This page has been archived and commenting is disabled.

Mr. Denninger and Gold – Part Deux or: A Rebuttal to All Fiat Money Apologists

Gordon_Gekko's picture





 

via Gordon Gekko's Blog

The last post saw almost a holy war break out between the opposing camps of paper-bugs and the gold bugs (truth-bugs, really) resulting in a record number of comments1 (645 at last count) the highest for any post on ZH – ever (pending Marla’s confirmation of course. Where are you, Marla?). I wish to thank everybody who participated in the discussion for their insightful comments and feedback. 

In his rebuttal to my previous article - eloquently titled "Listen to the Hucksters, Lose Your A**" - Mr. Denninger raised certain points - ill-informed as they may be (not to mention classic fiat money apologists' arguments)- to which I wanted to respond. I hope that this response will dispel some of the myths and misinformation surrounding hyperinflation, Gold and our paper money system. I must warn you though: it’s going to be a bit longish read (although interesting, I hope), so sit down with your favorite cup of coffee and without further ado let’s get started.

 

On Anonymity

It appears that Mr. Denninger has an issue with anonymity, perhaps being irritated at not getting the opportunity to engage in ad hominem attacks, as is his custom. Karl conveniently forgets the fact that one of the websites he has frequently referred to, quoted and even praised ever since its inception – ZeroHedge – has the principle of anonymous speech at its very core. In ZH’s own words

Though often maligned (typically by those frustrated by an inability to engage in ad hominem attacks) anonymous speech has a long and storied history in the United States. Used by the likes of Mark Twain (aka Samuel Langhorne Clemens) to criticize common ignorance, and perhaps most famously by Alexander Hamilton, James Madison and John Jay (aka Publius) to write the federalist papers, we think ourselves in good company in using one or another nom de plume. Particularly in light of an emerging trend against vocalizing public dissent in the United States, we believe in the critical importance of anonymity and its role in dissident speech. Like the economist magazine, we also believe that keeping authorship anonymous moves the focus of discussion to the content of speech and away from the speaker- as it should be. We believe not only that you should be comfortable with anonymous speech in such an environment, but that you should be suspicious of any speech that isn't.

(All emphasis mine)

Indeed, anonymous speech is protected by the First Amendment to The United States Constitution, as has also been affirmed by the Supreme Court of the United States (McIntyre v. Ohio Elections Commission 514 U.S. 334 (1995)) – and with good reason:

Protections for anonymous speech are vital to democratic discourse. Allowing dissenters to shield their identities frees them to express critical, minority views . . . Anonymity is a shield from the tyranny of the majority. . . . It thus exemplifies the purpose behind the Bill of Rights, and of the First Amendment in particular: to protect unpopular individuals from retaliation . . . and their ideas from suppression… at the hand of an intolerant society.

(Emphasis mine)

The fact of the matter is that people care more for the ideas expressed rather than who is expressing them. Are you afraid to contest on the strength of ideas and facts alone, Mr. Denninger?

The Metals Forum
Specifically, I got tired (fast) of the incessant and mentally-deficient spamming of my forum with goldbug crap and thus have deemed it off-topic everywhere except in.... surprise.... the metals forum.
That's right, I have a specific place for all such discussions where they're perfectly welcome - even if I believe the people running their particular beliefs are wrong (or worse.)  
(Emphasis mine)

Just because you have a specific forum for the “metals” does not mean that you promote an open discussion regarding them or do not ban people who dare to have ideas different than yours. This is what one of the commenter’s on my blog (and, apparently, a former participant of your "metals forum") “George K” had to say about your “metal forum”:
I would like to note that I am one of the people who got banned from Denninger's forum for daring to question his judgment on gold. Although Karl has a subforum for metals, that does NOT change the fact that he created it precisely so that he could force "gold bugs" into his little gold ghetto, and so that Karl could point to it as a justification for banning anyone who dared to question his judgment on gold when he makes comments denigrating it in his "tickers" or elsewhere on the forum.
“Perfectly welcome”. Right.

On Hyperinflation

Worthless currency eh?  Hmmm... all I have to do is be able to obtain a return that exceeds the devaluation of the currency in question, assuming it does in fact devaluate.
Also, first you say:
Of course what really happened was that gold's price collapsed and the promised hyperinflation didn't occur.
But then you say:
Those who are looking for hyperinflation are about 20 years too late. We already had it. First in stock prices, and then in houses.  Anyone who cares to argue that taking the SPX from 100 to 1500 over a period of 20 years is not "hyperinflation" has rocks in their head.
(Emphasis mine)

Well, what is it Karl? Did the hyperinflation occur or not? Of course, it would help if you actually knew what hyperinflation is which clearly you don’t, or perhaps you deliberately choose to define terms according to your convenience. 

 

Seriously, I mean that has to be the first “hyperinflation” in history where only two asset classes rose. Not only that, these were financial assets (or investments) and they rose much higher than the commodities and goods needed for everyday living. I mean this has to be the most prosperous “hyperinflation” in the history of mankind! If this is what “hyperinflation” looks like, then I think every country should have one. I mean Zimbabwe should be a freakin’ world superpower right now! Yeah, somebody definitely has rocks in their head.

Clearly, this is NOT what hyperinflation is. Many people tend to think that hyperinflation is simply a higher rate of inflation. Not so. The only similarity between your everyday government-theft enabling inflation and hyperinflation is in the name. There is a phase transition that occurs going from simple inflation to hyperinflation, namely, a “crisis of confidence” which eventually renders the currency worthless. In a hyperinflation we are not dealing with linear functions anymore, but exponential ones. Now I’m not going to go into a detailed explanation of how and why a hyperinflation occurs, in general, and why it will occur in the US, in particular, because excellent discussions regarding both of these topics can be found on Wikipedia and FOFOA respectively, and I’m sure Mr. Denninger will be interested in going through them. Suffice to say that hyperinflation is a currency collapse which occurs when people lose confidence in the currency, i.e. people are not willing to hold the currency for any length of time and rush to exchange it for real goods as soon as they receive it. This results in not only a high inflation rate, but an exponentially increasing one where prices double every few weeks, days or – during the end stages of the currency - even hours.  The inflation rate is reported monthly, even daily, instead of annually. 

In real terms, a hyperinflation is, in fact, a deflationary depression, as even though the nominal amount of currency in circulation might reach multi-trillions, its real value is depreciating exponentially due to the high velocity and subsequent high (and increasing) inflation rate. Indeed, there is a shortage of currency in a hyperinflation as the demand for currency outstrips ability of the Central Bank to create it. Did you realize what just happened!? No matter how fast the CB prints (or digitally creates) currency, people are always one step ahead of the Central Bank2. So even though the CB can print currency, it can no longer steal! The people have finally realized the scam and will have no more of it. 

To give you an idea about what a hyperinflation looks like, here are some excerpts from The Nightmare German Inflation:
By 1923, the wildest inflation in history was raging. Often prices doubled in a few hours. A wild stampede developed to buy goods and get rid of money. By late 1923 it took 200 billion marks to buy a loaf of bread….Millions of the hard-working, thrifty German people found that their life's savings would not buy a postage stamp. They were penniless….By mid-1923 workers were being paid as often as three times a day. Their wives would meet them, take the money and rush to the shops to exchange it for goods. However, by this time, more and more often, shops were empty. Storekeepers could not obtain goods or could not do business fast enough to protect their cash receipts. Farmers refused to bring produce into the city in return for worthless paper. Food riots broke out. Parties of workers marched into the countryside to dig up vegetables and to loot the farms. Businesses started to close down and unemployment suddenly soared. The economy was collapsing….Meanwhile, middle-class people who depended on any sort of fixed income found themselves destitute. They sold furniture, clothing, jewelry and works of art to buy food. Little shops became crowded with such merchandise. Hospitals, literary and art societies, charitable and religious institutions closed down as their funds disappeared.
And to give an example as to what kind of inflation to expect during a “currency collapse” a.k.a. hyperinflation, here are inflation rates from some of the worst hyperinflations in history (via Wikipedia):

Is that what happened in the United States in the 20 year period that Mr. Denninger is referring to? No. But it sure as hell IS what’s in store.

Seriously, I would love for Karl to explain how he intends to outrun the exponential devaluation of the currency when prices are doubling every few days or even hours with…umm…LEAP Calls. Even if, for arguments sake, we assume that the rise in the value of your LEAP calls outpaces the devaluation of the currency, at some point you are going to have to cash out to realize the “gain” - assuming, of course, that the counterparty who wrote the calls is still solvent and is actually able to pay up (more likely the exchange will declare a force majure as counterparties go bust left and right due to the exponential increase in price, so now you are left with nothing instead of the rosy profits you had been dreaming about)- you’re still stuck with the damn currency - toilet-paper! What is your “out”? That which the government cannot create at will out of thin air - real goods and commodities, or whatever’s left of them for sale at that point. And what is the best “real good” to hold in a hyperinflation? The one which is the “most marketable”3 of them all - Gold! – which unfortunately won’t be available for sale anymore then. So you would have been better off if you just swallowed your hubris, bought Gold at the outset and gotten with the program [of protecting your savings].

Karl’s LEAP Call Profits - Now tell me this is something you [will] want more of!

(Courtesy Wikipedia)

Moreover, each and every hyperinflation in history – and there have been many, with the US itself having experienced one - has occurred simultaneously with a gold corner, i.e., Gold stopped being quoted in that currency – there was no Gold available at ANY price in the hyperinflating currency, whereas many other goods were (or whatever was left of them). Quite an interesting coincidence, don’t you think? Well, only if you don’t know (or refuse to accept) the fact that Gold is the only real money there is – a fact people quickly come to realize when the fire of hyperinflation starts burning.

Why You Should Stay OUT of the Stock Market in a Hyperinflation

Let’s take a look at what happened in the Weimar Stock Market:
We can say that those who bought a well-diversified list of stocks in solid, well-established companies quite early in the inflation and who held on throughout the period and also through the stabilization crisis saved much or all of their capital. However, there were many pitfalls along the wayside for the greedy, the fearful and the over-clever. Those who did best were investors with a certain unemotional, stolid character, a basic confidence that strong, well-managed companies would come through, and an immunity to excitement, anxiety and speculative temptations.

Many very sharp but brief advances and declines in the market led to widespread speculation, and well-intentioned investors often wound up as traders. Naturally most of them did as badly as amateur speculators generally do. Many decided that speculation was the only sensible approach; when the entire economy and financial structure was visibly crumbling, who could wait patiently with confidence in the long-range value of anything?

So to be sure, the stock market may rise tremendously during a hyperinflation but is not as straightforward as it seems. There is a lot of accompanying volatility – before the system finally becomes unhinged and collapses [into hyperinflation]- as is occurring in the US Stock Market right now –where one wrong move can destroy your life savings. We've already had two spectacular rises followed by two equally spectacular crashes (2000 and 2008) followed by another spectacular rise in 2009 – how many people were able to successfully trade around that? Very few. Buying “protection” with LEAP calls or any other instrument attached to the stock market during a hyperinflation is simply GAMBLING, and we all know how all gambling endeavors end up. Yes, you can buy and hold companies you think are solid, but you don’t know which companies will survive the hyperinflationary storm. Even worse, during times of economic distress when its own revenues are collapsing (again, in real terms), the government can confiscate any company it wants to – often the ones which are most profitable thus rendering your stock holdings in that company worthless. I really don’t understand is why you would risk your life savings gambling in the stock market CASINO when you have a much safer and better alternative which will not only preserve but increase your purchasing power when the government currency falls apart, as has been CONCLUSIVELY demonstrated throughout the various hyperinflations that have occurred in human history so far.

The Dollar, Gold and Exter’s Pyramid

Then Mr. Denninger points to the DXY chart which does not present a very accurate picture in my opinion as it simply reflects the different rates at which various fiat currencies are sinking in terms of real purchasing power. Moreover it is easily manipulated as Central Banks can and do intervene in currency markets all the time. But yes, the dollar has risen in terms of real purchasing power against a lot of things, although not all. Still, both of these phenomena are easily explained as the dollar is still the world reserve currency and is considered to be the most liquid asset i.e. “money” (for the time being anyways) by many people. As I already said:
Initially, of course, many people (such as Mr. Denninger) – mistakenly thinking the dollar to be “money” – will rush to its perceived safety causing the dollar to rise.
Which is what has happened “since the financial crisis in 2007”. But here is the thing – Gold has risen much more in terms of purchasing power than the dollar, i.e., you can buy a lot more real goods, commodities and services including “actual hard productive assets” - ounce for ounce - with Gold than with the dollar - dollar for dollar - since 2007. And this is not simply a coincidence. The model that best describes, in my opinion, what will happen – and is indeed happening - as we move along this [Gold] deflationary depression is Exter’s Pyramid.

Exter’s pyramid

As the higher layers are liquidated – indeed, evaporate (h/t Trace) as the market for them simply stops existing -  in search of the “most marketable good” or the most liquid asset, initially everything will fall against the dollar and Gold. In fact, as I’ve said before, this pyramid is the reason why - as capital accelerates its flow down the pyramid - we can expect more and more instances of the dollar and Gold going up together. Indeed, a final spectacular rise in the dollar – lulling many dollar-deflationists into a false sense of complacency - will be our signal that the show is about to end. It is this collapse of the second-last layer – the dollar or the “Federal Reserve Note” layer - that will manifest as hyperinflation. Many dollar deflationists who realize the truth about Gold think they can time this, trade around it and switch to Gold when the time comes. However, there is no guarantee that Gold will be available at anywhere near today’s prices – or indeed available at all – at that point. Much of it will happen too quickly for many people to even comprehend what hit them. 

Many people will go through the different layers of the pyramid losing chunks of their capital along the way, before they come to the conclusion that Gold is the ultimate “go to” asset – at which point they may not have anything left to preserve. Trading in the rigged paper markets casino will virtually assure that outcome. But those who know what’s really happening will go directly to Gold. They will be the ones who really hit it out of the park.

On “Lawbreaking”

Oh, so now "Gordon" advocates lawbreaking as a means of "safeguarding wealth"?
As far as “lawbreaking” is concerned, somehow I don’t think the people who fled Hitler’s Germany would appreciate your lecturing very much. I mean, after all discrimination against and even killing off certain sections of society was “the law” there, so you would be “lawbreaking” if you helped anybody flee. And guess what they used to hide and preserve whatever was left of their wealth – surprise! - Gold. (In fact, many of them were only able to flee by bribing officials with Gold as that was the only thing they would accept as payment). Slavery too was legal at one time right here in the US. Price controls are also legally enforced. How do those turn out? Empty shelves! You cannot decree people to sell below the cost of production. The point is that just because something is legal does not mean it’s right, neither does it mean that “the market” will accept its fiat as such. When the government’s greed and tyranny reaches a point where people are forced to choose between their own survival and the governments’, people almost always choose their own. This is how and why “black markets” (which are really “free markets” in disguise) arise, as they WILL in the US at some point. 

Legalized persecution was the very reason that the Founders fled Europe and their Central Banks and established this nation. They were also aware that governments can get tyrannical, which is precisely why the Second Amendment protects the right to keep and bear arms:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
If it were up to “obedient” people like Karl running scared of “getting boffed in a prison cell”, America would never have been founded. Rest assured, if the present state of affairs continues where only 21% of the people believe that the US Government has the consent of the governed, we WILL reach a point – if we’re not there already – where “lawbreaking” will be the ONLY means left for “safeguarding wealth”, liberty and perhaps even our lives. 
..........................................................................
You're awfully presumptive there "Mr. Gekko"
Am I? Time and again governments throughout history and in many different countries have shown that they will happily loot and pillage their citizens in order to ensure their own survival. You need look no farther than our own shores where FDR forcibly STOLE US Citizens’ Gold and then devoured half their wealth in a step devaluation of the currency. Or just look to the latest legalized daylight ROBBERY that was TARP where the government FORCIBLY took our money and gave to the banksters. Even today the government is considering STEALING retirement monies of American citizens by forcing them to invest in Government bonds and suspending mutual fund redemptions. So no, I’m definitely not being presumptive.
And as for "moving to another country", which one would that be, exactly?  It would certainly appear that the United States for all it's faults is better-situated than the alternatives reasonably available to most of us.  Certainly you cannot believe that any of the so-called "Western Nations" in the EU, for example, are a better choice, yes?
Looks like you don’t get out much Karl.
Gold is, however, a damn good geopolitical instability hedge.
And exactly why is that Karl? Have you thought about it? Why not platinum or silver or any other precious metal? I mean what difference does it make? I’ll tell you why – it is because of what you refuse to accept – that Gold IS Money – the ultimate wealth preserver. 

Perhaps that is why you conveniently ignore the high stocks to flow ratio phenomenon of Gold and the fact that the Central Banks of the world are one of the biggest hoarders of Gold. And to those with selective memories who say that, “Well, they are just part of the herd buying the top”, I will say that CB’s have been hoarding Gold ever since they came into existence. They continued hoarding it even when the dollar’s Gold backing was removed and – even though their overall holdings might have fluctuated over time - they continue to hoard large quantities of it TODAY. And the high stocks to flow ratio is not a recent phenomenon, neither is it solely on account of Central Bank hoarding. It is held by many people throughout the world (except, of course, the brainwashed populace in the US), i.e. it is a market phenomenon, and it has been that way for thousands of years. It was that way when Gold was confiscated in 1933; it was that way when the dollar was “delinked” from Gold (basically a euphemism for DEFAULTING on Gold obligations to other countries); it was that way when Gold “bottomed” in 2001; and it IS this way TODAY when, according to some misinformed people, it is a “bubble”. 

You have to be simply naïve to believe that that these “geopolitical instabilities” have nothing to do with our monetary system.
Prove it.  You conspiracy theorists on this topic have been ranting for three decades about the same tired song - that it's all "price suppression", that "the gold doesn't really exist", and on and on and on.
Prove what? I was simply pointing out the flaw in your reasoning there, not alleging anything – not in that sentence anyways. Perhaps you should actually bother to read/understand what you are responding to. 
Well, when is it going to happen?  Investment forecasts, to be actionable, must include both a price and a time or they are worthless - indeed, often worse than worthless.
Well, in case you didn’t notice, “it” is happening right now! In fact, it has been happening for the past decade. You would have been better off holding simply Gold than any other “investment” during the past ten years. And as time passes I can assure that “it” will continue to happen, only at an accelerating pace. The emperor will soon be fully naked for all to see. 
I also remember the people who were bankrupted by believing that gold was "money" and nothing else was…
Only if you were a casino patron who practiced “buy and hold” using leverage. Even if you bought the very peak, you lost only about 50%, considering the average price over the ensuing 20 years, and were not “bankrupted” as Karl claims. But if you had even half a brain and could see the massive inflation that what was coming down the line - what with the US Government spending money like a drunken sailor on the Vietnam war and the subsequent default on its Gold obligations – you bought Gold as soon as you saw Nixon LYING on national television. How did that turn out? Well, not only did Gold rise 24x during the ensuing decade, it remained levitated 11x (even after the “collapse” in 1980) for the next 20 years, and today is 34x that level, whereas the SPX is only 14x its 1970 level! Even if you go with the “market price” since 1974, Gold has risen 12x till date whereas stocks have risen only 8x.

The 20 Year Argument

Basically, the point Karl seems to be making is this:
The historical precedent is what it is… gold is not a particularly good hedge against inflation…during a period of serious inflation - from 1982 to 2002…gold's price was flat to down. It is thus a massive fail at it's claimed purpose.

First, aren’t you being a tad biased when your “historical precedent” consists of only the recent 20 year period while conveniently ignoring the “historical precedent” of thousands of years of fiat currency failures and of Gold’s acceptance as money? Second, there was a lot of inflation during the 1970-80 period with the CPI rocketing to 16% by 1980, but Gold performed extremely well during that period, whereas stocks essentially went nowhere. So you really can’t make generalized statements such as “gold is not a particularly good hedge against inflation”. But the question remains, what happened after 1980? Why did Gold do nothing while stocks rocketed? Two things: first, the US exported a lot of its inflation to other countries via the reserve currency mechanism. CPI remained flat to down after 1980, as exemplified in the following chart: 

Here is the gold price in Chinese Yuan and Indian rupee – two of Asia’s (and the world’s) largest economies. As you can see, they were experiencing a bull market in Gold even as the dollar price remained “flat to down”:

Second: outright manipulation. They started to gimmick the CPI massively in the 90’s at which point the “strong dollar” policy was instituted, i.e. manipulation of Gold prices (via massive naked shorting of futures as well as fractional reserve selling of bullion by the LBMA) in order to hide the true rate of monetary inflation. It is this manipulation which has started to unravel since the beginning of this decade resulting in rising Gold prices.

On Manipulation
Yes, I know, it's all manipulation.
Is that really so hard to believe? You yourself, along with many others, have extensively documented the shenanigans occurring in various markets today. I mean the Fed is now OPENLY manipulating the Treasury market via “QE”.  But the one market they decide to let trade “freely” – the one most important to maintain the illusion of a “strong dollar” no less - is the Gold market. Do you really expect us to believe that? Indeed, organizations like GATA have extensively documented the US Government/Fed supported long-term Gold price suppression. Alan Greenspan even admitted openly in 1998 that Central Banks intervene in the market to suppress Gold’s price:
Nor can private counterparties restrict supplies of gold…where central banks stand ready to lease gold in increasing quantities should the price rise.
The evidence is out there, if only you choose to look at it.

However, there is a fly in the ointment. The manipulation cannot last forever. In fact, the longer and more persistent the manipulation, the more spectacular the eventual opposing move will be. It is a testament to the sheer force of the market that despite record naked short position of the bullion banks against Gold, it continues to rise. The real rise will be witnessed when the bullion banks and the LBMA go bust. To put it another way, if you were patient enough to hold Gold through the period it went “sideways to down”, rest assured, you will be well rewarded.
..............................................................
Let's define our terms.  "Money" is a convenient catch-all but it's also a bullshit term because it lacks precision.
I already did - precisely. I can’t help it if you choose not to understand it. 

Karl then – instead of looking at the simple facts staring him right in the face - goes into a confused and disjointed theory about money with subjective terms like “wealth”, “credit”, “intrinsic value”, “speculative premium”, “value” etc. and ultimately ends up justifying that “money is debt” (or credit – after all, one man’s credit is another man’s debt); that you need credit (or debt) in order to trade. This is the very same propaganda that the banksters have sold us that “money is debt” – the way it is created in our system today – and Karl seems to have bought it hook, line and sinker. 
The hell it is. Every man has the ability to create wealth and most can create credit, which is the essence of money. When Wimpy promises to pay for that hamburger next Tuesday he has created, in point of fact, both credit and (by common definition) money.
We can? Have the legal tender laws been repealed? Phew! Good thing– I guess we can get rid of all the banks now. Who the hell needs “loans” from Fed-controlled banks when you can pay off stuff with a promise to pay it off tomorrow? Sweet. Seriously though, unless you are telling me that you can print Legal Tender (or dollars) out of your basement, you are WRONG. Every man can create “wealth”, but needs to bend over in front of the banksters to obtain the legal tender denominated “credit”. 
But only government has the authority to use force to extract both from you - that is, to force you not only to turn over current production but to compel you to produce in the future as well.
So what you’re essentially saying is that we are all born indentured SLAVES to the government. And here I was thinking slavery had been abolished in America. BTW, did you think about who controls our government today – that’s right – the banksters. So, in other words, we are all slaves to the banksters. Which is EXACTLY what I meant when I said “ultimate power”.
The convertibility by law was disposed of by Richard Nixon.  The dollar did not "instantly collapse" (although many said it would.)  In addition there was no right of exchange during the period after FDR's confiscation through the repeal of those regulations and laws, and again, the dollar did not "instantly collapse."  This claim is utter and pure horsecrap as the dollar was maintained through forty years of being non-convertible.
First of all, as long as Gold was/is available on the open market in exchange for dollars, it was/is “convertible”. Period. It doesn’t matter if it’s a fixed or floating rate. Sure, the government tried to “dispose of convertibility” (and pretended it was in charge in order to hide the fact that they were defaulting on their Gold obligations), but really it was the market that forced their hand. They simply could not afford to redeem all the flood of dollars coming in Gold at the artificial fixed price! Indeed, if Gold was only money by government decree then it should have collapsed instantly, as many paper-money apologists claimed even then. Instead it rose 24x over the next decade and even after “the collapse” in 1980, it remained almost 11x its decreed price in 1970. The market showed everybody which one was the real money. Also, you conveniently “forget” the fact that even though US citizens were not allowed to own Gold or redeem their dollars for Gold, internationally the dollar remained redeemable which is why it did not collapse. Yes, somebody is definitely spewing “horsecrap” and it is you, sir.
The founders based our monetary system on silver, not gold.
Umm…No.  They based it on both Gold and Silver. Perhaps it’s time you took a look at the US Constitution:
Section. 10. No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
(Emphasis mine)
Even today the banksters would love a gold standard, as it would play directly into their hands.  With the vast majority of production being tied to a handful of suppliers absolute control would vest in just a few easily-bribed persons and corporations.  By being able to control gold supply through such a corrupt system they could easily cause deflationary collapses any time they wished, thus escheating all property carrying debt to themselves literally on demand.  Such was common practice prior to the abandonment of gold-backed currencies.

Gold-backed currency is a banking cartel member's wet dream.

So why don’t we have it now? I mean the banksters practically control Congress and the White House right now and they literally OWN the Federal Reserve – would you agree? So what’s there to stop them? I mean if they can get a law like TARP passed – they can get ANY law passed. Clearly the people of the United States cannot stop them. Or are they just not doing it out of the goodness of their hearts?

Do you really believe that the bankers would want something that is limited in supply by nature to be money over something they fully control the issuance of i.e. paper money? Not only that, Gold’s above ground stockpile is extremely large (compared to its annual production) and distributed widely enough that controlling a “handful of suppliers” would not amount to controlling much. This is the very reason why they engage in all sorts of frauds and misinformation campaigns against Gold. As Ayn Rand said:
“Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked, 'Account overdrawn.'”
If you think they want Gold so they need to cause a “deflationary collapse” to own everything, I suggest you take a look around – they ALREADY own EVERYTHING. I mean the level of ignorance you display here is actually quite astounding. I guess that is what happens when you surround yourself with sycophantic “yes-men” and instantly “banning” anybody who dares to have a shred of different opinion. Why even bother having a “forum” when all you want is listen to your own voice. At least try to do some independent thinking and research before blindly accepting anti-Gold propaganda.
Gecko then presents the following outright fraudulent chart. Why is it fraudulent?  Look at his starting point - the end of Kondratieff Autumn in 2000!
Perhaps you should actually read what you are responding to. I clearly mentioned the period I was referring to when I presented that chart. Moreover, is the Kondratieff Cycle an exact science? No! What is exact are the facts and I was simply observing them.
The goldbugs are after a laudable goal - the ability to simply save money (production) over time, take zero risk and wind up with the sum of the purchasing power saved. 
That's the goal that the bugs have, but the goal is unachievable through hard-backed money.  The bugs often point to the period before the 1930s as one where over time purchasing power didn't change much, but they ignore the outrageous swings that took place in the interim, often resulting in 30-50% price changes in the space of just a year or two's time - in both directions!  Catch that wrong and you're bankrupted.
I am not advocating any sort of “backed” money as backed money is always some sort of fraudulent fractional-reserve scheme used by the government/banksters to engage in stealth confiscation - which is also the reason why you get the violent swings you are referring to (even so, I don’t see how losing 99% of your purchasing power over a 100 years is preferable to a short lived violent swing, where if you simply sat it out, you’d still be preserving all your purchasing power!). Gold in the hands of the public freely circulating as money is sufficient to achieve the “laudable goal”, without any interference from the government. I mean I already took the risk when I engaged in my particular occupation and earned that money. Why should I have to take risk it all again simply to preserve my purchasing power?

In fact, Gold doesn’t only preserve your purchasing power, but increases it over time. Let me explain. Contrary to what paper money advocates will have you believe, deflation in itself is not “bad”. In fact, in a society with increasing productivity this will be the de-facto state of affairs because as the production of goods and services in the economy increases and the money supply remains relatively constant – a feature of Gold as it cannot be created out of thin air unlike paper money – the purchasing power of your existing savings increases, which is what matters ultimately. Most people focus on the nominal amount of Gold or currency in their possession. It simply does not matter! The purchasing power of what you hold does. 

Inflation is not the “natural” state of affairs as the statists would like everyone to believe. Imagine not having to gamble in the paper market casinos just to keep even, and instead spending your time and increased purchasing power on doing what you do best further enhancing the overall productivity of the society. This, in fact, would be the de facto state of affairs in the absence of disguised looting and pillaging (via the inflation tax) by the government/banksters in a fiat money system. 

So yes Mr. Denninger, we’re not only after that “laudable” goal, but one better.

On the Federal Reserve System

Also, Mr. Denninger also appears to be an ardent fan of The Federal Reserve System, which is neither Federal nor a Reserve but a private banking cartel monopoly. If it is such a great and beneficial law why was it passed stealthily through Congress in the middle of the night after a secret meeting between the bankster kingpins of those days on Jekyll Island? Indeed, the video “The Creature From Jekyll Island” by G. Edward Griffin explains the truth behind the Federal Reserve. 

He then goes on to quote the Federal Reserve Act:
The Federal Reserve Act says:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

Really? How about Unicorns s**tting Gold bars (or dollars, if you prefer) while we’re at it? If central planning worked, the Soviet Union would be the wealthiest country on earth right now. The fact of the matter is that central planning has never worked. The Fed does not – indeed cannot – know what “the economy’s long run potential” is and therefore it cannot “maintain long run growth of the monetary and credit aggregates commensurate” with it. In fact, nobody can know what this “optimal” rate of growth of economy or the money supply is; only the market does. The fallacy that Karl (and whoever wrote this idiotic law) is engaging in is that we need “stable prices”, therefore we need a money supply that increases with the growth of the economy. We don’t need “stable prices”; falling ones – as I explained above - are better! 
This [the Federal Reserve Act], if followed defacto, results in zero inflation (stable prices) across the intermediate term… 
A law which has not been followed once since its inception, can be argued, was not meant to be followed (not to mention, the way it is written, cannot be followed). They wrote a bunch of BS platitudes in there to fool the public but, like they say - watch what they do, not what they say. This is what has happened throughout the entirety of the period that the Fed has been in existence:

US Dollar Purchasing Power Since the Creation of the Federal Reserve in 1913

Theft via inflation was their intention from the very beginning and that is, in fact, what they did.  
The failure is not in the structure of the system, but rather is found in the corruption thereof and the utter refusal of the people to hold those elected and appointed officials to account under their black letter legal responsibilities.
So how do you suggest we fix this? By putting everybody in prison? You’ve already blamed everyone – everyone except yourself, that is. Perhaps we should make you in charge of the whole shebang, right? The fact of the matter is that shouting online and elsewhere that corrupt politicians, regulators and law-enforcement personnel be prosecuted and jailed while at the same time promoting the very system that is at the root of the corruption is ignorance at best, and hypocrisy at worst. You want government appropriation that funds your social security checks to continue, yet you want the looting to stop. You simply can’t have it both ways Karl.

Of course, I realize that no matter what I say or what evidence I present, it will never be good enough – especially those who believe in paper money enabled wealth-redistribution schemes. Or perhaps people like Karl are simply envious that those they derided and opposed so vehemently are being proven right by the market. 

The proof of any hypothesis/theory is in what actually transpires in the real world. Events will eventually prove who is right. As Another said:
Time will prove all things.

1. H/t Akak
2. Now many will say, “But currency is created digitally today”. So what? If the CB can print digitally, the people can spend digitally!
3. For an explanation of the “most marketable good” please refer to my previous article.

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 06/19/2010 - 05:45 | Link to Comment GoldmanSux
GoldmanSux's picture

Gordon Gekko= Escape Key= Alak=same poster.

Sat, 06/19/2010 - 12:00 | Link to Comment akak
akak's picture

GoldmanSux  =  JohnnyBravo  =  JayBayBaker  =  Arm  =  My grandmother's overflowing colostomy bag

Thu, 06/17/2010 - 23:45 | Link to Comment Joe Sixpack
Joe Sixpack's picture

"We've already had two spectacular rises followed by two equally spectacular crashes (2000 and 2008) followed by another spectacular rise in 2009 "

 

Don't forget the flash crash a couple weeks back. $1 trillion gone in seconds. Thisnk how much real gold that could have bought!

 

www.Gold-Silver.US

Thu, 06/17/2010 - 21:18 | Link to Comment paladin
paladin's picture

(snip)Karl

How about gasoline?  Higher today, but far off its peak.  Same for the base stock, crude oil - pretty flat over the four years, and about double the purchasing power off its peak.

 

this is the same crap I read that gold was $850 in 1980

was this the true price of gold then......oh yes I read......how old your you??

so Karl as to the price of oil to $149..

 

how do you play that.....as in the price today??...is that deflation??

 

 

 

 

Thu, 06/17/2010 - 20:39 | Link to Comment paladin
paladin's picture

Karl said..

A thing that is unobtainable at any price has a value of zero.  That's the paradox.  If you're right you need guns, ammunition and the ability to produce your own food and drinkable water.  The gold will be a good doorstop, and the guy with more guns than you (and there always is someone who does) will soon have both the guns and gold

end..

to you both....the rule of law.....it does not care what GOD you pray to......if this is what is to happen.....it dog eat dog....I care not to go down that line of thought...paladin

Thu, 06/17/2010 - 20:21 | Link to Comment paladin
paladin's picture

are you telling me that in 1980 you could get out

of gold and into 10 and 30 year bonds at 14---15---16%....you would not do it????

Thu, 06/17/2010 - 20:15 | Link to Comment paladin
paladin's picture

as GG has said in the thread a average price over 20 years.

I will call it....I was on the ground in late 1970 as to the rise of gold....the 1979 gold chart was a line in the sand at $400 an OZ...

$400 an OZ was the average,,,,,,up 100 then down 100 ..then 400 average....in late or 1990 up the price was stable till late 1996----1997..

something happened then........stock .....dot com?

this was the game changer

Thu, 06/17/2010 - 19:46 | Link to Comment paladin
paladin's picture

(snip)market-ticker

 

It appears that Mr. Denninger has an issue with anonymity, perhaps being irritated at not getting the opportunity to engage in ad hominem attacks, as is his custom

Oh no, my issue is quite simple: Nobody snivels in the corner unless there's a conflict of interest - or an outright lie - that might be concealed.

You have the perfect right to speak anonymously, if you can find anyone who will listen.  But there's a difference between a right to speak and a right to demand others pay attention to you.  The latter comes only with some modicum of integrity, and that can only be shown when one has a reasonable means to discover what sort of conflicts you might have in your speech.

The finer points of speech, specifically credibility, seems lost on those who write under a nom-de-plume.  You're certainly entitled to do it, as is Zerohedge, and I, along with the rest of the readers, are perfectly entitled to conclude that the reason you're hiding is that there's something embarrassing that would be learned along with your identity.

Perhaps you're a gold dealer.  Perhaps you're a central banker.  Or perhaps you're a 12 year old kid posting what one of the Rothchilds' gave you? 

Do words stand on their own?  Perhaps.  You're free to deny people the knowledge of your identity, but wise people consider that those who do so usually have a reason to hide.

end (snip)market-thcket

 

as a poster on many sites over the years I have said to me.....I hope you die with your gold....you will die with your silver.......people will kill you for your gold....

as someone who has a site or fourm.....I ask...Karl....is anyone on your site posting with their name...or are they posting as anonymous

 

paladin

Thu, 06/17/2010 - 19:22 | Link to Comment paladin
paladin's picture

Gordon_Gekko

great post......I will now look at Karl's site and read what he said....

 

as I posted on another gold thread on ZH..

 

The Reagan Diaries, which follows Ronald Reagan's 8 year term through
his daily dairy entries, and lo and behold, early on at page 25 comes this obvious bombshell
from economist Arthur Laffer: "Art Laffer dropped a grenade on his colleagues when he said we weren't
going to solve the fiscal program until we returned to convertibility of money for gold. I would have
liked to heard the discussion among the economists after I left" - Ronald Reagan

Thu, 06/17/2010 - 15:38 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

One of the analysts I respect, Gary Tanashian of Biiwii.com had this to say after reading Denninger's latest rant:

Karl Denninger's posts have been linked over at the main site on several occasions but more and more it seems to me as if he is rabid in his viewpoints and too emotional about nearly everything. I think he is smart, but maybe so much so that the forest is obscured by too many trees (signposts, data points... what have you).

http://biiwii.blogspot.com/2010/06/theyre-at-it-again-inflationist.html

Thu, 06/17/2010 - 07:43 | Link to Comment Treeplanter
Treeplanter's picture

Sometimes I regret spending half my savings on real gold and silver when I see how my mining shares have doubled, tripled, etc. since late '08.  But it may not be long before we find it hard to get delivery of real metal.  My metal is hidden where Uncle Sam or Lord Obama can't find it.  Mining shares earn more but they are far more easy to confiscate by a tyrannical gov't.  So, the hoard stays where it is.

Thu, 06/17/2010 - 07:17 | Link to Comment Instant Karma
Instant Karma's picture

Over time gold and silver have been monetary means of exchange. But the barter system goes back perhaps longer. A simple exchange of goods and services. Back in the day food and spices and salt and seeds and sugar and other essentials and non-essentials were considered a type of money: items of value easily traded for other items of value.

Gold has historically been a store of wealth, and seemily will continue to be.

But like most things it has little intrinsic value, outside its utility as a highly ductile, malleable, non-oxidizable, shiny yellow metal.

There are other rarer, more "precious" metals like platinum, palladium, and rhodium.

Jim Rogers believes that the best inflation hedge against money printing is a well-construted basket of commodities.

Have I moved a good chunk of my money into precious metals? You betcha.

If you think about it, there's a lot of risk have all your wealth tied up in the currency of any one country. Something bad happens to that country, it's currency is worth a lot less.

Thu, 06/17/2010 - 07:08 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

EURO bullish warnings mentioned earlier, have strengthened today. Vice versa for the USD index of course.

I have detected EURO buying support for several weeks now.

XAUEUR daily chart gives bearish warnings as of today.

This could be an important development.

The proprietary indicators I use in my technical analysis can identify trend changes before they occur.

http://stockmarket618.wordpress.com

Thu, 06/17/2010 - 09:30 | Link to Comment TheWord
TheWord's picture

And gold is going ape.  Well done, Karl.  Next you'll be challenging Cramer and the Squid for top contrary indicator status.

Thu, 06/17/2010 - 04:38 | Link to Comment yabs
yabs's picture

yeah this guy is similar to Nathan from nathans economic blogspot

espouses freedom but if you disagree with him you are banned

Nathan thinks Gold standrads are the same system we have now and its who controls the supply of money thats important, not what backs it

In a perfect world where people can be trusted I agree

but greed always trumps any system in the end

you cannot trust any human with the money supply is the bootom line

You HAVE to back it with something of worth and gold is all we have

Thu, 06/17/2010 - 09:40 | Link to Comment economicmorphine
economicmorphine's picture

We actually have silver, too.  Readers who are unfamiliar with it should read the Coinage Act of 1873.  Also, the work of Hugo Salinas Price in Mexico to move that country to a silver standard is noteworthy.  I am a big fan of a bi-metal gold+silver standard because it gives the little guy like me a fighting chance.  Just saying.

Thu, 06/17/2010 - 03:52 | Link to Comment EscapeKey
EscapeKey's picture

I just want everyone to know that da Vinci's Mona Lisa is worthless. It must be, since it isn't on the market to trade. Denninger taught me that.

Gold (or whatever) must maintain it's value in real terms.  That is, I must continue to be able to buy and sell it in exchange for other things.  But you already claimed there would be none on the market at any price - that is, there would be no trade in it at all.  If this is the case then it is worthless, not priceless.

Oh, and this assumes you wish to exchange your gold for rapidly depreciating paper currency.

Government cannot steal it, or you won't have it.  But history says that government will steal it.  And they don't have to do so by outright confiscation either - they can whack you with a 90% tax on it at the point of sale and demand that all dealers register and report.  Oops - they already did the latter after 9/11!

Fxxx this, I've got better things to do than pick his downright moronic post apart. I used to respect the man, but he's clearly lost his marbles.

Thu, 06/17/2010 - 09:14 | Link to Comment LePetomane
LePetomane's picture

It was a mindnumbing experience to be sure.

Thu, 06/17/2010 - 03:54 | Link to Comment akak
akak's picture

LOL!  Great call, EscapeKey!

I had read that as well, and saw the idiocy in it.  Frankly, Denninger's whole juvenile diatribe was exceedingly hard to read, so full of logical fallacies, irrational emotionalism, and outright lies as it was.  But your analogy here with gold and the Mona Lisa is, well, .... priceless!

Thu, 06/17/2010 - 05:16 | Link to Comment EscapeKey
EscapeKey's picture

I'm sorry, but it's clearly worthless, seeing how it isn't available to trade.

And how about this:

Soybeans, Wheat, Corn?  Flat from 2004, roughly.  Six years, no price change of materiality.  Oh sure, it's gone up and it's gone down, but it's back where it was in 2004 for all of those basic commodities.

Karl has seen no inflation since 2004. Does anyone wish to dig through inflationary stats to prove how wrong he is. I googled a few graphs which all confirm inflation for certain items is around 20% (food, generally), but I can't be bothered finding a reputable source.

Here's one from the Daily Fail, which confirms significant inflation in the UK.

http://img.dailymail.co.uk/i/pix/2008/02_02/basketgraphicDM1102_468x479.jpg

It's grossly inaccurate and dishonest to use the exact date that Nixon yanked the $36 peg as your comparison.

Yet he sees no problem with cherry picking the peak of gold prices when comparing to todays price level.

I'm not gonna comment about the picking of gold's exact date, although it serves as a less arbitrary date, considering it was the date of float.

 

 

Thu, 06/17/2010 - 19:33 | Link to Comment Island_Dweller
Island_Dweller's picture

I've always hated the argument that this or that crop is the same price as it was "x" years ago.....

Afterall, the government subsidises most crops; we can't possibly know what they would fetch in a free market because we don't have one.

Thu, 06/17/2010 - 03:47 | Link to Comment The Mighty Monarch
The Mighty Monarch's picture

Personally, I dig Karl. I credit him with helping me along in my own personal self-discovery of our financial system and how utterly screwed it is (or as beautifully put by Doug Stanhope, "it's all d*cks and no holes.").

However, his one big fallacy is that he appears to believe the system can be fixed from within. We just need the Fed to "abide by the rules" and all will be well. That's great...where are we going to find people to enforce it? How does he propose arresting the criminals when their lackeys are the ones with the handcuffs?

Reminds me of Milton Friedman schooling Phil Donahue on the supposed virtues of central planning..."Where are you going to find these angels who will organize society for us?"

Corruption is at every level and the cops are sufficiently bribed. When in this situation it seems prudent to exit the system as best you can and watch it consume itself.

Personally I'm happy to sit on a bit of cash, a few gold and silver coins, and ammo while I tend to my vegetable garden and collect a few eggs from the chicken coop. All the while preparing to bug out of the suburbs to the family ranch if need be.

 

Thu, 06/17/2010 - 03:25 | Link to Comment huckman
huckman's picture

If you doubt Denninger, then you doubt Gundlach too.  If your one of the dumb asses asking who's Gundlach, then do as the Samari did and go commit Hari-kiri !  

Thu, 06/17/2010 - 03:40 | Link to Comment EscapeKey
EscapeKey's picture

Since I'm one of these "dumb asses", I decided to google Gundlach:

Beno J. Gundlach

Manufacture installation tools for resilient flooring, carpeting, plastic laminate counters, and ceramic wall and floor tile . Catalog, parts list and a ...

Hmmm... probably not.

Gundlach Industrial Crushers crushing solution for coal, potash ...

Gundlach Crushers are the preferred crushing solution for coal, potash, salts, lime and other higher value industrial minerals where precise product sizing, ...

...mmm, no, not that either.

Gundlach Bundschu

Family-owned producer of a range of red, white, and rose wines in Sonoma. Includes information about their products, vineyards, and winemaking team, ...

This is followed by some guy on Twitter, an ex-star manager being jailed for drugs, a plumbing&heating expert, and a Polish engineer.

But, clearly, your prophet is better than Mises.

 

Thu, 06/17/2010 - 03:04 | Link to Comment EscapeKey
EscapeKey's picture

"Uh huh.  How many of those were due to external debt?  How many came on the back of a war?  (Oh, and you omitted Lincoln's greenbacks, although those didn't fit YOUR definition of a currency collapse.  Nonetheless, anyone who held them for more than a day sure felt they were in one.)"

 

I don't even understand this argument. External debts were inflated away post-WW1 in both Germany and England, but it's hardly as if internal debts haven't been either. I think he should pick up "This time is Different" - it states internal debts are easier to inflate away, as they can't withhold credit, and cease trading with the inflator nation.

And Argentina's hyperinflation in 1989 wasn't due to war, and neither were all the perennial inflationary issues in South America throughout the 20th century.

Karl's post translates to little more than a 5-year old throwing a tantrum.

 

Thu, 06/17/2010 - 03:06 | Link to Comment akak
akak's picture

In actual fact, Karl's post more closely resembles the contents of the diaper of a 2-year-old after throwing a tantrum.

Thu, 06/17/2010 - 03:20 | Link to Comment EscapeKey
EscapeKey's picture

I'm trying to work my way through his post, but it is hard because there's so many issues which clearly haven't been thought through, such as this:

"You can no more provide evidence that "gold is the only real money" any more than I can prove there is a Christian God.  Both are articles of faith and those who run them demand fealty - or you are called all sorts of names."

Considering he's of the faith of paper currency, that is... well, rather shocking he would post the above without even proof reading it.

Karl, OK, Gold is to an extent faith. But so is paper currency. And in the event the SHTF, the governments and central banks who, indidentally, store gold in their vaults as a significant and growing part of their reserves, can debase the paper currency, but will find it a little harder to debase gold.

Gold might not ultimately be the best asset class in the event of hyper/high levels of inflation, but you can rest assured fiat currency won't be.

"Have you ever noticed that all those who make such claims and actually put dates on them wind up committing suicide when their prediction fails to materialize as expected?  The wise ones sucker people along by refusing to provide a date."

This is SO STUPID. The smart guys in the room know that timing is everything. And yet, he seems to have a serious issue because people don't provide an exact date? Ridiculous.

If Karl had lived in Germany in 1920, and had the same conversation, Karl would have lost everything in the following years. He even carries on with this line of reasoning - "PROVIDE A DATE"

"The currency you have now (dollars, in the case of the US) will collapse.  Again, if you're going to predict this, you must both predict an event and a time or your prediction is not actionable."

This is too painful to read, I need a strong cup of coffee to continue.

Thu, 06/17/2010 - 14:44 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

I have provided busloads of evidence, yet cannot help someone who refuses to look at it. Idiots like Karl DESERVE to lose it all.

Thu, 06/17/2010 - 02:14 | Link to Comment mliu_01
mliu_01's picture

IT is very simple to settle this.  All takes is Mr Denninger Publically announce to his tickerforum readers that he will never ever purchase one ounce of gold or silver under any circumstances. That will settles all.

 

 

Thu, 06/17/2010 - 03:04 | Link to Comment akak
akak's picture

I see the cowardly pro-Denninger flag trolls are out tonight!

As well as a petulant "Arm", whose cover is now blown.

Thu, 06/17/2010 - 10:42 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Hmm, I read that merely as a call for KD to put his money where his mouth is. Don't think I have ever heard him say he would never buy gold. But that really does not settle the debate.

But my brain is small, and I don't read so good. I say drink a little from all K00l-Aid glasses

Thu, 06/17/2010 - 02:01 | Link to Comment thisandthat
thisandthat's picture

Semi-OT

Speaking of amendments, I came across this:

If any citizen of the United States shall accept, claim, receive, or retain any title of nobility or honour, or shall, without the consent of Congress, accept and retain any present, pension, office, or emolument of any kind whatever, from any emperor. king prince, or foreign power, such person shall cease to be a citizen of the United States, and shall be incapable of holding any office of trust or profit under them, or either of them.

Apparently it's the original 13th amendment, from 1819, and missing since the Civil War:

http://www.phoenixarchives.com/contact/1996/0696/061896.pdf (page 2)

Thu, 06/17/2010 - 02:00 | Link to Comment DoctoRx
DoctoRx's picture

Status of gold audit as of 1982 report.  Don't know follow-up

http://www.goldensextant.com/Resources%20PDF/Gold%20Commission%20Report%20Annex%20D.pdf

Thu, 06/17/2010 - 01:47 | Link to Comment dumpster
dumpster's picture

not so fast gold man

 vis MV=PT. If you would like to take a breather, Henry Hazlitt has an excellent summation on the error of Mr. Denniger's ways. http://mises.org/daily/2916

from capitalist man

Thu, 06/17/2010 - 00:46 | Link to Comment GoldmanSux
GoldmanSux's picture

Point, set, match to Denninger, in my opinion.

Here is his response...

http://market-ticker.org/archives/2414-Gecko-No-Wonder-He-Went-To-Prison.html

Day after day excellent commentary by Karl.

 

Thu, 06/17/2010 - 11:57 | Link to Comment What a mess_man
What a mess_man's picture

I'm with you but it seems we are in the vast minority.  Gold bugs really dislike Denninger!

Gordon your posts are quite good, and give us much to think about.  But what I really like about Karl is his thorough analysis which he backs up with math - very cool.  A lot of irrefutable stuff.  You have to take a lot on faith with some of these conclusions re Gold.

In full disclosure I hole about 13% gold and have done very well with it in the past year...

Sat, 06/19/2010 - 00:18 | Link to Comment GoldmanSux
GoldmanSux's picture

No, we're not. For every 10 people who proclaim the merits of physical gold and the giant conspiracy, 1 actually owns even a gold coin. It's just the shouting that turns their crank.

Alak and Escape Key are Peter and Paul to Gekko's Jesus. Of no consequence unless you don't agree with Gekko. They are precisly who Denninger was writing about in his response. They've got gold religion.

Not that it needs a religion. It's in an 8 year uptrend. So, I am a 13% owner too. Will keep adding if and as it rises.

Denninger is unique in several ways. He always asks himself why things happened and what the result was. And then provides practical solutions. I don't know him, but I would think he has the mind of an engineer, but unlike 98% of the engineers I've known, realises the world doesn't run on a linear equation.

Nothing against Gekko, glad for opinions of everyone. But his minions have no substance.

 

 

Sat, 06/19/2010 - 03:04 | Link to Comment akak
akak's picture

Baseless assertions, ad hominem attacks, and irrelevant insults ---- wow, you do have SO much to offer this forum!

If you chose to denigrate a strong and principled stand against the massive monetary corruption and crime of fiat currency as "religion", then that is your business.  But it is interesting that you do not equally chose to label the rabid and hysterical defense of fiat currency by the current power elite as "religion" as well.

Sat, 06/19/2010 - 04:12 | Link to Comment GoldmanSux
GoldmanSux's picture

I don't attack Gekko's stand. I attack you, Peter. Get your own opinion, defend it, or fuck off, you acolyte.

Sat, 06/19/2010 - 11:50 | Link to Comment akak
akak's picture

Go back to screaming at pigeons in the park, you unhinged basket case.  You're pathetically and absurdly off base.

Thu, 06/17/2010 - 03:22 | Link to Comment EscapeKey
EscapeKey's picture

Well, then you clearly lack the ability to comprehend. Karl's post amounts to little more than a 5-year old throwing a tantrum.

 

Thu, 06/17/2010 - 01:52 | Link to Comment akak
akak's picture

I think Denninger just embarrassed himself further.

His ignorance of monetary theory and history, and his pigheaded obstinancy in refusing to recognize and admit his ignorance, is simply breathtaking.

Thu, 06/17/2010 - 00:41 | Link to Comment repo 105
repo 105's picture

Maybe you could give us the timetable you see this hyperinflation happening?  Tomorrow, next week, year, decade, century? I will predict the Sun is going to burn out, but don't know what good that does you without telling you when. I know it hasn't started yet, my money goes further this year for food, shelter, clothing than last so even a starting date would be helpful. Thanks.  

Thu, 06/17/2010 - 03:23 | Link to Comment EscapeKey
EscapeKey's picture

You wouldn't have predicted it in Germany in the early 20'es. Or Argentina in '89. Or Hungary in '46... you would have lost it all.

 

Thu, 06/17/2010 - 01:39 | Link to Comment LePetomane
LePetomane's picture

Hmm. You bet on infinite (the sun will never set on the US dollar for, like, a long time) while demanding exactitude from your counterparty.

Wow. Those are fantastic odds!

Thu, 06/17/2010 - 01:39 | Link to Comment LePetomane
LePetomane's picture

Hmm. You bet on infinite (the sun will never set on the US dollar for, like, a long time) while demanding exactitude from your counterparty.

Wow. Those are fantastic odds!

Thu, 06/17/2010 - 00:30 | Link to Comment Cistercian
Cistercian's picture

 Zero Hedge has a number of fantastic contributors, and among them GG is one of the best.I always look forward to your posts Gorden.Thank you very much.

 Gold is money.FRN's?Not so much.

Thu, 06/17/2010 - 00:25 | Link to Comment Jesse
Thu, 06/17/2010 - 00:41 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

I was thinking of doing a post on this very topic. Everybody is screaming how Gold is a bubble, yet they cannot see a bubble hiding in plain sight. Nice post Jesse.

Thu, 06/17/2010 - 04:07 | Link to Comment EscapeKey
EscapeKey's picture

Not that I'm a great conspiracy theorist, but TPTB have a potential interest in talking down the value of gold, but not the currency. And since they, in the eyes of the MSM, are claimed to be the experts in their field, they will be the ones who are interviewed with regards to their opinions.

Great piece, btw GG. I thought last round was still too close to call, but this time it isn't even close. I think you did yourself a favour by taking your time to respond. Karl's post reeks of froth-at-mouth, and he's clearly committed the mistake of not proof reading his post.

 

Do NOT follow this link or you will be banned from the site!