustainable. The end is near. Prepare accordingly.

Mon, 08/16/2010 - 12:50 | 524017 Ripped Chunk
Ripped Chunk's picture

Where we are going has been pre-determined. The media circus and the vote remain to make the Sheeple think they have a choice and a voice.

 

Mon, 08/16/2010 - 21:08 | 525133 Cui Bono
Cui Bono's picture

Dear Turd,  Don't know if you have read Naked Capitalist- the book not the website- but if not I could not recommend it strongly enough.  We have one party and it is the tool of greater masters... CB

Mon, 08/16/2010 - 12:41 | 523993 Let them all fail
Let them all fail's picture

Well I would call the one party the "do what is currently in my best interest" party, since that trumps any ideals that our deranged elected officials used to have

Mon, 08/16/2010 - 20:04 | 525032 StychoKiller
StychoKiller's picture

I call it the Leviathan Party since all it ever does is increase the size of Govt.

Mon, 08/16/2010 - 18:48 | 524885 tanerlorn
tanerlorn's picture

Excellent point....

To go further...its all back to the Matrix(1999) which was put out by the very same people who control the media today and manipulate our consciousness

 

Red pill/Blue pill.....Democrat/Republican....Blood/Crip...

 

How many damn red/blue dialectics do we need?

Mon, 08/16/2010 - 12:56 | 524046 SgtShaftoe
SgtShaftoe's picture

Turd, I'm in the inflation camp, though I take issue with the Matterhorn "sky is falling" arguement.  No one can be sure what the future outcome of this situation will turn out to be.  It is highly unlikely that it will turn out to be what Matterhorn is claiming, though possible. Remember Taleb's micro variable impact on long term forecasts.  The best we can do is look at history, and there are plenty of nations that have lived through hyperinflation. 

Our role should be to try to protect the country/world from the worst case scenarios.  We all can have an effect on the outcome.  Make it a good one.

Mon, 08/16/2010 - 13:37 | 524176 StateofFraud
StateofFraud's picture

"The best we can do is look at history, and there are plenty of nations that have lived through hyperinflation. "

Except that, since 1971, for the first time in the history of the world, ALL nations operate in the fiat realm. It's not isolated; it's global.

From the first paragraph:

"It is not possible to save a world economy built on worthless paper by creating more of the same."

Mon, 08/16/2010 - 13:10 | 524064 mudduck
mudduck's picture

I wouldn't refute his facts, but his conclusions are debatable if looked at from the point of view of; inflation is everywhere and always a political decision to print. Take out the 'they will print' parts and I would say these guys make a good arguement for deflation.

Fri, 08/20/2010 - 00:07 | 532126 thermroc
thermroc's picture

Then add 'they have already printed', stir well, bring to a simmer and run the fuck away.

I just keep seeing a mortar being launched in my head. Drop it in the pipe, first it slides slowly downwards, until it shoots straight back out at 40,000 times the speed. OK who wants to peer into the pipe and watch deflation.

Mon, 08/16/2010 - 11:45 | 523859 Nostradumbass
Nostradumbass's picture

Your argument was lost with the first two words Turd.

Mon, 08/16/2010 - 11:59 | 523891 Turd Ferguson
Turd Ferguson's picture

Agreed. My gratuitous use of profanity lessens the validity of my ideas.

p.s. Fuck you, too.

Mon, 08/16/2010 - 12:01 | 523897 downrodeo
downrodeo's picture

WIN!

Mon, 08/16/2010 - 12:05 | 523908 still kicking
still kicking's picture

You really are my favorite poster on here! 

Mon, 08/16/2010 - 12:23 | 523950 ATTILA THE WIMP
ATTILA THE WIMP's picture

I rode in here on a horse ... any comment?

Mon, 08/16/2010 - 12:39 | 523991 Ripped Chunk
Ripped Chunk's picture

Not at all. I think universities (before they are all looted and burned to the ground) should offer courses in creative and artistic swearing. Artful self expression should be rewarded.

Don't bring up manners because that concept has been dead for decades. Your daily commute and a trip to the grocery store proves that point.

Wait until things really get tough........ 

Mon, 08/16/2010 - 12:42 | 524003 Turd Ferguson
Mon, 08/16/2010 - 12:46 | 524020 Ripped Chunk
Ripped Chunk's picture

++ !!! funny.

Mon, 08/16/2010 - 13:50 | 524206 Yardfarmer
Yardfarmer's picture

bwahahahahahahahahahahaha! Go Turd!

Mon, 08/16/2010 - 14:16 | 524281 ColonelCooper
ColonelCooper's picture

Game, set and Match to the Turd.

Mon, 08/16/2010 - 12:01 | 523898 Hdawg
Hdawg's picture

I thought the opener was thorough and to the point.

Mon, 08/16/2010 - 10:53 | 523753 Ripped Chunk
Ripped Chunk's picture

+ !!

No news in Egon'smessage either.

 

Mon, 08/16/2010 - 11:28 | 523822 downrodeo
downrodeo's picture

you have to go through with what your world view tells you to do, its what we all must do to make sense of our crazy world. You must understand that everybody is biased.

Mon, 08/16/2010 - 11:55 | 523880 SheepDog-One
SheepDog-One's picture

Riiiight cant listen to them or their charts pointing out the OBVIOUS! They own gold after all! And are therefore somehow 'biased'...so who are you listening to, moron-orc human cattle? Bernanke? Good luck with that you IDIOT!

Mon, 08/16/2010 - 12:40 | 523994 Zero Debt
Zero Debt's picture

yes, it is biased, now go back to watch Fox

Mon, 08/16/2010 - 14:02 | 524239 Noah Vail
Noah Vail's picture

So what snake slithered up your ass today, Turd? He was not wrong for pointing out the POSSIBIITY of bias, neither did  he allege it. Anyone who doesn't look for the biases of financial commentators is a nit wit.

Thu, 08/19/2010 - 15:41 | 531131 Pladizow
Pladizow's picture

How about an asset management group that specializes in:

1. Equities?

2. Bonds?

3. Etc.......

Are they not also biased?

The difference is most "Gold Bugs" eat their own cooking!

Thu, 08/19/2010 - 16:30 | 531280 william the bastard
william the bastard's picture

Like Obama and the "summer of recovery"?

Mon, 08/16/2010 - 10:43 | 523721 Young
Young's picture

Damn it - I knew Krugman only drank knock off bubbly ;)

Mon, 08/16/2010 - 10:42 | 523723 Angry-Taxpayer
Angry-Taxpayer's picture

Dam,

Gloomy, gloomy Tyler...

I read this report as...

GOLD, Ammo, Farmland and provisions for the WIN...

 

Mon, 08/16/2010 - 10:57 | 523757 TrulyStupid
TrulyStupid's picture

Ammo? Who are you going to shoot? yourself?

Mon, 08/16/2010 - 11:02 | 523772 Internet Tough Guy
Internet Tough Guy's picture

Your name fits. I imagine if you tried to shoot yourself, you would miss.

Mon, 08/16/2010 - 11:06 | 523775 ColonelCooper
ColonelCooper's picture

That was pretty funny.

Mon, 08/16/2010 - 11:56 | 523884 SheepDog-One
SheepDog-One's picture

TrulyStupid, great name for yourself! Only better one I can think of is 'HumanCattle' perhaps?

Mon, 08/16/2010 - 12:37 | 523987 superman07
superman07's picture

Dont junk him, it should be left as an example post so everyone knows to discredit anything he posts.

 

I for one will shoot any TrulyStupid person that shows up at my house when SHTF.

Mon, 08/23/2010 - 15:47 | 538378 TrulyStupid
TrulyStupid's picture

Dear bozos in the hills with guns - you've lost everything and no one is coming to take what's left, certainly not those who robbed you. The only people left to shoot are yourselves and each other. Take good aim.

Mon, 08/16/2010 - 10:44 | 523727 daggerwolf22
daggerwolf22's picture

excellent article , congrats...

Mon, 08/16/2010 - 10:45 | 523733 augmister
augmister's picture

Looks to me like a big PUMP for the Gold before the D-E-F-L-A-T-I-O-N begins.  Gold will be cheaper once the markets take everything down with it.  Plenty of time to buy.  Now, back to our regularly scheduled programming, "Federal Fuck-ups and Government Grabs."

Mon, 08/16/2010 - 11:02 | 523769 Turd Ferguson
Turd Ferguson's picture

Look, no one here seems to understand the rationale for gold.

Its not a trade where you hope/plan to make money. It is a preservation of wealth trade only. Inflation. Deflation. Doesn't matter. The end of the current system is upon us. You purchase and hold gold to preserve your wealth. I couldn't care less if inflation precedes deflation or vice versa. The world is overwhelmed with debt. The dollar, the Euro, the Pound are all headed to worthlessness.

The next global financial system will, most likely, have a new global currency which will be at least partially asset-backed with gold and other PMs. So preservation goes like this:

1) Convert all or most of your wealth into gold now.

2) Hold physical gold through the coming financial tribulations.

3) Convert your gold back into the new global currency when issued.

4) Voila! Wealth preserved.

Its obviously not a perfect strategy but it clearly beats the shit out of idly sitting in dollars while they are devalued to zero. 

Mon, 08/16/2010 - 11:38 | 523838 Rogerwilco
Rogerwilco's picture

@Turd

About step #3 on your list. When you convert your stash and the taxman tells you to hand over 90% of your "windfall" gain, what then? The system will punish people who saved and stockpiled assets. They will be vilified as "hoarders" and fined or taxed. The only way you'll use gold is under the table in a black market, and the conversion rate there is not what they list at COMEX.

Mon, 08/16/2010 - 11:48 | 523863 downrodeo
downrodeo's picture

LONG LIVE THE INFORMAL ECONOMY, THE ONLY "FREE" WAY TO TRADE!

Mon, 08/16/2010 - 12:02 | 523893 carbonmutant
carbonmutant's picture

Of course counterfeiting of coins and ingots will be rampant.

Mon, 08/16/2010 - 12:04 | 523904 Turd Ferguson
Turd Ferguson's picture

"When you convert your stash and the taxman tells you to hand over 90% of your "windfall" gain, what then? The system will punish people who saved and stockpiled assets."

That's the chance you take, I guess. Maybe I'll just drop dead and I won't have to worry about it, too. Maybe an asteroid will hit my bunker and destroy it. At any rate, holding gold is your only opportunity to preserve wealth through the end of The Great Keynesian Experiment.

Mon, 08/16/2010 - 13:06 | 524079 Abigail Adams
Abigail Adams's picture

No taxes on those gold profits if they're in a Roth. If TPTB change it, only a 10% penalty applies to cash out. I can live with that.

Mon, 08/16/2010 - 14:19 | 524295 ColonelCooper
ColonelCooper's picture

How does one go about getting the eagles buried in my woods to qualify as a ROTH?

Mon, 08/16/2010 - 12:07 | 523909 aerojet
aerojet's picture

I just don't buy this argument.  My wealth comes from what I know and what I can do, not some paper or coins that I have. 

Mon, 08/16/2010 - 12:10 | 523920 Turd Ferguson
Turd Ferguson's picture

Fine but preservation was necessary, even in biblical times.

How about Joseph (of the many-colored coat)? He forecasted a seven-year drought for the Pharoah and advised him to store all his crops (wealth) for the hard times to come. When the drought came, Pharoah's Egypt survived.

Mon, 08/16/2010 - 12:40 | 523992 superman07
superman07's picture

I agree paper is worthless, but when the system stumbles this time gold is not going to be a store of wealth.

 

Stick to food, amunition, and friends / family. If Gold hits 5k there will be anarchy right behind it.

Mon, 08/16/2010 - 14:09 | 524262 Hunch Trader
Hunch Trader's picture

That is all speculative only, if gold drops back to $300 how well have you preserved your wealth?

-75% is pretty goddamnawful bad no matter which way you look at it.

The basic gold bug tenet seems to be that of course gold will go to the moon and beyond. But it is just a wishful claim, which may well turn out to be empty.

 

Mon, 08/16/2010 - 15:06 | 524441 akak
akak's picture

I am not necessarily expecting or even wishing that the price of gold will "go to the moon" as a result of economic and monetary collapse, but I find it improbable bordering on impossible that the market value of gold is going to drop to HALF of its average production cost at any time in the future.

Mon, 08/16/2010 - 15:32 | 524507 Hunch Trader
Hunch Trader's picture

That depends on the producer, I hear labor and machinery are both very cheap in China, which is the biggest gold producer today.

 

Mon, 08/16/2010 - 15:53 | 524551 akak
akak's picture

No, the average world production cost of gold does NOT depend on the producer!  Do you know what AVERAGE means?  And anyway, there are few if any mines in the world today, including in China, who would or could have a gold total production cost of $300/oz. or less.

 

Mon, 08/16/2010 - 11:10 | 523783 DarkMath
DarkMath's picture

Of course you know that deflation will cause the dollar to rise. You are saying you think the dollar will increase in value. Gas will be like $1/gallon . Food prices will drop, everything we buy will become less expensive.

Do you really think that's going to happen? I don't think we'll get off that easy.

Mon, 08/16/2010 - 11:28 | 523820 Turd Ferguson
Turd Ferguson's picture

DM: If you're replying to me, you clearly didn't read what I wrote above.

Mon, 08/16/2010 - 13:29 | 524149 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

DarkMath, yeah, we will see the $1.00/gallon gas. The problem is no one will have enough to cover the gallon. It might as well be priced at $100/gallon. Deflation is going to happen for a period of several years before the hyperinflation hits. Then will be the time to own gold!

Mon, 08/16/2010 - 18:15 | 524839 MachoMan
MachoMan's picture

Depends...  we've seen the dollar rising, but yet the price of consumer staples has increased... 

In the severe deleveraging that I think we're likely to see...  and in an environment where increases in costs can't be passed onto consumers...  you'll just see these guys pack up shop.  They aren't going to make it up on volume.

The other scenario is whether or not anyone has enough cash to pay for goods and services...  if wage decreases outpace the declines in the prices of consumer goods, then we got a problem.

But no, to answer the question, we don't get off that easy...  How long it lasts is anyone's guess...  but, in the end, we'll have to decide between default (can't make our payments to international creditors) and repudiation (can pay, but flip the bird)...  which will be the end of the dollar (market expectations/alternative reserve currency will probably have killed it before then though).

Mon, 08/16/2010 - 12:26 | 523958 Hal n back
Hal n back's picture

are you saying that gold will drop in value faster than the US Dollar?

Mon, 08/16/2010 - 13:54 | 524216 Things that go bump
Things that go bump's picture

What makes you think that once deflation hits you will have anything left with which to buy gold? 

Mon, 08/16/2010 - 10:48 | 523740 10044
10044's picture

In your fckin face Shalom

Mon, 08/16/2010 - 14:07 | 523746 Ripped Chunk
Ripped Chunk's picture

?

Mon, 08/16/2010 - 10:52 | 523751 Oh regional Indian
Oh regional Indian's picture

Brilliant analysis and I'm not saying that just because I happen to agree.

Mega-trends cannot be denied with something as flimsy as paper or even flimsier like an electronic entry.

I'm sending this to my sis in the US, whose head is firmly in the sand.

Blowing the horn on things that matter. Well done Matter-horn-blowers.

ORI

http://aadivaahan.wordpress.com

Mon, 08/16/2010 - 12:00 | 523889 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Blowing the horn on things that matter. Well done Matter-horn-blowers.

Good one!

Mon, 08/16/2010 - 10:53 | 523754 Bluntly Put
Bluntly Put's picture

I agreee with his assessment that the financial industry has become more parasitic than government itself, that is obvious. What I find difficult to understand is that when confronted with these facts of overwhelming debt obligations that mandate further debt expansion you still have yahoos like some of the posts above which think some kind of technical correction will occur and bring us back to the good old days where financial wizards once again rule the day with their majik wands. It's all over but the fat lady singing and she is soon to make her debut.

Mon, 08/16/2010 - 10:55 | 523755 TrulyStupid
TrulyStupid's picture

These conclusions are scary, but unfortunately based on fact...there is no way the situation can be turned around and solvency restored, all the inertia is stoking the downward spiral of malinvestment, debt creation, denial.

Mon, 08/16/2010 - 10:58 | 523759 Ivanovich
Ivanovich's picture

I think I saw this guy on the corner with the End is Near on a sign.

Mon, 08/16/2010 - 11:55 | 523881 Oh regional Indian
Oh regional Indian's picture

Hah! This time it IS different!

Mon, 08/16/2010 - 10:58 | 523762 Jason T
Jason T's picture

Debt Based money ... it's in the math that this would happen. Predictable as predicting some who is 20 years old today will be 40 years old in 20 years.

Mon, 08/16/2010 - 12:02 | 523895 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Not if he's flattened by a bus.

Mon, 08/16/2010 - 12:18 | 523938 flacon
flacon's picture

Black Swan!

Mon, 08/16/2010 - 12:09 | 523914 aerojet
aerojet's picture

What is not predictable is what comes of it.  The numbers do not lie, but do not make the mistake of applying numbers to social situations, you will fail.

 

A lot can happen to prevent a 20 year old from ever seeing 40.

Fri, 08/20/2010 - 00:20 | 532138 thermroc
thermroc's picture

Or maybe as predictable as predicting someone who is 40 years old today will shag a 20 year old, given the chance. 

Mon, 08/16/2010 - 11:03 | 523766 Thomas
Thomas's picture

You won't hear that on CNBC. And, BTW, if hyperinflation strikes, you won't be able to move gold equivalents (even something like CEF) from within the system to physical because the lag time--the time required to liquidate one, get the money out, and buy the other--will be long on the time scales of the hyperinflation. The banks in the 1970's used to put big lags in transactions to capture the interest on the money in transit.

Mon, 08/16/2010 - 12:51 | 524028 ATM
ATM's picture

Right on Thomas! If anyone here is planning on trying to time the hyperinflation even and buy gold then you will be sadly and rudely awakened. Who in their right mind is going to sell you gold for papermoney when inflation starts ramping overnight? When the shit hits the hyperinflationairy fan you won't have a chance to breath let alone get cash together to purchase a real asset. That time will have been long gone.

Trying to save a few dollars when gold will be trading for thousands or tens or hundereds of thousands an ounce or more is insanity. Get it now while you can because when the hyperinflationary trigger gets pulled the muzzle blasts in a milli-second.

Prices can double before you get to the bank and quadruple before you get to the store.

Mon, 08/16/2010 - 13:26 | 524141 romanko
romanko's picture

Exactly. Especially with the flow of information globally via the internet, HFT, electronic everything - hyperinflation isn't going to walze in over 2 or 3 years like it did in Weimar; it will be an instantaneous event - although today might be a few months or years too early to position oneself, it's worth foregoing some gain rather than being caught with your pants down holding on to your "dry powder."

Tue, 08/17/2010 - 17:45 | 527062 Geoff-UK
Geoff-UK's picture

Exactly.

In Weimar Germany you had about one year when the price of an ounce of gold went from 100 marks to a Trillion marks.  Who, in their right mind, who HAD an ounce of gold would let you pry it from their fingers for any amount of marks?

If someone right now offered to take one of your Krugerrands off your hands for a Trillion Zimbabwean dollars, would you jump on that? 

When most of America decides they want gold, it'll be too late to buy it at any price.

Mon, 08/16/2010 - 11:02 | 523767 Zero Debt
Zero Debt's picture

hindenburg airlines at your service

Mon, 08/16/2010 - 11:03 | 523770 Mercury
Mercury's picture

Soooo....I'm off to do some food shopping soon.  Are green bananas still a buy?

Mon, 08/16/2010 - 11:12 | 523789 Ripped Chunk
Ripped Chunk's picture

I would shop for banana clips instead.

Mon, 08/16/2010 - 12:01 | 523894 SheepDog-One
SheepDog-One's picture

Banana clips INDEED! Even on Zerohedge, the herd is disturbingly moron-orc'ish lately. Better have plenty of food and ammo, all you desk jockeys, oh yea and stop by 'Eddie Bauer' there in Lower Manhattan for something other than wingtip foot gear, you apparently have no idea the pain thats coming to you soon.

Mon, 08/16/2010 - 12:48 | 523998 Ripped Chunk
Ripped Chunk's picture

So I am a moron? But you recommend stocking up on ammo.

Little pussies that run all over this site junking people they they don't agree with really need to get a life and grow up.

Increase your dosage Sheepdogglerone.

Mon, 08/16/2010 - 14:02 | 524238 Yardfarmer
Yardfarmer's picture

I believe he was agreeing with you. take a deep breath and count to 10.

Mon, 08/16/2010 - 14:11 | 524257 Ripped Chunk
Ripped Chunk's picture

See its other posts. Everyone is a moron or an idiot except for Sheepdogger.  Lonely at the top I guess.

Mon, 08/16/2010 - 11:30 | 523826 MachoMan
MachoMan's picture

All of these authors seem to think they're the only ones who know how perilous our situation is...  I contend that the FED as well as the administration are keenly aware of all the facts and figures in this article.  In short, the author has to suspect that they will continue to print with reckless abandon despite knowing full well it is a fruitless endeavor.

The author may be correct about our certain death and inability to pay for all obligations.  However, what no one wants to try and tackle is the process whereby we attempt austerity in a bid to stave off the inevitable.  My guess is that through this process, we teeter on the brink of destruction far longer than most anticipate.  I'm not saying we'll be successful, but I'm confident that you'll be able to watch those bananas ripen into the scrumptious morsels they should be. 

Mon, 08/16/2010 - 11:41 | 523847 Internet Tough Guy
Internet Tough Guy's picture

We continue to do the opposite of austerity. I don't think the Feds will let the states go bust, stop SS payments, eliminate medicade, defense, or any other unpopular thing; these programs are expanding. We don't even have a budget any more. Their actions are simply print, print, print.

Mon, 08/16/2010 - 11:55 | 523876 Max Hunter
Max Hunter's picture

Agreed.. But if the Fed does end up saving the states by printing money, this will be the shot heard round the world as the treasury bonds begin hitting the market and being dumped.

That would be the most blatant example of throwing good money (well.. you know what I mean) after bad.

I can't imagine anyone holding treasuries would feel good about the Fed bailing out states..

They have just kicked down enough to the states to get them through elections, we'll see what happens after that.

Mon, 08/16/2010 - 12:55 | 524040 Zero Debt
Zero Debt's picture

Good morning, but you are describing the future which has already arrived.

Check the total amount of outstanding loans from the federal unemployment account, balance as of August 12, 2010 is $38,658,783,359.52 USD.

This was not money paid in by taxpayers, it was federal money. That is as close to printing as practically possible.

http://ows.doleta.gov/unemploy/budget.asp#tfloans

 

Mon, 08/16/2010 - 13:47 | 524201 Max Hunter
Max Hunter's picture

That 38B is what I was talking about when I said kicked a little down.

That is a fraction of what they need. Just bought a few months.

When you think about the debt that needs to be bought in the near future from Fed and State it's pretty apparent that the life support machine will be working over-time.

Mon, 08/16/2010 - 15:03 | 524435 MachoMan
MachoMan's picture

These programs are a drop in the bucket to QE 1.0.  As crazy as this may sound, decreasing the size of successive QEs is actually...  gulp...  austerity.  Basically everything that HAS to get paid (whatever the plebs need to keep breaking shit) will be paid...  except, it will be slowly decreased over time.  Eventually most all of the domestic programs we know will be defaulted upon...  in an effort to appease our international creditors.  And then, eventually, we can't pay them either...  (maybe).

But, I think this is the route we take to stave off the inevitable the longest.  Who the fuck knows what would happen to the power structure with a hyperinflationary collapse (ok, fine, robber barons would rule the country)...  better to buddy up with the cell guards than the executioner.

Mon, 08/16/2010 - 12:23 | 523948 WaterWings
WaterWings's picture

You are correct as long as the serfs don't realize what they are in real terms and allow themselves to get raped in so many ways year after year. Once baby formula and diapers run low the barbed-wire and machine gun checkpoints will be the next phase.

Mon, 08/16/2010 - 13:11 | 524098 Votewithabullet
Votewithabullet's picture

Bravo macho. Nov. 2010, Nov. 2012 will usher in sanity. People on death row should not be offered a choice of last meal it should be peanut butter shoved down their throat. People who have sex with little children should  be killed quick.  The conservatives will cancel kill , Depts. Education(snicker), Interior, etc. We can fix this. Negative nattering Turd. 

Mon, 08/16/2010 - 11:03 | 523771 RSDallas
RSDallas's picture

Damn.  Have a great day as well!

Mon, 08/16/2010 - 11:03 | 523773 Rich_Lather
Rich_Lather's picture

Asset price collapse and hyperinflation at the same time? How's that going to happen?

Mon, 08/16/2010 - 11:06 | 523776 Bluntly Put
Bluntly Put's picture

Easy hyperinflation in food, energy various types of durable goods (think hardware) with simultaneous hyperdeflation in equities - things with counterparty risk.

Mon, 08/16/2010 - 12:09 | 523916 Hdawg
Hdawg's picture

Perfectly put.  A hyper-turnaround from of the trends that governed the last 20 years where we had lower and lower Petro-agflation versus higher and higher asset bubbles...allowing many middle class Westerners the illusion of wealth.

1+ Counterparty risk is the key and it will break the system overnight.

Mon, 08/16/2010 - 11:09 | 523782 Leo Kolivakis
Leo Kolivakis's picture

Geez, is this just Monday morning blues? Looking outside my window, the rain has stopped, the clouds are parting, and the sun is shining! :)

Mon, 08/16/2010 - 12:02 | 523896 SheepDog-One
SheepDog-One's picture

WOW Leo! And also youre STILL a FUKTARD!

Mon, 08/16/2010 - 12:23 | 523951 WaterWings
WaterWings's picture

How do you like the taste of the GoM fish tacos? For shame they are still charging full price!

Mon, 08/16/2010 - 12:45 | 524010 hack3434
hack3434's picture

Hope is a fools weapon...

Mon, 08/16/2010 - 13:09 | 524086 RichardP
RichardP's picture

And what, pray tell, is despair?

Mon, 08/16/2010 - 13:36 | 524178 Ms. Erable
Ms. Erable's picture

Recognition of reality.

Mon, 08/16/2010 - 11:11 | 523787 reardonmetal
reardonmetal's picture

Japan has been suffering from this phenomenon for over 20 years.  Tokyo and Osaka are the two most expensive cities in the world to live in, while their housing and stock prices have collapsed during that time.  We call it deflation, because its the only word we have for it.  But asset deflation coupled with a rising overall level of prices is not unheard of. 

Mon, 08/16/2010 - 11:12 | 523792 Internet Tough Guy
Internet Tough Guy's picture

Well stated.

Mon, 08/16/2010 - 11:25 | 523817 John McCloy
John McCloy's picture

  You can see price reflation here in Manhattan as well and it was rapid. The rents in prime Manhattan are only 10% off the previous bubble heights which were the summer of 2008. The reason for this is pretty evident as the high paying jobs that are remaining are in Manhattan and the most desired areas of residence are Below 30th and above canal. This was expected since Wall Street was protected from a depression at the expense of the rest of the nation.

    People should begin to expect inflation in cities and regions near the last remaining high paying jobs such as Washington D.C., Manhattan, Boston, San Francisco and Los Angeles. Many more Americans from other parts of the nation will also begin to gravitate towards these cities as a refuge in search of the Banking Cabal & Lobbyists trickle down table scraps further driving up prices. It will only be temporary however.

Mon, 08/16/2010 - 11:53 | 523875 Burnbright
Burnbright's picture

You don't need to live in a big city to see the relation that happened fairly rapidly. I live in a small town and my apartment went from 950 a month to 800 in 6 months and then back to 950 again in three months. They will raise the rents again soon I am sure. 

Mon, 08/16/2010 - 12:04 | 523906 Captain Archer
Captain Archer's picture

What do you think will happen with real estate?

Mon, 08/16/2010 - 11:11 | 523788 Internet Tough Guy
Internet Tough Guy's picture

All the money needed for hyperinflation is already created. Dollars denominate 'assets'  all over the world, held by distressed governments. All that 'wealth' has to squeeze through the dollar exit before it can be denominated in something else. Every single dollar has to come back to the US.

It can't be done. We are just waiting for the spark now. 

Mon, 08/16/2010 - 11:12 | 523791 reardonmetal
reardonmetal's picture

what about owning miners/gold stocks?  Everyone always wants to buy physical gold (which I get), but gold stocks should go ballistic in this sort of environment.  Or are we so far beyond that we're worried that the equities markets will be unavailable, and that we need to get gold under the bed and a gun in the closet?

Mon, 08/16/2010 - 11:36 | 523835 What_Me_Worry
What_Me_Worry's picture

They will be great for awhile, I am sure.  I highly expect all PM mines to be nationalized for "national security" purposes or some other reason they make up.  I expect this to happen in each and every country with a PM mine.

I consider it a late-stage event, though.

Tue, 08/17/2010 - 17:55 | 527077 Geoff-UK
Geoff-UK's picture

Anything not hidden in a floor safe that you installed yourself is at risk of Uncle Sam prying it from your hands.

Nationalization of mining is guaranteed.

Mon, 08/16/2010 - 12:21 | 523946 spinone
spinone's picture

A mine is a hole in the ground with a liar at the top

Mon, 08/16/2010 - 11:13 | 523795 Chemba
Chemba's picture

Well, if what Herr von Greyerz is saying is even remotely correct, then you want to own cash dollars first, followed by gold later.  The process of unwinding the stock of dollar based assets and debt would cause a massive call on cash dollars in the interim.

Mon, 08/16/2010 - 12:38 | 523990 blunderdog
blunderdog's picture

I think this is right in principle, but it might be tough to time it properly, though.  Buying gold today at a slightly high price *may* be a better option than trying to get it at $900 and finding it unavailable at any price.

Considering how little money I have, I'm hoping for a brief dip during options expiry near the end of the month for a (very) modest physical grab. 

Mon, 08/16/2010 - 11:15 | 523797 redpill
redpill's picture

Well then, might as well hit the sports bar early today.

Mon, 08/16/2010 - 11:21 | 523801 Voodoo-economist
Voodoo-economist's picture

umm, not sure if id trust people that were invested in madoff...Matterhorn was

Mon, 08/16/2010 - 11:20 | 523808 doomandbloom
doomandbloom's picture

hindenberg, bitchez

Mon, 08/16/2010 - 17:20 | 524729 Fox Moulder
Fox Moulder's picture

deflation, bitcheZ

Mon, 08/16/2010 - 11:23 | 523814 Psquared
Psquared's picture

Deflation + hyperinflation = ?

1) the stuff you have to have to live (food, fuel, etc) = inflation

2) the stuff you have that is worth something (assets) = deflation

But there is a another solution. A World War. Before the west crumbles through a 100 year correction we will go to war - maybe even a limited nuclear exchange. Kill a billion people worldwide and the economic problems will be solved.

Mon, 08/16/2010 - 11:41 | 523840 MachoMan
MachoMan's picture

But there is a another alternative. A World War. Before the west crumbles through a 100 year correction we will go to war - maybe even a limited nuclear exchange. Kill a billion people worldwide and the economic problems might be delayed.

Fixed it for you.

Mon, 08/16/2010 - 12:19 | 523941 aerojet
aerojet's picture

It is my fervent belief that all of humanity's problems arise from "too much humanity" in various parts of the world.  I'm looking at you Chindia. 

Mon, 08/16/2010 - 13:24 | 524137 redarrow
redarrow's picture

Not really, they have been living with those numbers for thousands of years. The problem is the model of wealth distribution and the blind materialism here. For instance, 80% of the wealth in this country is held by a small % of the population. Here society is built on a ponzi scheme where relatively few persons makes all the widgets society needs. This is the problem with Europe and America. If the society here has to thrive then there must be buyers who will buy while accepting a pittance in exchange. So even if you somehow closed all borders and traded within the US there will be the same relative wealth distribution among the populace. (Also...I think some people here need to lay off the crack pipe, they spout some heartless shit, it really is scary).

Mon, 08/16/2010 - 13:35 | 524171 Rusty Shorts
Rusty Shorts's picture

"Not really, they have been living with those numbers for thousands of years."

 

Really? - you need to lay down your crack pipe dewd.

http://ldolphin.org/popul.html

Mon, 08/16/2010 - 13:54 | 524215 redarrow
redarrow's picture

Come on. I think you are missing the point here. 

What I meant is that they have always had a large population but they are sustained on agrarian economies. Unlike here where wealth is measured / invested more in industries that export things to the third world. 

\As far as I am aware those countries are not expanding at the same rate as the population here. Chindia have one child policies, but here you go to the mall and I see so many with 4 kids, climbing out of a suburban, and a 6000 sq ft home with 10 bathrooms.... so we are not being exactly minimal on the worlds resources either.

Tue, 08/17/2010 - 17:56 | 527082 Geoff-UK
Geoff-UK's picture

U.S. birthrate is below replacement rate--unless you count illegals.  What you see at your local mall notwithstanding.

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