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Things That Make You Go Hmmm - The Past, Present And Future Of The Dollar

Tyler Durden's picture


With each passing day bringing us closer to the end of the world's reserve currency, and everyone coming up with their soapbox theories about what happens tomorrow and the day after, perhaps the best way to analyze the future is by looking at the past, which is what Grant Williams has done in his latest TTMYGH letter.  It begins: "What exactly IS ‘The Dollar’? There are currently 47 countries or territories that use the ‘dollar’ as their currency, from the obvious names such as the United States, Australia and Canada to the more esoteric such as Suriname, Tuvalu and Guyana, but where did the word ‘dollar’ come from?" Williams proceeds to analyze the full history of the greenback, and its primary function, to provide an alternative to gold, as the defacto world currency. The truth is that every time the dollar appeared like it was on the verge of irrelevance, a gold standard of some form was reestablished, however briefly. We are now at one such crossroads. Yet only fools know for a fact what will happen hours from now, let alone years. Which is why as Williams concludes, " Whatever happens from here, there are a few of things of which we can be quite certain" :

  • To paraphrase Winston Churchill’s quote about America: Governments will always do the right thing - after they’ve run out of every possible way to avoid doing so
  • The can will be kicked down the road until we run out of road - and into a brick wall
  • The ultimate judge of the success (or otherwise) of every political decision made since Lehman Brothers went to the wall is shiny, yellow and costs about $1,500/oz

"So what exactly IS the dollar?" Read on form some answers.

Things that make you go Hmmm: June 9 (pdf)



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Sat, 07/09/2011 - 16:43 | 1440180 Ahmeexnal
Ahmeexnal's picture

The dollar is a racket.
Then again, so is everything else.

Love is a racket.

Sat, 07/09/2011 - 18:12 | 1440298 blindman
blindman's picture

Junior Parker - Love Aint Nothin But A Business Goin On

Sat, 07/09/2011 - 18:32 | 1440315 W T Effington
W T Effington's picture

Assuming that love is a racket somehow, at least it is entered into consensually and not forced upon individuals through violence or the threat of violence. Like legal tender laws.

Sat, 07/09/2011 - 18:35 | 1440318 Dr. Richard Head
Dr. Richard Head's picture

You haven't met my wife. ; )

Sat, 07/09/2011 - 23:21 | 1440807 blindman
blindman's picture

you have obviously forgotten what it is to be compelled by
the hormones of nature itself, good for you ! you see, nature has
its own trick bag and secret plans, conspiracies you might say,
that it perpetrates against the satisfaction and accomplishments
of its own creations. love, it's a bitch ! here we go ...
Rolling Stones '73 Bitch with Live audio and video
can't take the cut off there... so go here..
hmmm, speaking of nature

Sun, 07/10/2011 - 11:49 | 1441355 Oh regional Indian
Oh regional Indian's picture

Blindman, one of nature's biggest hormone movers is SPRING!

The Rites of Spring, the most violent thign I've seen on stage.

You're right, nature has it's own engines.


Sat, 07/09/2011 - 23:01 | 1440774 SparkySC
SparkySC's picture


Sat, 07/09/2011 - 23:02 | 1440775 SparkySC
SparkySC's picture

Buy Gold

Sat, 07/09/2011 - 23:04 | 1440777 SparkySC
SparkySC's picture


Sun, 07/10/2011 - 01:40 | 1441001 Hugh G Rection
Hugh G Rection's picture

Love the Bryan quote.  It's a shame the cowardly lion lost a close battle to McKinley.  The Secret of Oz is a great documentary, and illustrates the potential danger of a gold standard.  What matters is the abolition of government debt money and fractional reserve banking.  If we simply switch over to a gold standard, and the same corrupt bankster assholes own all the gold, we won't be better off.  Free Silver Bitchezz!

Sat, 07/09/2011 - 16:48 | 1440191 macholatte
macholatte's picture


Hmmmm ........

Invisible Empire A New World Order Defined Full

Sat, 07/09/2011 - 16:54 | 1440199 keating
keating's picture

Gold is in such short supply that its maniptulation is very easy and done frequently. Better to use a basket of commodities, include gold and silver, but also oil, coal, steel, and other commodities. It almost does not make a difference as any basket of commodities is only used to prevent countries from running the printing press. I don't care if it is a basket of barbie dolls and Dodge pickup trucks, as long as the government can't print more money than they can redeem. This would be an enormous gift to savers and to the elderly who live on savings.

Sat, 07/09/2011 - 17:10 | 1440215 chartcruzer
chartcruzer's picture

yes! A distributed basket produces smoother returns as the currency is devalued - less hair pulling.    Below is the relationship between major commodity classes.   Note the relative performance of precious metals....[s163683610]&disp=P

BTW the long term performance of the SPX relative to gold - uggggggly.[s235939273]&disp=P

and a comparison of major investment classes relative to gold,,,,  read it a weap.....  or profit....[s238082247]&disp=P

happy trading




Sat, 07/09/2011 - 17:50 | 1440272 Tejano
Tejano's picture

Who would determine the mix of comodities in your "basket"?

Sun, 07/10/2011 - 01:39 | 1441000 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Currencie it has to be, and monie will make your barbie dolls trash.  Gold in a vault will store, and last forever.  Not even the lifeblood of the economy can do that.

Sat, 07/09/2011 - 16:58 | 1440207 Pumpkin
Pumpkin's picture


money. A silver coin of the United States of the value of one
hundred cents, or tenth part of an eagle.

2. It weighs four hundred and twelve and a half grains. Of one thousand
parts, nine hundred are of pure silver and one hundred of alloy. Act of
January 18, 1837, ss. 8 & 9, 4 Sharsw. Cont. of Storys L. U. S. 2523, 4,
Wright, R. 162.

3. In all computations at the custom-house, the specie dollar of Sweden
and Norway shall be estimated at one hundred and six cents. The specie
dollar of Denmark,at one hundred and five cents. Act of May 22, 1846.

Source: Bouviers Law Dictionary 1856 Edition

Sue the Federal Reserve for fraud!  FNRs are not dollars and being legal documents are FRAUD!

Sat, 07/09/2011 - 20:04 | 1440426 slewie the pi-rat
slewie the pi-rat's picture

'do the math' w/ slewie:

1) 480 grains in a troy oz., so, 412.5 grains = 412.5/480 = 0.859375 troy oz
2) alloy of 90% silver:  .9 X 0.859375 =  0.77344 oz silver in a "dollar" by law
3) amount of silver in a Morgan or Peace silver dollar = 0.77344 oz.  really. 

got dollars?

Sat, 07/09/2011 - 21:14 | 1440561 FeralSerf
FeralSerf's picture

I thought FRNs were notes, not dollars, i.e. the debt instrument you get in exchange for your virtual imaginary dollars.  Just like that note you signed at the bank when you borrowed those virtual dollars to buy that stuff.

Sat, 07/09/2011 - 17:07 | 1440218 Stuck on Zero
Stuck on Zero's picture

Why does everyone talk about a return to the gold standard?  It's not feasible because of the large number of mercantilist countries today.  Mercantilists will sell you something for gold and then will hoard the the precious metal.  They value it above all else.  The result is that all the gold used for trade disappears and that ends all trade.  Back to barter.  Rome learned this lesson, Britain learned it. 

Sat, 07/09/2011 - 17:11 | 1440223 Internet Tough Guy
Internet Tough Guy's picture

No gold standard. Gold will stand outside the monetary system, a demonetized physical asset, storing value only. This solves the problem of storing value in currency where the issuer can expropriate it. Without the need to store value the dollar can perform its transactional role, at which it excels.

Freegold; the solution.

Sat, 07/09/2011 - 18:07 | 1440295 disabledvet
disabledvet's picture

We have a God standard basically.  It literally says it on the Greenback:  "in God we trust."  In short:  "have no illusions moron."  Still...there is God.  The irony that only Wall Street not only denies his existence (putting mere men in his stead after exterminating themselves no less!) but laughs and even kills all those who merely acknowledge Him.  IT'S ON YOUR MONEY MORONS.  NOW DIE!  Anywho, "but by the grace of God go we."  Those who proclaim a need for a new standard refuse to acknowledge the existence of the current one--which is not the dollar at all but the Treasury complex.  This is called A MARKET and the reason why currency traders (with apologies to George Soros who is also all Alpha all the time right now) are pretty much meaningless.   (Sorry there Axl "Rose" Merk.)  Once seen through the lens of "markets" you begin to realize what a pile of garbage articles like this are.  IT SAYS ABSOLUTELY NOTHING.  Now maybe the dollar is going to collapse tommorrow.  "I will gladly trade pay you tuesday for a hamburger today" might be a funny way to run a country--but when you make all the hamburgers on the planet such that you can determine the relative worth of every currency on the planet based upon the price of a hamburger believe it or not it beats gold hands down.  Okay--we're mooching.  It's just a word.  A...a...common bond he desires most in this world

Sat, 07/09/2011 - 20:19 | 1440447 mess nonster
mess nonster's picture

"Once seen through the lens of "markets" you begin to realize what a pile of garbage articles like this are.  IT SAYS ABSOLUTELY NOTHING. "

Yeah... I was puzzling over the conection between the history of the dollar and the author's convoluted cogitations concerning the gold standard, when I realized...there wasn't any, despite such a connection being promised. Although I would never call any form of self-pleasure, even the mental kind, a waste of time...

Sun, 07/10/2011 - 01:27 | 1440987 Libertarian777
Libertarian777's picture

There are large swathes of people who misunderstand the gold standard.

There are 2 things that a gold standard demand.

1. a definition of the 'dollar' as a specific weight and fineness of gold (or silver).

2. a free market in money (i.e. an American Eagle = Kruger rand = Canadian Maple etc). Competing currencies.

Specifying a 16:1 ratio of gold to silver in coinage (bimetallism) doesn't work either, since it is a government mandate which will lead to one of the two coins being over or under valued at any one time. Greshams Law would lead to one of the two coins disappearing from circulation.

As to your point about 'mercantilism', that only occurs when a. legal tender laws exist. b. competing currencies are not allowed to be used.

As an example. Say we have a dollar stated as say 1 gram of gold. If we kept buying Chinese goods, we'd be exporting large quantities of gold into China (or a mercantilist state). What happens here is there is less gold (money) chasing the same goods (in the USA), leading to the price of goods (in gold) becoming cheaper (each oz of gold buys more stuff), whereas in the mercantilist state (China) the manufacturer who is hoarding his gold from America, has to pay for his manufacturing inputs, leading to an increase in money (gold) in that state. More money (gold), chasing the same goods = things become more expensive (each oz of gold buys less stuff). Note, that any American who decides to SAVE his gold coin and not spend it, has MORE purchasing power over time. Note also though, that the Chinese manufacturer would stop selling stuff to the USA, since he gets progressively less gold for each shipment (since Americans with gold would be demanding MORE for each oz). So the demand has a way of killing itself off when things are out of balance.

Since things are cheaper in the USA than China, and competing currencies are allowed, Canadians, Chinese, Spanish, Mexicans and South Africans would come to the USA to spend their Maples, Pandas, Pieces-of-Eight, Peso and Krugerrands, leading to an influx of gold into the USA, leading to the supply of gold (money) increasing, leading to the goods becoming more expensive over time. If this continued, then the USA would be able to continue importing Chinese goods, and the Chinese manufacturer would keep sending his goods for the same payment.

The only time this would not happen is if foreign coins were outlawed (as they are currently), so other countries' gold coins would not be able to be used in the USA. This is exactly the problem Nixon had with US gold flowing overseas.

The other problem is that the government likes to spend money it doesn't have, with a gold standard if it kept spending , its coffers of gold would eventually be depleted. It then has to DIRECTLY tax citizens, i.e. asset confiscation, or debase the gold coinage (so much for 'full faith' of the US government). So the gold standard would stop the government from funding wars overseas, as well as sending billions to dictators we want in charge.

It sounds completely counter-intuitive, and it is, because with a gold standard (and competing currency) your money is a free and clear ASSET. It is not a DEBT note (as FRNs are now).

The argument you use is the one that everyone who is against a gold standard always use, that there is not 'enough' gold for commerce. That's the biggest load of B/S. Gold can be divided into as many pieces as you want. Using modern technology, each bank could issue its own gold backed debit cards, and you could pay for things using 1 gram, 1 milligram or whatever division of gold you wish to use. If your bank was issuing more 'gold credits' then gold, it would eventually go under and close, but again this assumes no government intervention to save TBTF.

There are numerous books that go over this, but Ron Paul's 'The Case for Gold', his Gold Commission 'report' is a good start.

Sat, 07/09/2011 - 17:21 | 1440231 Dr. Gonzo
Dr. Gonzo's picture

This article makes me want to go out and buy more gold again. I was doing so good saving my fiat too.

Sat, 07/09/2011 - 17:21 | 1440232 nuinut
nuinut's picture

The fractional reserve banking system, with Central Banks as facilitators, is net short dollars, as the system is composed mainly of claims on dollars (credit).

The printing of currency which accelerates into recognizable hyperinflation is the CB's response to the short squeeze.

Central Banks hold physical gold as a hedge against this.

You should too.


Read this: The Return to Honest Money, and wonder no more about how gold will remedy the dollar's ills this time.


Sat, 07/09/2011 - 17:25 | 1440238 Internet Tough Guy
Internet Tough Guy's picture

All your base (money) are belong to us.

Sat, 07/09/2011 - 17:43 | 1440265 Jack Napier
Jack Napier's picture

I'm all for a return to honest money, but one thing in your link took me aback. Ron Paul wants to sell the gold in Fort Knox. It bugs me that this guy with masonic roots has everybody thinking he's a champion of the people. So let's sell all our gold for fiat dollars just before they hyperinflate to nothing. Add to that it's only a matter of billions of dollars worth of gold when we owe $14+ trillion. Thanks, but no thanks. This isn't directed at you nuinut as much as shooting for full disclosure.

Sat, 07/09/2011 - 18:11 | 1440297 Tejano
Tejano's picture

The people of this country have had no claim on, or access to the gold in Fort Knox (if there is any) since the fed gov stole it from them seventy-eight years ago. So why not sell it? Any portion that found its way into private hands would be a blessing.

Also, "we" don't owe $14+ trillion.  The same gov that confiscated the people's money in 1933 might, but I don't.

Sat, 07/09/2011 - 20:23 | 1440455 mess nonster
mess nonster's picture

I say we sell the tungsten in Ft. Knox for the price of gold!!!

Sat, 07/09/2011 - 22:52 | 1440762 Tejano
Tejano's picture

Good luck with that!

Sun, 07/10/2011 - 23:04 | 1442531 tip e. canoe
tip e. canoe's picture

me neither

Sat, 07/09/2011 - 18:19 | 1440305 disabledvet
Sat, 07/09/2011 - 18:22 | 1440307 nuinut
nuinut's picture


I think you have your wires crossed, in that the article was not supporting Ron Paul at all, but pointing out his shortcomings on this issue; that he has good ends as his goal, but the means he proposes to achieve these ends are unworkable... FOFOA then describes the means that will achieve those ends, completely in accord with the work of Menger, Mises and Hayek, amongst others.

With all due respect, I recommend you read further than the opening paragraphs before drawing conclusions. 

Sun, 07/10/2011 - 05:06 | 1441073 Jack Napier
Jack Napier's picture

I never said the article supported him. I was merely echoing the part of article's sentiment that struck me as important for the sake of those who are too lazy to read it since so many people here are Ron Paul supporters. I used to be one, and I don't like how he's duping everybody. Thanks for posting it.

Sat, 07/09/2011 - 17:25 | 1440236 Long-John-Silver
Long-John-Silver's picture

Returning to a Gold standard for the US Dollar would require the calculated value of 1oz of Gold bullion to inflate to $47,400 in order to cover the current debt. This calculation was based on the published amount of gold held in reserve by the USA and the published amount of US Federal currency in circulation. The last audit of Gold held by the USA was done in 1949. The FED has refused to publish any audit results sense 1949. Currently the amount of Silver held in reserve is zero having been sold on the world markets in an effort to keep Silver prices in check.

Sat, 07/09/2011 - 21:00 | 1440407 maximin thrax
maximin thrax's picture

I don't understand what our national debt has to do with the ultimate value of gold. If a dairy was one million dollars in debt and needed $80 per gallon of milk to pay the debt off, then it's going to go bankrupt.

However, if any citizen of any nation could, at any time, buy and sell gold absolutely tax free then all the gold available on earth for purchase would end up being the world's savings, outside of paper investments and interest-bearing accounts. As excess currency (savings) is exchanged for gold, price would rise until all the gold that is theoretically available has changed hands.

The ultimate value of gold, in dollars, should be the value of all long-term savings not in stocks, commodities and bonds, not in checking accounts where cash goes in and out, and including a good portion of capital reserves, converted to dollars and then divided into the world's bullion supply. Gold does not have to back every bit of fiat either in paper or in digital format.

Sat, 07/09/2011 - 17:25 | 1440237 gwar5
gwar5's picture

A dollar is 1/50th of a blowjob.

Sat, 07/09/2011 - 17:28 | 1440243 Long-John-Silver
Long-John-Silver's picture

That depends on location. I know places where the ratio is 1 to 1.

Sat, 07/09/2011 - 17:40 | 1440261 delacroix
delacroix's picture

the fellatio ratio, is that like the big mac index?

Sat, 07/09/2011 - 17:31 | 1440250 reader2010
reader2010's picture

It says it all.

Sat, 07/09/2011 - 18:00 | 1440285 I think I need ...
I think I need to buy a gun's picture

i saw that thing about swiss franc yesterday. 1 gram of gold equals 5 new units of is going on? I get more pissed by the day....i am investing nothing in my business all proceeds just keep going to gold these motherfuckers took the whole system down and we have 75% of the population operating like nothing is wrong!

Sat, 07/09/2011 - 22:32 | 1440326 blindman
blindman's picture

@" you tell me. .."
the dollar is a promise, in a long list of promises,
that will be broken on the shores of the minds
and hearts of men, women and children;
as the energy of waves and winds of fluidity pound the
strand of hard parts and stone into grains of sand.
the dollar, the form of a castle, of those grains no
more, no illusion or promise left in the slumping form.
just grains now, waiting for new and better
promises, collective promises, dollars, till no one
believes they are worth the keeping. and ...
you can thank the bankstas and their servants.
jubilee, the great equalizer, is in town. ?
you have all noticed that there is a nearly arbitrary
heirarchy to the musical jubilee, no? yes. here the
razor's edge of war. i would say refuse it all in favor
of nothing even.
wiki .. " The Razor’s Edge is a book by W. Somerset Maugham published in 1944. Its epigraph reads, "The sharp edge of a razor is difficult to pass over; thus the wise say the path to Salvation is hard." taken from verse in the Katha-Upanishad.[1][2]"
mink deville- i broke that promise
[OTE113] On the Edge with Steve Keen
Posted on July 9, 2011 by stacyherbert

Sun, 07/10/2011 - 23:02 | 1442529 tip e. canoe
tip e. canoe's picture

kicking & sceaming,

we push to the razor's edge.

Jubilee Awaits...

Sat, 07/09/2011 - 18:47 | 1440332 slewie the pi-rat
slewie the pi-rat's picture

almost all fiat is traded, worldwide, for gold & silver, each and every day.  i often wonder if people, even the ones who trade fiat for real, realize this.  it's simple beyond belief, yet seems to result in endless confusion.  what's up w/ that? 

so, today, $1 = 1/1544th oz gold = 1/37th oz silver

really.  trust me.  i guarantee it! 

Sun, 07/10/2011 - 07:50 | 1441126 Yen Cross
Yen Cross's picture

    I do!  I like the OLD SCHOOL, lack of [....] math. Nice fractional work Slewie/



Sat, 07/09/2011 - 18:48 | 1440335 RECISION
RECISION's picture

"What exactly IS ‘The Dollar’? There are currently 47 countries or territories that use the ‘dollar’ as their currency, from the obvious names such as the United States, Australia and Canada..."

Say what???

Australia may Call their currency - the dollar - but that is the end of it. 

Not all "dollars" are created equal. And to imply that the Australian dollar is the same as the US dollar (even accidentally) is likely to upset the southern cousins.

Quite frankly, such sloppy writing makes the author of this piece look like a fool.

Sat, 07/09/2011 - 19:08 | 1440362 dudditz
dudditz's picture

Dollar was backed by silver, gold and now.... $14 trillion in debt.  Yes folks, we have a debt based currency.

Sat, 07/09/2011 - 20:33 | 1440472 mess nonster
mess nonster's picture

Gold is superstition. Aside from its luster and refusal to react with other elements, it has no real intrinsic uses, aside from decoration. One cannot eat it or burn it. On a scale of usefulness, carbon is the king of the earth. We owe our economy to carbon, and when the carbon that can be burned is gone, we will return to our stable little midaeval economies, in which we worship the shiny useless metal.

The discovery of burnable liquid carbon (hydrocarbon) enabled us , briefly, to escape from the superstition  of gold, but when the oil's gone, it's gone, and along with it, our species' brief romp in the fields of wealth.


Sat, 07/09/2011 - 21:08 | 1440549 r101958
r101958's picture

Puuuuleeeaaase! Gold has been a medium of exchange for thousands of years.

Sat, 07/09/2011 - 21:29 | 1440592 FeralSerf
FeralSerf's picture

I've got an idea.  Why not use little pieces of it as tokens, like bus tokens for example.  Whenever you need to acquire someting from someone else (or get on the bus), you could give them one or more or even portions of one of the tokens.  You could be confident that the tokens weren't counterfeit ones like wood or paper tokens because gold is not too plentiful and gold mining is hard work.  Also the counterfeit if it was made of gold really wouldn't even be counterfeit.  And if you accidentally left it out in the rain, it wouldn't rust.  How cool is that?

Sat, 07/09/2011 - 22:06 | 1440694 sgorem
sgorem's picture

that's exactly why I'm buying all that shiny, superstitious, non-intrinsic, useless CARBON shit I can get my hands on!!.......... 

Sun, 07/10/2011 - 00:50 | 1440906 Oracle of Kypseli
Oracle of Kypseli's picture

Have faith my friend. Chemistry will save us. We will soon be able to separate hydrogen from water by a cheap chemical process with minimum energy input and solve the transportation, heating and cooling problems.

The process exists. But first...we must burn all hydrocarbons, to blow the doors of the competition. The byproduct of using hydrogen is water.

As far as power generation, safe mini nuclear units will replace the giants and eliminate voltage drop and electromagnetic waves of OH X-mission lines.

Chemists and engineers of the world unite.



Sun, 07/10/2011 - 01:13 | 1440967 slewie the pi-rat
slewie the pi-rat's picture

maybe they'll create gold in the lab, and we'll all be rich too! 
and good looking, which you are, already, but hey!  how about me?
right after the safe nuclear, probably. 
how long till they they figure out the wastes again? 
what to do with all the damned nuclear wastes? 
or do they "engineer" small "safe" thingies, so the problems are "small" and "safe"---like in japan...?  huh?
it's good to have imagination, tho
and big, strong, chemists and engineers who can fix any problem
except the ones they can't fix
in the structures which they designed, built, and sold. 
very, very profitably, too, i might add.
they're not offering to pay for the clean-up are they?
somebody else gonna take care of that for them?

Sun, 07/10/2011 - 09:49 | 1441197 mess nonster
mess nonster's picture

Now we're talkin'! Yes, I'm all for creating gold in the lab. That's why I'm investing in 16th century alchemy books...

Sun, 07/10/2011 - 22:58 | 1442523 tip e. canoe
tip e. canoe's picture

"Topflight international reverse-alchemy boffins say they have managed to transmute gold into an entirely new form of "negatively strange" antihypernucleic antimatter, ultra-bizarre stuff which cannot possibly occur naturally - except perhaps inside the cores of collapsed stars."

suggestion: don't forget to read Jung's work on alchemy.

Sat, 07/09/2011 - 21:08 | 1440547 Stuck on Zero
Stuck on Zero's picture

BTW.  The correct quote by Winston Churchill is: "You can always count on Americans to do the right thing - after they've tried everything else."

Sat, 07/09/2011 - 21:18 | 1440569 gdfghfdg
gdfghfdg's picture

In the long term gold will shoot up but before it does that it will fall to 200 dollars because of deflation.

I could be wrong about this because I am lousy at predicting the price of gold,


Sat, 07/09/2011 - 21:36 | 1440610 Robslob
Robslob's picture

New member at 2 weeks and 5 days... Hmmm

Yes you do suck when it comes to gold

Sun, 07/10/2011 - 01:34 | 1440997 Hugh G Rection
Hugh G Rection's picture



how the hell did you pass the captcha? Was it 0+0= ___


If gold goes to 200, I'll gangbang a room full of mentally disabled chimpanzees.

Sun, 07/10/2011 - 10:23 | 1441219 mess nonster
mess nonster's picture

You should hedge yourself, and make that 200 AND 2000. Then you won't have to forego any fun.

I know I said that gold is a superstition, and I suppose the best use for it is pavement, but I acknowledge the hold this superstition has upon us. Logic is or Vulcans. That's why I predict gold above 2000 in the next 12 months. Just to be perverse, I also predict this will be a sign of deflation... not of (fiat) money, but of energy accessibility. Peak Oil tells me that deflation is inevitable. But that does not preclude hyperinflation. If anything, hyperinflation is a sympton of rapid deflation.

Sun, 07/10/2011 - 23:30 | 1442581 tip e. canoe
tip e. canoe's picture

like the superstition angle.   ever wonder WHY glod has been a superstition (maybe the Original Superstition) through recorded "history"?

could there be something about glod that we have forgotten as a species, but the memory of is still embedded in our DNA, like a half-forgotten phantom? 

Sat, 07/09/2011 - 21:55 | 1440670 snowball777
snowball777's picture

But who's going to argue against the Constitution?


Funny that Grassley has forgotten that people in his position can propose amendments to it.

Sun, 07/10/2011 - 03:24 | 1441054 Libertarian777
Libertarian777's picture

umm. the whole of congress has ignored the consitutional requirement for CONGRESS to declare war on Libya (never mind the war powers act)... Grassley must have selective memory.

Sat, 07/09/2011 - 21:56 | 1440671 Sathington Willougby
Sathington Willougby's picture

The dollar is a measure of debt.

Sat, 07/09/2011 - 22:07 | 1440699 Beau Tox
Beau Tox's picture

A dollar is 4 rolls of toilet paper.  Buy the double rolls NOW and store them in your shed.  One day soon enough, 1 roll of good Charmin will be worth 4 dollars.  Then the white women will wail and gnash their teeth, for the glory of those days when 'ma toilette' occupied an hour of time.

Sat, 07/09/2011 - 23:08 | 1440785 I_ate_the_crow
I_ate_the_crow's picture

A dude named Schlick coined the term dollar?

Sun, 07/10/2011 - 00:13 | 1440861 I_ate_the_crow
I_ate_the_crow's picture

The one thing that CAN be  relied upon, is the fervor with which the Central Bankers of  the world will fight the notion of gold once again at the centre  of the financial solar  system with the various currencies all orbiting it.

Juxtaposed with:

Central banks have pulled 635 tonnes of gold from the Bank for Internatonal Settlements in the past year, the largest withdrawal in more than a decade.

Makes no sense.

The central banks of the BIS are pulling back their gold reserves in anticipation of the very thing your introductory history points out, the invariable return to some sort of a gold standard. If they succeed, the wealth of each nation will be determined by how much gold it possesses to convert into the new peg - just like every individual investor. I suppose it is possible that they could maintain the dollar in its current symbolic form in such a scenario, but obviously its value is a totally different issue. I don't think we are quite to the point where the world could be convinced to symbolically adopt an IMF SDR type of currency, but then again its early and these bastards are capable of anything.

Sun, 07/10/2011 - 11:37 | 1441324 Urban Redneck
Urban Redneck's picture

It makes perfect sense.

A "Central Banker" is a blend of 1 part Banker, 1 part Politician, and entirely untrustworthy.

Therefore, the central government politicians (also entirely untrustworthy) damn well don't trust their BIS (or other multilateral FI) representatives to look after their best interests - so the gold goes "home" to be verified and guarded, until such time...  

Sun, 07/10/2011 - 01:24 | 1440986 trgfunds
trgfunds's picture

You guys do realize that this infamous quote from the alleged Thomas Jefferson letter about banks being more dangerous than standing armies is a hoax right? I am not saying he didn't mistrust banking instituitons, but do some research and you will find that these are words placed poshumously in the mouth of a well-known dead person. Please be careful. There are TONS and TONS of fraudulent "quotes" out there from the founding fathers and other people which are curiously relevant to exactly what is going on today. Well, it turns out that they are far TOO relevant, and they are lies. Do your homework.

Sun, 07/10/2011 - 01:55 | 1441013 Boxed Merlot
Boxed Merlot's picture

At the end of Q3 2009 the BIS had 120 tonnes of gold. At the end of 2010 it held 500.7 tonnes. Why?

Coincidentally, the "official" holdings of Greece=111.6, Portugal=382.5 and Spain=281.6 tonnes.

The B.I.S. acquired this gold though a set of Currency / Gold arrangements the details of which have not been made public. But it was at about this time that the Eurozone debt crisis reared its ugly head...While a swap arrangement is not a sale of gold nor is it a disposal, it is sufficient for the B.I.S. to record the gold swapped as an acquisition in its books. But the central banks involved need not record its disposal, giving us a rather clandestine situation...

Julian D. W. Phillips - Gold Forecaster
Published : July 07th, 2011

Gold is not denominated in currencies, it's denomination is measured in sovereignty. This is an illustration of a business interest attempting to morph into a sovereign entity through possession of gold. imo

“Woe to you, blind guides, who say, Whoever swears by the sanctuary, that is nothing; but whoever swears by the gold of the sanctuary is obligated.’ You fools and blind men! Which is more important, the gold or the sanctuary that sanctified the gold?" - Jesus

Mt 23:16-17

Sun, 07/10/2011 - 10:39 | 1441229 mess nonster
mess nonster's picture

Very nice Bible quote! Thoughtfully placed, without the ususal Evangelical emotionalism.

Here's another: Revelation 18: 12-13, referring to the ecoomic collapse of Babylon: Well, i won't quote the whole thing, but it's a rundown of valuables, by Babylonian standards, a list of 28 items from most valuable to least valuable. It starts with gold, and ends with "the souls of men".

Perhaps in inversion of value, just as Jesus pointed out concerning gold and the Temple?

Sun, 07/10/2011 - 18:32 | 1442085 Boxed Merlot
Boxed Merlot's picture

Perhaps in inversion of value, just as Jesus pointed out concerning gold and the Temple?


An inversion of value, sort of like looking at yourself in a mirror? (the "image" of God)

If the place being prepared for us is described as not having a sanctuary but having "streets of gold", (i.e. as plentiful as dirt), I would think you're onto something.  We know our Creator values even one individual soul more than all matter, so my vote's on your understanding.  Thanks for the thought.

Sun, 07/10/2011 - 22:44 | 1442500 tip e. canoe
tip e. canoe's picture

wow, really interesting find...a subject for the tylers to dig into for sure.   the BIS QUADRUPLED their gold holdings in ONE YEAR?!?   wowowwowowowow

and yes, nice bible quote.   very apropos to our once & future past.


Sun, 07/10/2011 - 04:10 | 1441066 Byte Me
Byte Me's picture

The dollar is an agreed medium of exchange for the transfer of value between counterparties. Just like any other currency that individuals agree to use for similar book-squaring.

It also has an agreed global metric that has given the USA a privilaged position for many decades. This has naturally been abused, vastly so during the past decade. But it's still the local medium of exchange -- until faith in it is lost, at which point a very different dynamic ensues.

Sun, 07/10/2011 - 06:05 | 1441089 Yen Cross
Yen Cross's picture


Sun, 07/10/2011 - 08:28 | 1441136 Tedster
Tedster's picture

What's interesting to me, after the Comstock lode discovery, silver became so plentiful that silver dollars were basically shunned. Silver was the "fiat" money of the day, and at times was limited to purchases or legal tender up to five dollars. The story of the Comstock lode itself is interesting because the area was initially explored for and mining claims staked for gold. Hundreds of miners searching for gold. A thick heavy blue mud got into everything and made travel impossible. A savvy geologist took a sample of the mud and sent it off for examination and it assayed at something like 70 per cent pure silver. He then went about quietly buying up as many of the "worthless" gold mining claims as possible.

Sun, 07/10/2011 - 10:24 | 1441220 Inibo E. Exibo
Inibo E. Exibo's picture

Spurious quote is spurious.  Jefferson's actual words are actually better. 

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."

Sun, 07/10/2011 - 11:04 | 1441271 mess nonster
mess nonster's picture

Here are some interesting parallels between the current USA and the CSA. What happens when a gov't sells away all its gold, and is left with only the issuance of debt, in one form or another?

Sun, 07/10/2011 - 16:46 | 1441845 kevinearick
kevinearick's picture

Anatomy of Fascism

So, here we are, again, at a binary decision, double down on TBTF or get out from under it. TBTF assumes that power resides in the nucleus, in the past, exactly backwards. I suggest that the most powerful person on the planet is every person on the event horizon, none of whom may be seen from the nucleus, and, regardless, that power is negligible compared to the planet, and rarely warrants measurement by the universe.

Currency boils down to a promise, entrusting return made on past investments to the future, for NPV productive leverage. Stocks are a derivative of bonds, which are a derivative of currency, which is a derivative of a promise, to pay in the future, and therein lies (:)) the bait and switch.

The full faith and credit of the American taxpayer is bankrupt, not worth the paper, because Americans are not trustworthy by law. America is on the eve of failing Democracy because it borrowed against the future to maintain sunk costs in the present, for so long that it liquidated all historical investments. TBTF is the ultimate sunk cost.

Currency has no intrinsic value, but a percentage of the population is always lulled into believing it does. If you cannot trade currency intelligently, the value of which may be altered at will by its designers, you are not an investor; you are a consumer, and you will lose every time, when the casino is moved, if not before, unless you belong to the legacy system. It’s not rocket science.

Every tyrant presents the corporation, a legal figment of imagination on a piece of paper, as the bogeyman, promising to secure the people from its harm, at the cost of individual liberty in the beginning and social destruction in the end. “Never again” is bullsh**.

America is hated in net because it is enforcing stupid globally. Smart infrastructure to subsidize stupid is as stupid as it gets. Microsoft/IBM is stupid. Flag each core routine and run it until it crashes. Building ever bigger processors to keep it running is stupid times stupid. Then agency goes and subsidizes it globally, on the back of America’s full faith and credit in its military, as a design platform, “thinking” it can control the Internet and blackmail everyone, everywhere, Marvin the Martian.

On the back of all that stupidity, hoard as many houses, boats, and cars as possible, but don’t bother pleading peak anything other than government to the intelligent kids, who will be long gone while everyone else is still implementing smart navigation on their rear-view mirrors. By all means, deny access to the people designing the electrical hook-up with an electrical company built for the purpose, and have that same company lead the effort to design yet another make-work jobs program. That was a stroke of communication genius.

Wealth in the legacy class is a gravitational counterweight. When a middle class fails to remain neutral, it gets replaced. Governments fail because their law stacks are inelastic, which feeds inelasticity across the circulatory system. The bigger the stack, the bigger the devil, ending in TBTF every time.

Intelligent communities are largely self-governing; they do not require high density cops, firefighters, teacher, social workers, lawyers, doctors, blah, blah, blah. Economies require intelligent circulation to sustain current. When young intelligent people are crowded out by hoarding, the economy is as good as dead. Working from the middle class out, initially, makes the problem appear to be insolvable, because the middle class chased non-performing assets into the gravity trap.

Start from the bottom of the loop, positive feedback for immobility, and work up. The housing subsidies have to go to clear the market. Start from the top, those powers not specifically granted, and work down. Mandating civil family law has to go because its artificial property economy has crowded out the real productivity economy, to its own end. It’s a property short and a productivity open.

The addicts to free money are in charge of the pharmacy, paying themselves in drugs to addict children from birth, arguing that the producers just don’t understand the problem, like it’s something new. Addiction is a social event that blames the resulting individual for community failure, which has only one outcome, fascism. It’s a rerun; pull the hook, reset, and expect a different outcome.

America defaulted a long time ago. The argument among the participants rests on recognition, because the global virus, central planning, has run out of space to store all the resulting zombies. The real estate market is going to crash, and the people addicted to its sewage, free money in the self-replicating positive feedback signal creating the short, which is the majority of Americans due to the financial derivative misdirection, are never going to be ready. The fascists can’t get out of their own way.

The second city is always built over the ruins of the first. Virtual space was required because the physical space is now locked up, which was easily anticipated based on the momentum of the virus. Take the ball and run in the opposite direction of your own goal line. When you get to the 50, put the ball down and reset the system. Then play on your knees to make a game of it. Rinse and repeat.

Sun, 07/10/2011 - 22:40 | 1442486 tip e. canoe
tip e. canoe's picture

- was wondering where you were going with the whole sunk cost theme...think i get it now. 

- "Every tyrant presents the corporation, a legal figment of imagination on a piece of paper, as the bogeyman"  not just corp but gubbermint as well.    corps & gubs are golems, and everyone wants to treat the symptom and ignore the underlying sickness.   western medicine at its finest.

- "I suggest that the most powerful person on the planet is every person on the event horizon, none of whom may be seen from the nucleus"    well said and agreed, especially when those electrons start hopping around looking for other nuclei to orbit "invisibly".

- "America is hated in net because it is enforcing stupid globally." + "America defaulted a long time ago." = a nice little soap opera when the time finally comes to start calculating the "goodwill" section of USAInc's balance sheet.   cuz that's what it will ultimately come down to.

- "Marvin the Martian"   HA!   where's the KaBOOM????

Sun, 07/10/2011 - 17:25 | 1441940 Jovil
Thu, 07/14/2011 - 11:33 | 1456190 BigJim
BigJim's picture

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered.

Much as I love this quote, and agree with it, it appears to be misattributed:

Respectfully Quoted says this is "obviously spurious", noting that the OED's earliest citation for the word "deflation" is from 1920. The earliest known appearance of this quote is from 1935 (Testimony of Charles C. Mayer, Hearings Before the Committee on Banking and Currency, House of Representatives, Seventy-fourth Congress, First Session, on H.R. 5357, p. 799)

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