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Mike Krieger Deconstructs Commodity Inflation: "You Ain't Seen Nothing Yet"

Tyler Durden's picture





 

Submitted by Mike Krieger of KAM LP

Commodity Inflation: You Ain't Seen Nothing Yet

Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.

- Norm Franz, Money and Wealth in the New Millennium

As soon as your born they make you feel small,
By giving you no time instead of it all,
Till the pain is so big you feel nothing at all,
A working class hero is something to be,
A working class hero is something to be...
When they've tortured and scared you for twenty odd years,
Then they expect you to pick a career,
When you can't really function you're so full of fear,
Keep you doped with religion and sex and TV,
And you think you're so clever and classless and free,
But you're still fucking peasants as far as I can see,
There's room at the top they are telling you still,
But first you must learn how to smile as you kill,
If you want to be like the folks on the hill,

- John Lennon, Working Class Hero

Thanks Ben…You Have Destroyed the Social Fabric of the World

History is littered with the carcasses of men that in their exaggerated hubris attempted to stop the forces of nature and the markets only to fall flat on their faces.  We tell the stories of these men in history books and myths from prehistory, but it never stops men of successive generations from trying it all over again.  What the current political class the world over (at the behest of Wall Street financial terrorists and other big corporate interests) are doing falls into the same exact formula of prior historical failures.   Some of the historical figures that attempted to beat back nature were great warriors or kings that just reached too far.  Some of them were evil megalomaniacs whose desire was nothing short of absolute power in their hands over any of the unfortunate human beings that happened to be in the way.  Ben Bernanke is neither of these.  He is a just a little dweeb with an electronic printing press.  Tragically, because of modern technology and the way the monetary system works today he has the ability to cause more damage than any other one person in the history of mankind and he is doing it.  I shudder to contemplate the ultimate effects of the inflationary holocaust he has unleashed on the six billion mesmerized and helpless souls present on earth at this time.  The signs are starting to show up again just like in early 2008.  Food is becoming scare at a “reasonable” price in many parts of the globe and the symptoms of this are starting to bubble up to the surface.  For example in recent days we have witnessed food riots in Algeria and Tunisia where at least 14 people are reported to have died in each country.         

These types of events were easily predictable and have been predicted by people like me and many other whose views will never be seen in the mainstream media.  Fortunately, the alternative media is taking over (which is why the Obama administration is certain to increase its crackdown on the internet) and people are becoming very informed and linked all over the world.  The divide and conquer strategy that has worked so well for millennia will be much harder to pull off this time around.

Inflation:  There is No Putting this Cat Back in the Bag

Probably the most misleading thing Bernanke said in his sixty minutes interview was that he could snuff out inflation in 15 seconds (this was the most misleading thing not the biggest lie, which goes to his “I’m not printing money” statement).  This statement is so misleading because it is true he can do what he says but he never will because at this point the effect of raising rates or tightening credit would immediately bankrupt every single part of the gigantic TBTF banker run ponzi scheme also known as the global economy.  The world’s Western governments are loaded with more debt that before the crisis and many of these including the U.S. and Japan could not handle even a moderate increase in interest rates let alone what Volcker had to do in order to end the inflation of the 1970’s.  Think about it.  Other nations own our debt and currency in the form of their FX reserves.  China just came out with its latest FX figures and guess what?  You go it, a new record!  $2.85 trillion to be exact, which is up 19% year-over-year.  I want to reiterate a point I made earlier in the year on this.  With their FX reserves up 19% year-over-year they needed to boost gold reserves 19% just to keep their puny 1.6% of gold at a steady percentage.  If they actually want to increase the share, which they do, they need to buy far more.  This goes for every other nation as well since FX reserves have been exploding across the emerging world. 

You see this is the great game.  The West and Japan and major debtors that know they can never pay it off and have no intentions of trying.  The West keeps stuffing the emerging economies with their toilet paper currencies in exchange for real goods, which then fuels massive inflation and makes it virtually impossible for them to ever get their gold reserves up as a percentage of FX reserves.  We just keep diluting the hell out of them!  The Asians-ex Japan (they are a U.S. colony) and the BRICs certainly know this which is why they are buying resources around the world, strengthening their military and forming economic alliances with each other.  A great example of this is when the Chinese and Russians decided to transact in their own currencies rather than the dollar http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm. Also, there was this story about how India may pay for the oil it gets from Iran with gold as they try to hammer out another currency system http://economictimes.indiatimes.com/news/news-by-industry/energy/oil--gas/india-iran-mull-over-gold-for-oil-for-now/articleshow/7238760.cms.     

So far, the official policy out of China has been to raise bank reserve requirements as well as interest rates in an attempt to cool things down slightly and instigate a soft landing where inflation cools but economic growth stays robust.  NOT GONNA HAPPEN.  While the initial reaction by a lot of talking heads has been to sell commodities and buy U.S. equities, the Chinese have already failed in their attempt.  Asia Tapis crude oil (the WTI equivalent in Asia) just hit a new high last night at $104.78 per barrel, corn and soybeans are at new highs, as are cattle and hog futures.  Coal prices have been going parabolic as a result of the flooding in Australia.  If you think inflation is bad now you haven’t seen anything yet.  As much as they do not want to use currency strengthening in a more aggressive way they will be forced to, which will mean huge increases in commodity prices in dollars.  There have been reports that China has been releasing commodity stockpiles to keep things under control.  This begs the question.  How much have they released?  How much is left This is about to get crazy and not in a good way.   

Asia Tapis Oil Chart

Corn Chart

Soybeans Chart

Lean Hogs Chart

Live Cattle Chart

 

Banana Ben Will “Fight” Inflation by Printing MORE Money

As I have said since the Fed started its QE policy the global monetary and financial system will end in a holocaust of commodity price inflation.  The mainstream media has only started to notice (I guess when people starting dying in food riots they can’t just totally ignore it anymore).  That said, as I mentioned in last week’s piece I do not think we are anywhere near the end of this.  While in 1H08 there was the commodity surge and banking system collapse that was then followed by a soaring dollar and deflation, this time when the collapse comes it will be seen in the destruction of purchasing power of Western fiat currencies.  So rather than seeing the U.S. dollar limit up and commodities plunging, this crisis when it really starts kicking in will be characterized by commodity prices limit up and ultimately a crash in treasuries.  We are starting to see the commodity moves in earnest, but the treasury collapse may take some time and here is why.

The consensus view of the market remains that if inflation gets truly out of control, the Fed will raise rates and then treasuries will get bid as everything else craters.  I completely disagree.  Ben Bernanke is no Paul Volcker, and I doubt even Paul Volcker would have the nerve to raise rates like he did with the U.S. government just having levered its balance sheet so extraordinarily.  Thus, counter intuitively what do I think Banana Ben will do when prices start soaring?  He will print more money.  He will justify this by saying we need to get more “money in the hands of the people” so they can buy food and energy.  Barrack "I am incapable of telling the truth about anything” Obama will also lead the propaganda charge on this front.  They will demonize speculators.  They will take no blame.  They will be in a corner.  They just saved the richest 0.1% of America from taking any losses on their investments and ensuring that Wall Street firms that are nothing but wards of the fascist state can make record payouts.  They will have to print to “help the people” who’s future they just completely decimated.  Let’s never forget who did this…

You will know the episode is over when there is a “new (or devalued) dollar” and indeed possible new currencies across the Western world.  Not before this happens will it end.  I still sometimes hear this argument that the U.S. dollar is a claim on the assets of the United States of America.  Really?  Last I checked it says “Federal Reserve Note,” which to me sounds like a liability of the Federal Reserve, which itself is a private banking cartel.  Hmmm…dollar holders as far as I can tell have no claim on U.S. assets but rather claims on the assets of the Fed.  Have you looked at the junk they own recently?  

Conclusion

I could write for hours and hours on this topic but at some point I need to just say enough.  That time has come.  I just want to make a few final thoughts on two areas of the markets.  First, copper.  While I am not necessarily advocating people short it given my view on Western fiat money, to me this is the most overhyped elevated commodity out there right now.  It is not strategic like oil, precious metals or agriculture are and it is really at the very bottom of any list of commodities I would buy.  The other one I want to mention is the long GDX/short SPX trade.  As many of my long-time readers know, I think this is THE macro trade.  From time to time this spread goes the other way and macro investors are presented with a rare opportunity to put it on more aggressively.  I think that time is now with this thing going the other way by 14% since the gold stocks peaked on December 6th.  Be aware that like anything this can continue to go the wrong way just as it did for two months from December 2009-early February 2010 but if you start putting this on now I think you will be greatly pleased a few months from now.

Best of luck in the Fourth Turning!
Mike

 


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Thu, 01/13/2011 - 14:04 | Link to Comment medicalstudent
medicalstudent's picture

Time traded for worthless paper.

 

truly shameful

Thu, 01/13/2011 - 17:11 | Link to Comment malusDiaz
malusDiaz's picture

You know whats worth more then paper?

 

Copper.

 

It *USED* to be worth 1c... and 25c (silver quarter used to buy a gallon of gas) ~= 62.5 grams of copper, or 2.25 oz of copper.

3.50$ per gal on gas 

2.25 oz of copper ~= 3.50$.

16 oz per pound

24$ a pound... to keep up with gas inflation.

Fri, 01/14/2011 - 00:36 | Link to Comment AbbeBrel
AbbeBrel's picture

Humm what is this?  Doctor Copper has taken ill - down 3% today in FCX - what is the Rx?

Thu, 01/13/2011 - 14:05 | Link to Comment Bearster
Bearster's picture

If you want to see signs of inflation, look at the English language!

Krieger uses the same word for bankers as is used for people who deliberately plant shrapnel bombs on school buses to cause the maximum number of maimed and disfigured children.

Our financial system is a type of fascism, whereby profits are privatized by extracted from the population by force and fraud made possible only by government.  It is also a ponzi scheme as the tower of debt cannot expand forever.  And there are many cases of egregious fraud (like Abacus) and egregious hubris (like Blankfein).

But repeat after me this is *not* "terrorism".  It is a different kind of evil.

Thu, 01/13/2011 - 14:24 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

I agree. I said it in another thread: calling them Financial Terrorists would give them too much prestige, I prefer the term 'Worthless Cocksuckers'.

Thu, 01/13/2011 - 14:41 | Link to Comment 1100-TACTICAL-12
1100-TACTICAL-12's picture

People are dying in food riots "nuff said"..

Thu, 01/13/2011 - 15:21 | Link to Comment RafterManFMJ
RafterManFMJ's picture

More food for the survivors, on a per capita basis. See how neatly these things work out?

Thu, 01/13/2011 - 15:14 | Link to Comment hbjork1
hbjork1's picture

+10

Exaggurating to be heard has gotten to be cronic within our societal blogging discourse.  IMO, some of this comes from diliberate misreprentations by political players, in some cases, trying to represent that they know when they do not know.  If all fails, "fake your way through it."

IMO, TV has totally modified our society, democratizing but reducing ambition for intellectual rigor of the middle class.  We now know a lillle about a lot to things but with less rigor in specifics.  I have examples but it will make the note too long.

Thu, 01/13/2011 - 15:17 | Link to Comment AnAnonymous
AnAnonymous's picture

That is pretty weak. Terrorists enforce their views using terror.

It seems that several guys use multiple times the terror of the potentially collapsing Ponzi to enforce their views.

Not really an inflation of language.  More that terrorism is a shallow word, which too selective applications to be useful in any attempt to depict reality.

Thu, 01/13/2011 - 20:25 | Link to Comment Logans_Run
Logans_Run's picture

The "tanks in the streets" comment of Paulson? Fraud or an attempt at terrorism? Just asking.

Thu, 01/13/2011 - 15:25 | Link to Comment Misean
Misean's picture

Horseshit!

Thu, 01/13/2011 - 19:18 | Link to Comment Rainman
Rainman's picture

...or in more detail, the GDX/ short SPX is a coin flip. Gotcha'.

Thu, 01/13/2011 - 15:44 | Link to Comment MrBoompi
MrBoompi's picture

But repeat after me this is *not* "terrorism".  It is a different kind of evil.

 

Pardon me if I believe Hank Paulson, Chris Dodd, etc. threatening martial law and financial armageddon, if we didn't pass TARP, is terrorism.

 

And I also believe the flash crash, which just happen to occur while Congress was debating financial regulations, was terrorism as well.

 

However, I do believe financial terrorism is a different kind of evil.

 

 

Thu, 01/13/2011 - 15:48 | Link to Comment imapopulistnow
imapopulistnow's picture

How can there be financial terrorism if words have no meaning?

Thu, 01/13/2011 - 18:46 | Link to Comment Stuck on Zero
Stuck on Zero's picture

To quote Bob Chapman: "The terrorists are in the banks, on Wall Street, in the City of London and running transnational conglomerates that are destroying our society and that of Europe"

http://www.theinternationalforecaster.com/International_Forecaster_Weekl...

 

Thu, 01/13/2011 - 14:06 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Definitely a perfect storm scenario for commodities.

If you go on the need scale, food is going to skyrocket, steel is going to skyrocket (all those Indian's buying up Global steel with PE money are going to look really smart now), Oil will rocket...

Scene on the ground in India does not look good.

ORI

http://aadivaahan.wordpress.com/2010/06/30/snake-eyes/

Thu, 01/13/2011 - 14:08 | Link to Comment Bearster
Bearster's picture

Demand for food is less elastic than anything else.  Second least elastic is energy.

Buy base metals at your own risk, boyz!

Thu, 01/13/2011 - 15:58 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Paper food ETFs doing real good now:

DBA

CORN

Thu, 01/13/2011 - 14:30 | Link to Comment duo
duo's picture

I went down to the deli in the lobby of my office building.  Hadn't been there in 2 weeks.  All the prices were up 10-20%.  The $6 lunch I usually get is now $7 and change.

Thu, 01/13/2011 - 14:41 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Duo,

Scary if that is the trendline for the foreseeable future, eh?

ORI

Thu, 01/13/2011 - 14:56 | Link to Comment duo
duo's picture

When "value menu" items like $1 cheeseburgers and $79 cent tacos go away, that's when the riots begin.

Thu, 01/13/2011 - 15:20 | Link to Comment sawyer
sawyer's picture

$5 foot long at Subway...

Thu, 01/13/2011 - 17:48 | Link to Comment The Disappointed
The Disappointed's picture

... or the $2.00 lunch menu @ KFC.

mmm KFC

Thu, 01/13/2011 - 20:05 | Link to Comment DosZap
DosZap's picture

mmm KFC

 

$2.00 of Chicken skin, (no meat)DEEEEP Fried.

Thu, 01/13/2011 - 17:50 | Link to Comment ToddGak
ToddGak's picture

They can just keep shrinking the food sizes and keep the prices the same.  They've been doing that for a while but it's accelerating now.  Check the size of a jar of spaghetti sauce, they've gone from 32 oz to 28 to 26 to 24 or less now.

Thu, 01/13/2011 - 19:27 | Link to Comment UncleFester
UncleFester's picture

Not to mention you can 6sigma that 24oz down to 23.3oz without anyone looking.

UF

Thu, 01/13/2011 - 20:18 | Link to Comment ColonelCooper
ColonelCooper's picture

Not trying to beat a dead horse on this thread, but if you make your own they never get smaller than 32 oz. 

-450 brand new Mason Jars w/lids - $300

- 1 Presto 20 pint pressure canner - $89

- 1 Presto Steam Bath water canner - $35

- 1 years worth of enough heirloom seeds to plant 1/2 acre of garden space - < $100

- Eating healthy ass shit and having enough put away to last a whole year - Priceless

Thu, 01/13/2011 - 14:11 | Link to Comment Racer
Racer's picture

Hunger is a very powerful enabler of mass action.

ZimBen and the Genocidal Inkjets are blind to that consequence of 'their' action

Thu, 01/13/2011 - 14:14 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

There is an old saying that I can't remember the source of but I heard often during the inflationary late 70's and early 80's.

America and the world is always just 3 square meals away from chaos.

Thu, 01/13/2011 - 14:30 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

The grocery store has a few days worth of food, and in a panic, that would get cleared out in the blink of an eye. It's a good time to stock up on things, before any major price shocks come. If they don't come, then you're just well stocked. If you buy long lasting food, you can just draw down on your supply.

I just wish I were in a position to have a vegetable garden right now. Unfortunately I'm renting and can't do it.

Thu, 01/13/2011 - 15:04 | Link to Comment duo
duo's picture

Bread and potatoes don't store very well. .

Thu, 01/13/2011 - 15:19 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

Rice and Chick peas as a basis. They form a very nutritious emergency diet and store very well.

Thu, 01/13/2011 - 16:06 | Link to Comment ColonelCooper
ColonelCooper's picture

http://sproutpeople.org/

There are cheaper places to get seeds and supplies, but this site has a lot of examples, and how to etc..

Excellent way to get fresh nutrition year round, and requires next to no space. 

Thu, 01/13/2011 - 19:18 | Link to Comment Escapeclaws
Escapeclaws's picture

Thanx for that, CC, and a tip of the Hatlo hat.

Thu, 01/13/2011 - 15:33 | Link to Comment velobabe
velobabe's picture

duo

the word of the day, freezer. well as long as we have electricity, i guess. i make a bunch of twice baked potatoes and freeze them. almost everything freezes well.

freeze, bitch†

Thu, 01/13/2011 - 16:22 | Link to Comment ColonelCooper
ColonelCooper's picture

We had all better take a lesson from our Grandparents and learn to stretch our food.  We eat too much and we waste even more.   

Frugality Bitchez.  You'd better learn it.

Thu, 01/13/2011 - 16:02 | Link to Comment hbjork1
hbjork1's picture

For bread, seal the loaf with Al foil and freeze.

For Potato I would try the same thing because the only problem should be loss of moisture. 

Loss of moisture is the big problem.

 

 

Thu, 01/13/2011 - 16:08 | Link to Comment duo
duo's picture

I've frozen bread in the past.  It dried out but was still edible.  I guess dried out potatoes would cook faster.

Thu, 01/13/2011 - 19:30 | Link to Comment UncleFester
UncleFester's picture

Dried bread = french toast.  Chickens bitches!

UF

 

Thu, 01/13/2011 - 16:27 | Link to Comment ColonelCooper
ColonelCooper's picture

If you have room for a large garbage can, and a semi-cool place to put it, fill it with sand to store spuds, carrots, and onions.  If you live in the city, I would think you could buy sandbox sand at a Menards/Lowes/etc..

Also, consider doing your own canning.  Jars stack well, don't require fridgeration, and you tend to actually eat your leftovers rather than toss them.

Thu, 01/13/2011 - 17:10 | Link to Comment Things that go bump
Things that go bump's picture

Canning most things beyond pickles and jam requires a pressure canner.  This would be a good investment.  I got mine at Fleet Farm, where you can also acquire things like hand grain grinders and meat grinders, dehydrators, and good American-made cast iron cookware.  Get a good book on canning while you are at it, because pressure canning can be a dangerous undertaking if you don't know what you are doing.  With good technique and the right equipment, even meat can be canned at home.  I've actually canned butter, which doesn't require a pressure canner, and its not bad.  Lay in some jars and new lids.

Thu, 01/13/2011 - 17:52 | Link to Comment ColonelCooper
ColonelCooper's picture

I'm thinking about trying some of these this year.  Anybody have any experience with them?  I want to try them before I go all out, last year I put up a little over 400 jars; at about 4 times the cost they had better work.

http://reusablecanninglids.com/

As far as reference books, I highly recommend "The Joy of Pickling", and "Balls Complete Book of Home Preserving".  If you are going to buy a pressure canner, I would recommend buying a weighted one, rather than one with a gauge.  The weights never need to be calibrated and reduce the odds of canning at too low a pressure and shitting your pants for a month.

Canned venison on Ritz crackers is an outright delicacy where I come from.  Any time I have the pressure canner out, I brown up 5 pounds or so of ground beef.  It's the handiest shit ever when you need to make an instant supper.  Whenever I make soup I make a shitload, and start canning it right after supper.  On the nights I don't feel like cooking, I just tell the kids to have soup.  Right now, I have five or six different kinds on the shelf.  I don't even have to feel like shit for sitting around drinking bourbon while I make the kids feed themselves. ;)

 

 

Thu, 01/13/2011 - 18:28 | Link to Comment velobabe
velobabe's picture

just pickle your balls, colon. put them in a plastic freezer bag. use a straw and suck out all the air, really a B I G  o l d SUCK, boom, tight sealed pickle balls, freeze and enjoy at a later time†

Thu, 01/13/2011 - 18:59 | Link to Comment Things that go bump
Things that go bump's picture

I've never heard of those.  Thanks for the link.  If they really are reusable they would be well worth the investment.

Thu, 01/13/2011 - 19:27 | Link to Comment irishgurl4
irishgurl4's picture

I have a dehydrator that I've been running non-stop lately.  Best way to preserve fruits, veggies, and make some tasty jerky.  I've also got a bunch of mason jars and a vacuum sealer with the lid attachment that I use to keep things fresh.  I only have so much freezer space and if the electricity goes ...

Thu, 01/13/2011 - 16:39 | Link to Comment The_Euro_Sucks
The_Euro_Sucks's picture

Buy a bread baking machine and kilo's of flour. Can store that for around a year. Get creative or face a hard time

Thu, 01/13/2011 - 15:20 | Link to Comment AnAnonymous
AnAnonymous's picture

Dont worry, nobody will starve in the US (save the usual suspects)

The US is at starving the world to sweeten  trade negociations. As such, the US needs an army of gluttons to put pressure.

US citizens will be fed by their government. It would be counterproductive to act otherwise.

Thu, 01/13/2011 - 18:04 | Link to Comment johnnynaps
johnnynaps's picture

High Pressure Sodium or Metal Halide lights......look into them. I would recommend growing something that barters well as opposed to veggies though!

Thu, 01/13/2011 - 15:43 | Link to Comment RobD
RobD's picture

I've tested this, I get real cranky if I go more the 16 hours without eating. It won't hurt you to do it and some believe fasting is good for you as it simulates what our hunter gatherer ancestors experienced as we evolved. Give it a try sometime.

Thu, 01/13/2011 - 16:17 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

http://www.quickfasting.com/table_of_contents.html

It is a good thing in moderation.  One of the most memorable things I have done is fast for a week.  It is interesting to have have the devil on your ass, and I mean on your ass. 

Utterly amazing to discover how much power over your mind food has.

Thu, 01/13/2011 - 15:59 | Link to Comment Maos Dog
Maos Dog's picture

Terrible, terrible idea. Fasting drops your metabolic rate, and eats the muscle tissue first, leaving you fatter and weaker. Stock up on long-lasting cheap protein, like isopure, muscle milk powder, etc.

Thu, 01/13/2011 - 16:41 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Cheetos, Chips and Candy.

The three C's of daily nutrition.

/sarcasm

Fri, 01/14/2011 - 23:04 | Link to Comment h3m1ngw4y
h3m1ngw4y's picture

maos dog just doesnt get it i suppose just like maos dog if he has one

Thu, 01/13/2011 - 19:41 | Link to Comment Rainman
Rainman's picture

Juicing is the bomb....I've done it 19 years since the Juiceman came around. Now have a much more powerful one. Every morning I grind up a couple carrots, celery, a citrus, cucumber, ginger root, etc. I mix it up from day to day depending on what's in the fridge and supersize it. Then I have a teaspoon of Norwegian cod liver oil for a kicker. It's like being shot out of an energy cannon. I don't eat until evening most of the time and then gorge myself with whatever I want. 

Family thinks I'm nuts, but I'm slowly converting them. 

Thu, 01/13/2011 - 17:24 | Link to Comment malusDiaz
malusDiaz's picture

I believe it is:

*Revolution is 3 meals away*

Thu, 01/13/2011 - 17:40 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I did a search and it's tough to pin down. Even a reference to Mao at one point.

Thu, 01/13/2011 - 14:37 | Link to Comment Freddie
Freddie's picture

I always knew Hussein would be Mugabe 2.  He had a nice political pep rally for the people murdered yesterday.

Mugabe 2 and The Ben Bernank with The JP Morgue and The Goldman Sack will destroy America.

Thu, 01/13/2011 - 14:41 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

He's Jesus now. Giffords opened her eyes shortly after his visit. They are calling it miraculous!

Thu, 01/13/2011 - 14:52 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

get your T-shirts before they're gone

Thu, 01/13/2011 - 15:59 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

LOL, good one!

Thu, 01/13/2011 - 14:43 | Link to Comment Things that go bump
Things that go bump's picture

I think they believe they can contain the masses with their new technologies.  

Thu, 01/13/2011 - 15:25 | Link to Comment RafterManFMJ
RafterManFMJ's picture

And why do you think the camps are being built, and the Army training for 'domestic disturbances?'  They'll probably set up a program - "Come turn in your guns for a 10 lb sack of rice, your gold for case of soup."

 

...and people will.

Thu, 01/13/2011 - 15:29 | Link to Comment cossack55
cossack55's picture

A lot of folks think it is Ted Turner behind the Georgia Guidestones.  I'm thinkin' The Ben Bernank or maybe Jamie Dimon.

Thu, 01/13/2011 - 20:10 | Link to Comment DosZap
DosZap's picture

We won't have to worry about that till the end of UE 4Eva.

They will have set up for us by then.And, trust me they already have thought of that.Believe it was ?(Tunisa), the Military was overun by the people, and no guns were used.(Sheer numbers)

You will know for sure when the ultimate SHTF is coming, when you see Green vehicles, going down the highways, with little green dressed folks in them.

Thu, 01/13/2011 - 14:11 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Backman Turner Overdrive appears to have been ahead of their own time.

"You Ain't Seen Nothing Yet."

http://www.youtube.com/watch?v=7miRCLeFSJo

Thu, 01/13/2011 - 14:32 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

There's only so much oil in the ground.

http://www.youtube.com/watch?v=7LjrCV4Gnxw

Thu, 01/13/2011 - 19:33 | Link to Comment UncleFester
UncleFester's picture

Bbbbbbbbbbbb...baby!

Thu, 01/13/2011 - 14:13 | Link to Comment the not so migh...
the not so mighty maximiza's picture

article has clear ideas.

Thu, 01/13/2011 - 14:14 | Link to Comment monopoly
monopoly's picture

yup and coal going ballistic here.

Thu, 01/13/2011 - 14:17 | Link to Comment NOTW777
NOTW777's picture

check out PCX and YZC

Thu, 01/13/2011 - 14:43 | Link to Comment oddjob
oddjob's picture

Have a look at Northern Energy & Mining Inc(NEMI).Met Coal asset.

http://www.nemi-energy.com/

Thu, 01/13/2011 - 19:01 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Might as well purchase KOL, by Van Eck to get some large, mid and small caps, as well as geographical diversification in Canada, US, AUS, China, Indonesia..

Thu, 01/13/2011 - 19:01 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Might as well purchase KOL, by Van Eck to get some large, mid and small caps, as well as geographical diversification in Canada, US, AUS, China, Indonesia..

Thu, 01/13/2011 - 14:16 | Link to Comment SheepDog-One
SheepDog-One's picture

I agree, their sticking point is the divide and conquer technique isnt working well, the people are not fooled and theyre pissed off as theyre told they must suffer while the elite billionaires are totaly protected. The people know its all a planned bankrupting so they can come 'save us' by rising up the world into 1 world govt cashless societies. And the people arent buying it, the demonization of the people as was witnessed in this AZ shooting. And no Boehner, such an attack is not an attack on all of YOU politicians, its an attack on us, we the people, from the govt itself as usual! 

Thu, 01/13/2011 - 14:51 | Link to Comment 1100-TACTICAL-12
1100-TACTICAL-12's picture

Just a thought here, maybe all the awake freedom lovers should grow beards,& maybe the ladies a certain type of ponytail. I think it would make people more identifiable when the time comes. We are probably already on some kind of a black list anyway..

Thu, 01/13/2011 - 15:13 | Link to Comment WaterWings
WaterWings's picture

Bearded here.

Thu, 01/13/2011 - 15:15 | Link to Comment BigJim
BigJim's picture

"maybe all the awake freedom lovers should grow beards"

How will the TSA distinguish between all the "awake freedom lovers" and muslims then?

Ah, now I get it...

Thu, 01/13/2011 - 15:18 | Link to Comment malikai
malikai's picture

You mean like this?

Thu, 01/13/2011 - 15:23 | Link to Comment SheepDog-One
SheepDog-One's picture

I have a long goatee.

Thu, 01/13/2011 - 16:14 | Link to Comment Freddie
Freddie's picture

Horseshoe moustache.   We will all look like Freddie Mercury towards the end of Queen's career.  Bikers also wear this type of "satche."  

Thu, 01/13/2011 - 19:38 | Link to Comment UncleFester
UncleFester's picture

I believe it is called a FuManChu, but then again I am hairless.

UF

Thu, 01/13/2011 - 15:23 | Link to Comment downrodeo
downrodeo's picture

lol, anybody else notice that feed-back echo when you're talking on your phone?

Thu, 01/13/2011 - 19:38 | Link to Comment UncleFester
UncleFester's picture

lol, anybody else notice that feed-back echo when you're talking on your phone?

Thu, 01/13/2011 - 15:44 | Link to Comment InconvenientCou...
InconvenientCounterParty's picture

With strong ideas you don't need to kill people. You sir, may want to sharpen your machette. or reload, pimp that ride? Not sure what the jargon is.

Thu, 01/13/2011 - 16:12 | Link to Comment Incubus
Incubus's picture

I've always had facial hair:  I'm not shaving to end up looking like some effeminate metro.

Thu, 01/13/2011 - 14:17 | Link to Comment NOTW777
NOTW777's picture

the head disinformation chief is on now touting the strengthening economy

Thu, 01/13/2011 - 14:24 | Link to Comment NOTW777
NOTW777's picture

panel of smiling liars

they all agree, everything is great; no talk of record food stamps or record foreclosures or high unemployment

Thu, 01/13/2011 - 14:17 | Link to Comment alter ego
alter ego's picture

Again, I repeat myself.

We are just about to face a complete financial collapse based on a energy shock.

We are not running out of oil, we are just running out of the oil that we can burn with the price that we can pay.

All is interconnected, commodity price, inflation, escarcity, etc, etc.

For the people who can't see the correlation between oil peak and inflation here is:

 

In Many ways, the most fundamental linkage between Oil shocks and economic recession is that Oil shocks always cause huge spikes in inflation and those spikes in inflation are accompanied by huge spikes in interest rates that eventually snuff off growth

 

Every Central Banker knows, even misleads Central Bankers as  Ben Bernanke will tell you that your borrowing rate is a mirror image of your inflation rate.

 

 

Thu, 01/13/2011 - 14:26 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

>>

We are not running out of oil, we are just running out of the oil that we can burn with the price that we can pay.

>>

This phrasing is getting far too popular among the folks who can not bring themselves to think the unthinkable.

How about you try this on for size:

There is no difference between going to your convenience store and taking the hose off the pump, putting it into your car gas tank, pressing the button, squeezing the lever and HAVE NOTHING COME OUT.

AND

Going to the convenience store to do the same thing and seeing a price of $5000/gallon.

UNDERSTAND?  There is no difference WHATSOEVER between no oil and oil priced beyond all ability to pay.  This has NOTHING to do with the value of the dollar.  This is about oil scarcity.  Period.

Okay?  Understood?  Good.

Thu, 01/13/2011 - 15:24 | Link to Comment AnAnonymous
AnAnonymous's picture

Rather funny. If there was  a planet swimming in oil into another galaxy, people would use the same argument. "Oil is still plenty, we cant simply buy it."

Thu, 01/13/2011 - 15:33 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

Guys, I KNOW you are all desperate for inflation noises and having the explanation for everything be dollar weakness so you can make money on gold, but it's just not what is going on, and at this point I think you all know it.

The dollar is crushed today and gold is not spiking.  It's not a dollar value thing.

I know why you want inflation -- for your gold holdings -- but you have misanalyzed civilization.  Oil is the alpha asset.  It simply is, and you all really do know it deep down, no pun intended.

Oil defines and powers and is the lifeblood of civilization.  Gold is not.  That's just the way it is and will be until the Fall, which will likely be so far down as to pass that narrow window where gold might have value.

Everyone is looking for a yardstick against which to measure currency.  It's not gold.  It's oil.  Oil is food.  It powers the tractors.  It transports food to your mouth.  It is the basis of insecticide.  It carries the seeds to the farms.  It powers potash production.  Oil is everything.  There is nothing any of us can do about that.

Thu, 01/13/2011 - 16:21 | Link to Comment hooligan2009
hooligan2009's picture

CiO? well CIO...I think you do not go quite far enough. The scam is, there is no inflation since core isn't moving and because headline does not capture food (+25% last year) and oil (+25% last year). Inflation is 25% for the inelastic demand needed to survive. I can agree that without oil you can't have food, but oil is easily replaced if the amount of money spent on R&D went into minituarized (nuclear or steam or methane?) fuel cells to power engines. Our education system is not aligned with our needs, who wants lawyers and bankers when there simply is not sufficient food? Maybe the latest weather is a smidge of a wake up call for the impact of population growth in the next ten years (think another 1 billion people). Food is everything, energy is the facilitator and health the result, but I like the way you think!

Thu, 01/13/2011 - 18:48 | Link to Comment trav7777
trav7777's picture

of course it is...but gold is denominated in oil as well.  As long as gold fetches barrels, who cares really?

Thu, 01/13/2011 - 17:10 | Link to Comment 1223pm
1223pm's picture

Gas price increase is announced in UK. Now gallon of gas at

Current conversion rate will be US$8.45 per US Gallon.

Thu, 01/13/2011 - 14:18 | Link to Comment Eagle1
Eagle1's picture

Thu, 01/13/2011 - 14:19 | Link to Comment sbenard
sbenard's picture

As an ag commodities trader, I couldn't agree more! By late spring/summer, food prices will soar! What will the Bennie do thennie?

Thu, 01/13/2011 - 14:29 | Link to Comment B9K9
B9K9's picture

I gotta admit, I'm really impressed with how Krieger has come around. No longer does he  base his theses on serious misperceptions.

The key to understanding our world is to recognize that the events we are currently experiencing are not novel or new; in fact, they are as old & steadfast as death and taxes.

Over 100 years ago, the same challenges of dealing with monolithic, state sanctioned oligarchies & their favored allies were debated in parlors and analyzed/fictionalized by giants such as Belloc & London (Servile State & Iron Heel, respectively). In re-reading these books, one cannot but help take away an impression that their clairvoyance was positively astounding.

The single, biggest mistake one can make is to assume they have any meaningful participatory role in which to play. As long as one holds this belief, they will be helpless, both to themselves & their families, towards taking appropriate protective action.

The system can be gamed; crumbs can be poached. But in order to successfully navigate these waters, one must first understand how/why the system operates, and to what end control objectives are manifested in both visible & secret policy initiatives.

If you manage to properly train your thinking, you will find that you will quickly be able to recognize losers a mile off (eg Denninger, Mish, et al). Typically, they use words like 'should', 'we', 'recovery', 'law', etc. But make no mistake, this is all about control & survival; of those currently in charge.

They could hardly give a shit whether some silly prol, who thinks their seeming command of language and analysis grants them access to important decisions, lives or dies. This is a power & control game, period. The sooner one learns this lesson, the sooner they will be able to accurately predict certain actions and position themselves accordingly.

Thu, 01/13/2011 - 14:51 | Link to Comment tsx500
tsx500's picture

...so B9, how about a very brief version of your predictions (u decide timeframe) and appropriate 'positioning' for Joe Sixpack ?   thanks ...

Thu, 01/13/2011 - 15:18 | Link to Comment WaterWings
WaterWings's picture

J6P will die on the way back from Moscow - only Napoleon survives.

Thu, 01/13/2011 - 15:59 | Link to Comment Calmyourself
Calmyourself's picture

B9 I second this request.  I enjoy your posts for the most part and would like to see something a little laid out from you if you have time and inclination.

THX

Thu, 01/13/2011 - 18:18 | Link to Comment The Disappointed
The Disappointed's picture

I know you didn't ask me and apologize in advance for speaking out of turn, but have you not been paying attention? Why are you at the computer and not at the coin shop this very second? I would be (if I weren't broke and unemployed).

I'm only 'broke' in terms of FRN's. Gotta bunch of silver, though.

FWIW: I made the strangest trade the week before last. I sent APMEX something like 450 FRNs (from my unemployment check!) and they sent me 4 five-dollar rolls of dimes and I don't feel ripped off! Of course, they were pre-1964 dimes.

Thu, 01/13/2011 - 21:01 | Link to Comment Calmyourself
Calmyourself's picture

If this is advice for me..  (This site sometimes places comments in strange places) I have been to the coin store oh yes..  I am interetsed in B9's particular take on some of these issues.  Sort of like asking CD to expand on some of his thoughts, almost always profitable.

Thu, 01/13/2011 - 15:19 | Link to Comment kridkrid
kridkrid's picture

go on....

Thu, 01/13/2011 - 15:28 | Link to Comment DaveyJones
DaveyJones's picture

evil is never novel but the scale is something new. Mankind has never pushed a global resource exhaustion to this point, ever. Nor have they covered it up with so much paper and crime. Always appreciate your posts  

Thu, 01/13/2011 - 18:40 | Link to Comment Things that go bump
Things that go bump's picture

So what we are looking at here is an Easter Island scenario rather than, say Soviet collapse?

Thu, 01/13/2011 - 18:53 | Link to Comment trav7777
trav7777's picture

They're both the same.

At some point resource consumption growth inflects.  Think of Easter island...peak wood came a time before someone cut down the last tree.  The inhabitants were accustomed to a certain number of trees per capita in consumption for some time and then the population grew and the trees didn't and people started having to get by on less per capita.  They just became further away and harder to find.

But those statues weren't carved overnight.  Surely the morons thought the gods were angry because the trees were not growing as rapidly as the idiots wished...or something.  Because only a complete moron could fail to realize that trees grow slowly.

Soviet collapse was pretty quick because the society just up and repudiated the government and the paper and the whole shebang.  There was also a political revolution concomitant

Thu, 01/13/2011 - 21:02 | Link to Comment Things that go bump
Things that go bump's picture

Yes, but when the first Europeans reached Easter Island there were only 2,000 poverty-stricken inhabitants trapped there beyond any hope of migrating anywhere else, scratching a hard and meager living out of an inhospitable chunk of rock because their forebears stole nearly all the resources in an orgy of pulled forward demand.    

Fri, 01/14/2011 - 02:42 | Link to Comment AnAnonymous
AnAnonymous's picture

But the most interesting part is that they were recovering. Nobody will know what could have come from that situation as they got killed by European contact.

Thu, 01/13/2011 - 15:29 | Link to Comment RafterManFMJ
RafterManFMJ's picture

I'm having business cards printed today.

 

RafterMan

Junior Crumb Poacher

Thu, 01/13/2011 - 14:23 | Link to Comment bob_dabolina
bob_dabolina's picture

I'm not quite sure what the FED is doing.

Maybe they really do want to kill us.

BTW where is all the volume? Are people not BTFD?

Thu, 01/13/2011 - 14:31 | Link to Comment FunkyMonkeyBoy
FunkyMonkeyBoy's picture

It's a carefully planned controlled demolision to kill this insustainable period and usher in a new era, a new world facist order.

 

1. Create the problem (world wide chaotic collapse via hyperinflation create by the FED's relentless printing),

2. Wait for the people's reaction (save us, save us)

3. Offer the solution (a new world facist order).

 

Simple. It's a scam that is played out time and time again on the sheeple.

Thu, 01/13/2011 - 14:49 | Link to Comment Things that go bump
Things that go bump's picture

Did you miss the comments above regarding oil?  Have you ever heard of King Cnut and the tide?

 

Henry of Huntingdon, the 12th-century chronicler, tells how Cnut set his throne by the sea shore and commanded the tide to halt and not wet his feet and robes; but the tide failed to stop. According to Henry, Cnut leapt backwards and said "Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws." He then hung his gold crown on a crucifix, and never wore it again.[96]

Thu, 01/13/2011 - 16:14 | Link to Comment Incubus
Incubus's picture

what is hegelian dialectic, Alex.

Thu, 01/13/2011 - 19:13 | Link to Comment whatz that smell
whatz that smell's picture

hegelian dialectic?

i say white; the dude with the glock says black; i say black or die.

Thu, 01/13/2011 - 14:28 | Link to Comment doomandbloom
doomandbloom's picture

I believe, Ben( and gang), want to hold off the damage from the collapse of this whole Ponzi only for a couple more years ( which i think they will succeed).

 

why couple of years? what will happen then?

unfortunately the only rationale that i can give for these answers currently lies in the realm of conspiracy theories...

Meanwhile 400 people volunteer to take a one way trip to Mars.http://newsfeed.time.com/2011/01/12/space-cadets-400-people-volunteer-for-one-way-trip-to-mars/

Thu, 01/13/2011 - 14:27 | Link to Comment Robot Traders Mom
Robot Traders Mom's picture

Every last politician and enabler of the FED and the governors themselves will be on planes out of this country when the SHTF. It will be utter chaos.

Thu, 01/13/2011 - 14:30 | Link to Comment 6 String
6 String's picture

As many of my long-time readers know, I think this is THE macro trade. 

I'll believe in this trade when there is even a small amount of evidence that money printing doesn't elevate common stocks, too. Clearly this is the macro idea on the gold/dow ratio going to 1/1, with a leveraged bet on miners doing better. But shorting anything while the Fed monetizes has been nearly distrastrous for many.....

On the other hand, the debt ceiling noise should sufficiently load some volatility in the next couple months, right?

 

Thu, 01/13/2011 - 14:38 | Link to Comment TruthInSunshine
TruthInSunshine's picture

I know this is the most unpopular thesis amongst ZeroHedgers and TD, himself, but one would be unwise, in the least, to rule out a deflationary environment, given that it has taken Ben B52 Bernanke 2.x trillion (12 trillion if one includes Fed backstops and guarantees on CDS and MBS and derivatives) in printing to stem the negative losses overhanging the bank shadow ledgers (and this is an important caveat: the losses are growing, not receding, which means that the shadow ledger losses have not been cauterized; not even close - what is the true amount in USD terms of the losses and future losses banks and financials are sitting on, unhedged, in MBS, CDS and other derivative toxic waste?), and given that most people fail to even mention the debt on bank and corporate balance sheets when speaking of the cash, as an offset, and given that the M1 and M2 supply has not truly surged to anything close to what would be needed to stoke SUSTAINED inflation (and that's not taking into account the losses/debt still not accounted for that would wipe out cash as an offset, which will grow larger with more fundamental economic deterioration).

Finally, there's this:  If gasoline reaches $10 a gallon, and people have to pay 3x, let alon 7x, to heat their homes, and if a loaf of bread really requires a day's salary, does anyone really, truly believe there won't be total and complete revolution in the United States (and these prices are not even 'hyperinflationary')?

I am quite the contrarian here, but the black hole of debt and fantasy asset valuations are larger than all of Bernanke's efforts to date...

...DESPITE the fact that, yes, commodity prices have surged. This is a function of SPECULATIVE MONEY CHASING RETURNS IN A ZIRP ENVIRONMENT, WHERE BERNANKE IS SUPPRESSING YIELDS ON TREASURIES AND THE COMPETITORS TO TREASURIES (muni bonds and corporate bonds), AND NOT BECAUSE OF SUSTAINABLE INFLATIONARY TRENDS (excepting a select few commodities, which are quite inelastic).

Junk me if you think I'm disingenous in even positing these thoughts as a possibility, but refute these points if you think they're at least potentially possible.

Thu, 01/13/2011 - 14:50 | Link to Comment 6 String
6 String's picture

As Martenson just said, "We should have had deflation." Of course, it's not over and there still would be deflation in a heartbeat if all the manipulating scumsuckers finally just stepped out of the way....

But what odds to do you really give this?

A lot of people freaked out when Bernake used the term "100%" to describe his ability to control inflation. I'm not sure why, I agree 100% that he could....imagine in this environment just raising the fed funds rate to 2/3%. We'd enter another deflationary depression.

But, alas, that is why I'm 100% sure he won't control inflation. There is no way he will or can raise rates above the real rate of inflation without bankrupting the Treasury and sending this whole thing down the deflationary drain. He won't do that; he's convinced that doing something is better than doing nothing...especially when he knows that be doing something he's saving he elitist pals, for another day of reckoning.

So, the roads all point in the same direction (hyper) inflation. It's happening slowly, but then it will happen suddenly on the tug-o-war there.

 

 

Thu, 01/13/2011 - 15:27 | Link to Comment BigJim
BigJim's picture

I'm not going to junk you but in this debate I think it's important to remember that 'money' isn't just 'money' anymore...

My take:

The higher Mn figures might be shrinking, but remember what that means - it just means banks are lending less. So items bought on credit (houses, cars, land, boats, factories) are facing deflationary pressures. But the base money supply, is rocketing. This in itself is inflationary.

Furthermore, foriegners know this, which puts downward pressure on the dollar. Commodities are a global market, so as the dollar weakens, the price of commodities rises, at least in US$.

So - deflation in prices of big items bought on credit, inflation in everyday goods.

Thu, 01/13/2011 - 15:41 | Link to Comment Idiot Savant
Idiot Savant's picture

...DESPITE the fact that, yes, commodity prices have surged. This is a function of SPECULATIVE MONEY CHASING RETURNS IN A ZIRP ENVIRONMENT, WHERE BERNANKE IS SUPPRESSING YIELDS ON TREASURIES AND THE COMPETITORS TO TREASURIES (muni bonds and corporate bonds), AND NOT BECAUSE OF SUSTAINABLE INFLATIONARY TRENDS (excepting a select few commodities, which are quite inelastic).

Food stuff inflation isn't due to speculative money, it's due to an increase in world population and a decrease in food production. Climate change, whether due to man or cyclical reasons, is real, and it's here. The drought in Russia decreased their wheat output, flood in Australia ruined their wheat crop, and using corn for fuel is idiocy beyond belief.

I can still buy the deflation meme, but not where it counts.

Thu, 01/13/2011 - 15:45 | Link to Comment delivered
delivered's picture

Your comment was not unreasonable as I have also come to the conclusion that a short-term deflationary period could still occur, especially if interest rates rise. However the problem as I see it is that if Big Ben attempts to control inflation with increases in interest rates, then the damage to a number of interest rate sensitive industries/assets would be severe (including real estate, long bonds, etc.). Of bigger concern would be the problems with the US debt load. If deflation does take hold, this would reward savers and punish borrowers. And the largest borrower of them all - the US government. In effect, the government would have a lower tax basis to operate with in the event of deflation as prices of assets, necessities, wages, etc. would fall. This would drive tax receipts lower and thus accelerate the US debt default (as it requires more real earnings to pay off older debts stated in a constant unit). Once this happens, the confidence in US debt and the USD would fail and hyperinflation would set in (resulting from a failed currency).

I have often debated the issue of deflation versus inflation and have come to the following conclusions. First, some sort of short-term deflation is bound to occur (but which we might have already witnessed in 2008 - an issue I'm still debating). Second, the Fed and Big Ben know that the only way for the US to ever repay its debt load is to drive inflation. Doubling the size of the nominal economy (not real economy) would drive revenue higher for everyone and result in increased tax receipts (to magically give the appearance that the US debt can now be serviced). Of course when you get your investment back on the bonds you purchased, you will only be able to purchase half as much as previous but that's a worry down the road. Finally, the worst scenario for the US and the Fed is a fiat currency collapse which would wipe out an enormous amount of paper wealth and asset values (as priced in USDs) as well as potentially undermine the US's entire social and economic system. So at this stage and being the lessor of the evils, I see a path of sustained inflation for at least ten years to achieve some sort of re-balancing of wealth between real assets and paper assets (and the continued devaluation of the USD and reduction in standard of living for western countries).

The real issue is will this re-balancing be orderly or forced as the end game will be the same (in terms of real lost purchasing power of the USD and other weak western currencies). You can bet that TPTB are making every effort to manage this in an orderly fashion but the free markets may have other thoughts (case in point with the food riots being more of a forced response). Either way, hold on to your seats as the ride looks like its just starting.

Thu, 01/13/2011 - 16:19 | Link to Comment Spigot
Spigot's picture

Deflation would occur IF debt in general began to be defaulted on AND no liquidity was provided to take the place of these 100% losses on holders balance sheets.

In the case of a metals backed currency system where the government COULD NOT increase liquidity much due to lack of metal, then this was more likely.

Today we have entirely FIAT currencies and though it is possible that a cascading debt default might not be met with dump truck loads of fiat, it seems that ALL governments world wide have been practising the afore mentioned dump truck techniques and seem committed to the practice until 1) either all the trucks break down or 2) they can't make more fiat.

IMO, they have about another $50 trillion to go before the "bad debt" is washed out and replaced by "new dump truck money".

What happens after that? The money has to go find "work" to do. It is and will follow the trend. Where are the uptrends today?? a trickle becomes a flood?? Yep. Man the life boats, there's a liquidity flood a'coming!!

Thu, 01/13/2011 - 16:25 | Link to Comment franzpick
franzpick's picture

I saw the RE collapse coming in 2005 and have been a deflationist since, but something has changed:  on a micro-scale, a friend's daughter and SIL have defaulted on 2 investment homes, plus their own home and heloc, totalling $ 1.2 Mil, none of which can ever be repaid.  Somehow I envision that they as well as their lenders are both going to be enabled to skate free of these losses. 

Meanwhile the couple has opened an upscale retail food shop and are now raising prices and watching their daily gross and net  income increase, while they live rent/RE tax-free for 12 more months.

A personal debt-cash flow debacle has turned into a cash bonanza, stock prices and EPS of their lenders are rising, and I am observing the apparent cauterization of these respective unpayable debts and undeclarable losses.

Thu, 01/13/2011 - 17:19 | Link to Comment Raynja
Raynja's picture

your thoughts would be completely correct if the us was not so economically interconnected to the rest of the world. Yes housing is draining money supply, but most of the rest of the world does not have this problem. Increased price of imports coupled with rising commodities will crush us because we don't work in the factories where goods are produced, meaning we have higher prices with no wage increase. The inflation we've been exporting is getting repackaged and sent back to the consumers.

Thu, 01/13/2011 - 14:34 | Link to Comment alter ego
alter ego's picture

For CrashisOptimistc.

We live in a infinite growth paradigm which requires growth. The whole world economy cant be sustained, because requires infinite growth.

 

But infinite growth collides with finite energy.

 

And yes there is a correlation of how much money Bennny "the helicopter" Bernanke is throwing to the (scarcity energy problem) and the inflation on commodities and other stuff.

 

 

By the way,  relax my friend

 

Thu, 01/13/2011 - 15:47 | Link to Comment velobabe
velobabe's picture

it is Bennny "the chickencopter"!

Thu, 01/13/2011 - 14:36 | Link to Comment lynnybee
lynnybee's picture

UPDATE for anyone who's familiar with my story :   My last loyal family member has officially disowned me.    My own sister told me "NO MORE DOOM & GLOOM"  & refuses my phone calls & won't open my emails.   I showed her my silver, tried to explain the devaluing dollar & silver & gold & foodstuffs ....she doesn't understand & doesn't care & I'm to not mention "finances" & "economy" anymore.       My husband & children have officially called me "weird".   I'm crying ....... I've been officially ostricized & people are talking about me behind my back & what few friends I've ever had are abandoning me because I know what's coming & they don't believe a word I say.

Thu, 01/13/2011 - 14:40 | Link to Comment Dr. Porkchop
Dr. Porkchop's picture

You should stop talking about it then and continue to prepare as much as you can without anybody's support. If you're right, they'll come around. At that point, no discussion about who was right or wrong will matter, because there will be a lot of work to do.

Thu, 01/13/2011 - 15:22 | Link to Comment WaterWings
WaterWings's picture

Exactly.

She should be more worried about survivor guilt, if at all.

Fellow poster Cognitive Dissonance would explain you hurt all parties when they are so mentally entrenched. I'm dealing with the same thing.

Focus, and good luck.

Thu, 01/13/2011 - 15:45 | Link to Comment malikai
malikai's picture

Both here are exactly correct. Also, if you haven't already, look at CDs post about the christmas gifts "Johnny Silverseed". Then have a look at the book "48 Laws of Power" if you would like to see a modern interpretation of how influence has been managed historically.

Thu, 01/13/2011 - 16:47 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Was it you that suggested I get 48 Laws of Power? It came in and I've started it. Very interesting to have it all laid out. Thanks.

Sun, 01/16/2011 - 13:54 | Link to Comment malikai
malikai's picture

Yep. I hope you enjoy it. I read that thing at least a couple times a year and recommend it to all.

Thu, 01/13/2011 - 14:40 | Link to Comment Birddog
Birddog's picture

Lynnbee, if what your saying to them occurs...at that time they will become your closest alias and freinds...tighter than glue.

Thu, 01/13/2011 - 14:47 | Link to Comment oddjob
oddjob's picture

For the informed it happens at glacial speed,but for the uninformed it will be overnight.

Thu, 01/13/2011 - 14:51 | Link to Comment goldmiddelfinger
goldmiddelfinger's picture

see ya under $1,000 my minion

 

Thu, 01/13/2011 - 15:11 | Link to Comment oddjob
oddjob's picture

100 contracts HGD.TO June $10 calls

At $1000 Gold those will be worth $50 a pop.

I'll be ringing the register one way or another,thanks.

Thu, 01/13/2011 - 14:58 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

Nothing you can do but continue to prepare quietly and be ready to help when the day of reckoning arrives.

Thu, 01/13/2011 - 15:18 | Link to Comment RockyRacoon
RockyRacoon's picture

Ready to help?   That's what she was doing.  Now is the time to lock the door on them.

Recall the old Twilight Zone episode?

The Shelter

Thu, 01/13/2011 - 16:54 | Link to Comment CrockettAlmanac.com
CrockettAlmanac.com's picture

She's talking about family. How are you going to lock them out?

Thu, 01/13/2011 - 15:09 | Link to Comment trav7777
trav7777's picture

maybe think about STFUing?  what good is truth with no social skills?

The reality is that you don't know what's coming.

Thu, 01/13/2011 - 15:10 | Link to Comment Hephasteus
Hephasteus's picture

Well you got two choices. Continue on with people who don't have the same goals as you or stay your course. You can return to emotionally manipulated, believing in lies lifestyle or stay where you are.  This place is a school. One kid gets out of line the kid has a problem. A million kids get out of line the school has a problem.

All I can tell you is I've gotten conflicting reports. One reports say haha gains far outweigh losses. One report says everybody is jumping out of the tower and this final change is spilled all over the floor and totally fucking ruined. So it's business as usual bluffing dilutting disolving dismaying. Get your confirmation from the people who have shared your truth. It's not universal because not everyone is treated the same or reacts the same. So they really do have no idea what you are talking about. And there's not much chance of explaining it all. Everybody needs confirmation of their reality. The only question is how much. That's where being truthful has an advantage. It needs far less conformation than liars. Liars have got to fool everybody or their security is threatened and constantly eroded.

Thu, 01/13/2011 - 15:58 | Link to Comment velobabe
velobabe's picture

my daughter is being used, manipulated and mentally raped by one of these gay pervert elites, at the highest level. she would throw me in jail, if i commented about this particular Evil Empire Don. she would never talked to me again, if i were to suggest his intentions of making everyone into slaves. she is already his slave, he loves it, comes back for more every week. i look at this man's picture only to see the scariest devil in his evil eyes, i have ever known. he also is raping the western part of the united states, by being on the grand canyon save list as a board of director. oh, did i mention he is on the board of the council of foreign relations.

Thu, 01/13/2011 - 19:02 | Link to Comment trav7777
trav7777's picture

does she like getting pissed on?  bc there's probably some money in that

Thu, 01/13/2011 - 19:24 | Link to Comment Hulk
Hulk's picture

Golden showers are 10 bucks an ounce....

Thu, 01/13/2011 - 15:23 | Link to Comment Wynn
Wynn's picture

"How I learned to stop worrying and love the bomb" - great title, and applies today. Do what you can, then make peace with it. Should the worst happen, they will then know you were right, but you won't feel much like saying, "I told you so". Good luck.

Thu, 01/13/2011 - 15:26 | Link to Comment AR15AU
AR15AU's picture

You did what you could. It is they who have not done their due diligence, likely out of fear. After all, if you are right, they will need to change their lifestyle. And changing lifestyle is uncomfortable. So their mind tells them that all is well, and that you are just crazy.

Very few people can successfully overwhelm the emotional part of their brain with the logical. If you wish to chat with so many others in your same position, come on over to the kitco message board, register an account, and in 7 days you will have access to post.

Cheers 

Thu, 01/13/2011 - 15:35 | Link to Comment BigJim
BigJim's picture

Make what preparations you can, and then cool it. Remember, people have been spouting doom and gloom on the economics front for years now and we're still tottering along, so it may be some years yet before it all goes kerrang. Who thought they could extend and pretend this far?

Keep buying the dips (gold & silver), keep a larder full of food and rotate through it so it's always fresh. You don't say whether you're urban or rural... if urban, maybe you could talk your family round to taking concrete steps by suggesting they buy some Agri land for its investment potential.

Thu, 01/13/2011 - 15:37 | Link to Comment ZEITGEIST
ZEITGEIST's picture

lynbee..just remember the story od Noah..people are way too absorbed in their micro world to understand what is about to hit..keep preparing..in the end it will be your insight that will save them....

Thu, 01/13/2011 - 15:38 | Link to Comment Things that go bump
Things that go bump's picture

I'm sorry, Linnybee, the role of Cassandra is a tough one.  My children have forbidden me to speak on this subject, as well.  I do believe that most people have simply subconsciously decided they would rather die.  They would rather cling to any false hope than believe their lying eyes.  It has taken me several years, but I have come to accepted this.  Its the grief process.      

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