"This Is Your Friendly Goldman Sachs Prime Broker Margin Call"

Tyler Durden's picture

"Please sell anything that is not nailed down. Thank you. Oh yes, your invite to this year's Christmas elves party is in the mail"

Visualized another way:

Oh remember that record low NYSE investor net worth, and near record margin debt? Oops.

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Whizbang's picture

Boom. Headshot. Repeat after me: silver is not currency...

Dr. No's picture

Recession?  cash is king.  People forget the fundamentals.

max2205's picture

looked like a flash drop....how many trades went off then

Hephasteus's picture

It's all fun and games until august.

Boop's picture

In deflation cash is king...

Boop's picture

Maybe I shoulda said "In deflation cash is king".


And quite possibly my first Junk!  It is a red-banner day.

Whizbang's picture

We are in the grips of some serious inflation problems here, but the far more troubling problem is deflation. We will see inflation in items where people can afford to pay cash or easy credit like credit cards. Things like car sales and home sales that involve large amounts of credit are crashing right now, and the crash is accelerating. I just bought a 2br 2ba just outside of d.c. for 60k less than the last sale in 2009. Condos in florida are going for 6500 cash. I've never seen anything like it.


UncleFurker's picture

"Condos in florida are going for 6500 cash."


Guaranteed title?

Whizbang's picture

Foreclosures in boca raton for under 8 grand right now on homepath (fanniemae.com). It's insane. Fannie mae guarentees a clean title.

Careless Whisper's picture

can they guarantee a governor that isn't a criminal?

Mentaliusanything's picture

Funny thing is the banks still hold 'em at $180K on the books.

Heatburn (reflux) is a common ailment in the finance sector at the moment.

Those banker sure must have a big carpet to sweep this shit under.


johngaltfla's picture

LOL, hell no. Lien city baby.

trav7777's picture

people don't understand that this deflation is not like others; this one represents systemic insolvency where the basis for the debtmoney is eroding out from underneath it via default.

The very *monetary* system we used cannot, itself, be repaid.

Doña K's picture

True and simple statement.. and yet....many dispute it.

The fact that this deflation (if it does not run into hyperinflation) is unique, should alert you to maintain a cash to gold/silver ratio such that if deflation persists your cash will be king (as Boop posted and was junked) and if hyperinflation takes over, your gold will be king and compensate for the lost purchasing power of the cash.

What is that cash/gold ratio? you may ask.

Follow nature, harmony, art and geometry. Do you know that most of Da Vinci's and Salvador Dali's paintings are based on the geometric golden section? http://www.google.com/search?q=golden+section&hl=en&biw=1366&bih=822&prmd=ivnsb&tbm=isch&tbo=u&source=univ&sa=X&ei=LwvnTbnTFsbLgQeOx6z_Cg&sqi=2&ved=0CDoQsAQ

614/1000 Hence. if your liquid assets to be invested were $1614, have $614 in PM's and 1000 in cash or 38% PM's and 62% cash.


Hacked Economy's picture


You are absolutely correct that we can have both inflation and deflation at the same time, so don't pay attention to the noobs who junked you.

When credit is difficult to acquire (we all know the end of this sentence), the economy experiences a credit contraction, and if this is widespread enough, then deflation will result.  But not necessarily over all areas of the economy...it could simply affect the areas that are dependent upon credit.

For example, I just sold two of my ATVs via private party sales.  If the economy were jumpin', then I could have probably listed them for about $2000 each, because the buyers would only need to get easy loans (and concern themselves with the low monthly payments as most sheeple do).  But since a LOT of people have poor credit now due to past-due payments all over their FICOs, credit is not so readily available.  The price had to therefore be downgraded to a "cash" basis, which means they sold for only $1000 each.  The absence of credit/loans means less "money" (albeit debt) in the system, and lower prices for higher-ticket items.

However, we all know that food and fuel have been going up and up and up, and Der Bernankestein has been authorizing the creation of more "cash" (physical or electronic) to offset the decline in outstanding debt instruments.  This has led to inflation in many lower-priced items across the board.  After all, people don't typically seek loans to fill up their gas tank or buy groceries (unless they're maxing out their credit cards LOL).

It's all a bit more involved than the simple outline I've provided here, of course, but it is possible to experience both sides of the coin at the same time.  I have a great time watching the pro-deflationists and the pro-hyperinflationists flinging mud at each other on ZH.

I personally believe the fundamentals are present for an eventual hyperinflation that is seeing its first momentum beginning now, and will likely reach the classic tipping point circa 2013 or 2014.

Dr. No's picture

Gratz on the junk.. Looks like you got two even!

As I should have posted "in a deflationary recession, cash is king"

Robot Traders Mom's picture

Deflation is a myth. The dollar can strengthen relative to other currencies, but that is like being the tallest midget in the room. Money is always printed. The money supply only goes one way. Sure, they say they are tightening but that is euphemism for not printing as much.

Basic goods are up dramatically. If you cannot see that, you are nuts. The Fed is only concerned about one thing when they cite the justification of a loose monetary policy and "deflation:" Housing. And for obvious, toxic cleansing reasons.

spiral_eyes's picture

best zh post i've read for a while.

Hephasteus's picture

What was that 10 year war that caused a lot of inflation viet viet viet something.

Now take that (afghanistan)  add on iraq and throw in libya syria and iran. Hiding a 2 to 3 x decline in the dollar on top of a 2 to 3x decline to even make it appear legit.

el Gallinazo's picture

Hey Dr. No This is a hyperinflationary blog. Talking deflation and cash is king is like pissing on the statue of my favorite saint. Trash you :-)

SheepDog-One's picture

My .45 Silvertip ammo begs to differ with your opinion.

Mr Lennon Hendrix's picture

It doubles YoY because it is pretty.  Move along.

spekulatn's picture


Well done Mr Lennon Hendrix.

DoChenRollingBearing's picture

Mr Lennon,

I need a silver expert and bull to write an article at my blog.  You know a lot more than I do about Ag.  If you would be interested, please send me an email, my moniker at gmail.  Thx in advance.

Whizbang's picture

and then drops 35% in 2 weeks.

Bay of Pigs's picture

Yet gains well over 20% YOY for the last decade.

traderjoe's picture

You're funny. Yes, silver can be used as currency. But silver is MONEY. 

I bet you don't even know the difference. Do some research, and then get back to us, or not. Prefer the latter. 

traderjoe's picture

Really, that's your retort? Are you saying I can't go to my coin shop and trade a coin for some FRN's? Isn't that the definition of a currency - a medium of exchange? And yes, I deal with other vendors who will trade silver for goods and services. 

In 1964, my quarter could buy a gallon of gas. Now my 1964 quarter can buy 1.5 gallons of gas. That's a store of value - that's money. 

Dr. No's picture

A store of value does not have to be money. Mises said money was the most marketable commodity.

Whizbang's picture

Thats the very definition of a commodity, not a currency. Have fun with your silver.

Bay of Pigs's picture

WTF are you talking about?

Whizbang's picture

"Are you saying I can't go to my coin shop and trade a coin for some FRN's? Isn't that the definition of a currency"

No, it's the definition of a commodity. Commodities need to be converted to currencies which can then be exchanged for commodities of a different type. A currency is directly convertable between all commodity classes, particularly the USD. So no, silver is not a currency it's a mother fucking commodity. It can be used for black market/barter transactions on a small scale, but that is all for now. 

Doña K's picture

You may want to check the US constitution on money/currency

traderjoe's picture

Yes, but you can't use bushels of wheat or barrels of oil as currency. Have fun with your cotton and linen inscribed debt-money. 

Whizbang's picture

You can't use silver either, or you got to prison for terrorism and Anti american activities. I'm not a fan of the FRN or Fractional Reserve Banking myself, but it's the way it is. For the time being, the USD is the only currency you're going to see. I feel awful for all of the people that bought silver at 50.

Absinthe Minded's picture

You don't have to broadcast the fact that you're using silver to barter with. The fact is you can barter with anything of use or value. Bought some at $37, a little scary but got most at around $16. Pure dumb luck.

tmosley's picture

So just because some crackpot third world country jails people trading with US dollars, the dollar isn't currency?


oddjob's picture

I feel sorry for government slaves who are now realizing their pensions will be worth zip.

Rodent Freikorps's picture

Government always feeds itself first. You will suffer before they do.

tmosley's picture

So the British pounds that I have are a commodity, not a currency, since I can trade them for dollars at the bank?

Amazing, Holmes!  Tell me, what are they used for?

MrSteve's picture

"there's two kinds of money; cash and all others."