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Chart Of The Day: From Here To QEternity - Here Come The Central Printers

Tyler Durden's picture





 

With the liquidation driven collapse in the precious metals one of the most discussed events in the past two days, some are wondering: is the era of sound money over? Is the world suddenly a better place, and does infinite money dilution - the only source of nominal, not real, stability in the world - mean paper money will soon be seen as a safe haven once more? No, no and no. Obviously. And no, the sell off is not driven by the Mayan apocalypse due in a few hours. In fact, it is very amusing how quickly a snapback in paper prices of any one product can shift trader (we would say gambler, but that is an insult to gamblers everywhere) sentiment, especially when it has been reported time and again that unlike stocks, precious metals are the only commodity that is looked upon by central bankers with nothing but disdain.

So what do these central bankers propose as an alternative to sound money? The chart below shows precisely that, by projecting where the balance sheets of the final backstops of the modern financial world will be in one year. In short: far higher - driven by what? Why even more paper money dilution of course. Which is precisely the issue at hand - in a closed loop world in which relative currency devaluation does nothing to raise absolute global value, and merely shifts relative benefits from one actor to another, the only way the world can "grow" now that it has reached maximum leverage capacity is to devalue currencies but not against one another, but in a coordinated fashion against a hard asset(s). Which is precisely what will eventually happen. And that hard assets will be gold, silver and/or anything else that historically has had monetary equivalency. That daytraders seem to ignore or forget this fact is, well, expected. After all there are margin call demands to be met: everyone else should be delighted that real money is suddenly on sale.

Central Bank Balance Sheet as a % of total host GDP (via Guggenheim):

And a chart showing how much gold and silver the central banks will print in the next year: 

 

 

 

       [Insert chart here] 

 

 

 

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Thu, 12/20/2012 - 11:59 | Link to Comment Pharming
Pharming's picture

I had to put it in perspective to fully grasp this large economical pile of horse shit.

So, I put my own finances in relation to the good ol'United States...(approx with USDEBTCLOCK.ORG)

 

My wife and I bring home approximately $195,600 per year.

So, $16,300 / month.

We have monthly mortgage/bills/expenses of $23,600 / month.

I have outstanding liabilities of $1,360,000.

I have future unfunded liabilities of $9,800,000.

My inlaws and parents live with us (I give them an allowance).  My son is unemployed, I loaned my daughters money for school but they can't repay me and are working part time. I maxed out my 19th Cabela's Card.  Lot's of points though.  My printing press is working 24/7 but I just can't stop buying stuff with my Amazon App.  My wife doesn't really care about decreasing her spending for our spoiled little brats even though they are in their 20's and should be supporting themselves by now.  NOT to mention my daughters, who live with us, can't keep their legs together AND they know if they have another kid, my wife and I will be pitchin in more to support em.

Did I mention that our refrigerator is completely out all the time from all of my "family, parents, kids, grand kids, pets..." But you know me, if you want to eat out of my fridge, I'll buy more food...

I want to buy more.  I want a bigger house.  I want a better paying job, but those just aren't out there.  I wonder if I can get a couple more credit cards to get my by...at least till my kids can pay it off...  

What do you think?

Thu, 12/20/2012 - 12:02 | Link to Comment RallyRoundTheFamily
RallyRoundTheFamily's picture

I think it was a great post.

Thu, 12/20/2012 - 12:09 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

at least till my kids can pay it off...

 

So Ben Shalom uses your kid's future paycheck to force the metals down so he can buy with his money and then he moves to Idaho.....works for him.

Thu, 12/20/2012 - 12:33 | Link to Comment TheSilverJournal
TheSilverJournal's picture

Just make sure you don't stop borrowing, or else you are putting yourself at risk of going broke!!

Thu, 12/20/2012 - 13:15 | Link to Comment Pharming
Pharming's picture

Hahaha...fools...What me worry?  I own the banks!   hahahah....suckas....

Thu, 12/20/2012 - 14:11 | Link to Comment francis_sawyer
francis_sawyer's picture

Your kids are the 'kick the can' bait [promise] that made the last 100 years of jew bankers live fat & happy... Now go remind them how persecuted the jews have been throughout history and how ahamed they should be... Convince them that they should give their 100% support for the Apartheid State of Israel...

Thu, 12/20/2012 - 15:34 | Link to Comment weburke
weburke's picture

If you will do better analysis, by reading at zero hedge actually, you should be able to discern that it is not Jews at the top. Also, guess why media always refers to the "state" of israel. You dont hear them say the "state" of russia, england, francec, india, ect. Hello 51'st state. Lots you dont know Francis !

Thu, 12/20/2012 - 12:47 | Link to Comment Ghordius
Ghordius's picture

me too. I'd wish some mention of the foreign creditors and suppliers, though

btw, "expenses of $23,600 / month"? this means your hobby with weapons costs some $4'000 / month, doesn't it?

perhaps, just perhaps you should have a talk with your arms and ammo dealer

Thu, 12/20/2012 - 15:44 | Link to Comment Frozen IcQb
Frozen IcQb's picture

It would actually be hilarious if some parts of it weren’t true.

Thu, 12/20/2012 - 12:06 | Link to Comment Navymugsy
Navymugsy's picture

You should run for office as you appear to be highly qualified in economical matters.

Thu, 12/20/2012 - 12:28 | Link to Comment Pharming
Pharming's picture

I thought about it...but I'm on too many watch lists.  

Thu, 12/20/2012 - 12:31 | Link to Comment PlausibleDenial
PlausibleDenial's picture

Are your daughters hot???  I can think of an alternative cash flow source....:)

Thu, 12/20/2012 - 12:38 | Link to Comment AgShaman
AgShaman's picture

19th Cabelas' Card?

You're my hero.

Thu, 12/20/2012 - 13:12 | Link to Comment Pharming
Pharming's picture

Actually, while you were reading this...I just got my 20th!

Thu, 12/20/2012 - 12:52 | Link to Comment Tombstone
Tombstone's picture

You might need to kidnap Benny and his printing press.  Then again, raiding Fort Knox might help a bit.

Thu, 12/20/2012 - 13:11 | Link to Comment gmrpeabody
gmrpeabody's picture

You may be greatly disappointed with your take at Fort Knox.....

Thu, 12/20/2012 - 13:11 | Link to Comment jbvtme
jbvtme's picture

how about you and the bride in a three way with your accountant?

Thu, 12/20/2012 - 13:22 | Link to Comment Pharming
Pharming's picture

By the way, my neighbors?  They're awesome...I throw these huge parties...(I flip the bill)...girls, prime rib, Red Hook kegs, Estancia.  Then after the parties...get this...my neighbors let me come over, punch holes in their walls, blow up their shit...   My neighbors?  They really don't care.  It's crazy.  Maybe it's because I let em sleep with my wife, and I pay for all the damages.  What a bunch of suckers.   Man...  Yeah..  I just can't get enough.  Whoooo....!

Thu, 12/20/2012 - 15:23 | Link to Comment yogibear
yogibear's picture

Your not alone. You have better income than many I know. Bubble Bernanke and the fed will just massively devalue the debt and currency. It's their only solution and it's currently in-progress.

Thu, 12/20/2012 - 15:57 | Link to Comment Lore
Lore's picture

Pharming: "What do you think?"

Pity nobody seems to have the personal grit to raise a hand and say STOP.

Whatever happened to American PRINCIPLES and GUTS? 

Only one congressman showed willingness to stand up, and he was shown the back door.

Thu, 12/20/2012 - 12:01 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

When all you produce is fiat, every problem looks fixable with fiat.

Thu, 12/20/2012 - 12:05 | Link to Comment Unprepared
Unprepared's picture

"When all you have is a printer, every problem looks it can be fixed with a Ctrl+P"

Fabbrica Italiana Automobili Torino quote

Thu, 12/20/2012 - 12:04 | Link to Comment SelfGov
SelfGov's picture

The economy isn't happy.

People are needing money fast to cover paper losses so they sell the only thing of value they really have, grudgingly.

 

Gold and silver should be honored everybody is turning to them in a pinch...

Thu, 12/20/2012 - 13:41 | Link to Comment sitenine
sitenine's picture

Not really. No one is selling phyz (unless they are playing the backwardation spread). Selling gold and silver paper to cover other paper losses might make some feel smart, but all they are really doing is driving the price of phyz down so that I can buy more.  I'm not into contracts either - I buy at spot and stack immediately because delivery will be impossible shortly. Backwardation will grow in magnitude as more and more folks start to realize this inconvenient truth.

Thu, 12/20/2012 - 12:04 | Link to Comment Winston Churchill
Winston Churchill's picture

a 1933 redux perhaps.

A total deflationary collapse in progress ?

We just can't see the wood for the trees.

Thu, 12/20/2012 - 12:04 | Link to Comment A. Magnus
A. Magnus's picture

What if they're taking all that new fiat from QE4 and piling it into gold and silver shorts to suppress the price? How long could they keep THAT up?

Thu, 12/20/2012 - 12:23 | Link to Comment SelfGov
SelfGov's picture

Fortunately, not longer than I can keep buying...

Thu, 12/20/2012 - 12:04 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing has decided that only two assets are worth holding.  Both are precious metals related.

1) Au, Pt, Ag, Pd and some Pb (and Pb delivery devices)

2) Products made out of 52100 bearing steel:

http://tinyurl.com/d8fhlg9

Thu, 12/20/2012 - 12:37 | Link to Comment CPL
CPL's picture

Hard to beat the investment quality of a 50 pound box of steel, heavy gauge, framing nails.

 

2005:  Let's see $12.48 cents with tax (%15 PST+GST) in 2005

2012:  Currently $167 (working in taxes now at 13%) Canuckbucks for the same box of nails at Home Depot.

 

I'm glad I bought 800 lbs of good fixtures to combat all the non inflation we are having.

 

Thu, 12/20/2012 - 15:38 | Link to Comment gmrpeabody
gmrpeabody's picture

But, really...., there is no inflation because you can substitute those steel nails with iron..., or even wooden pegs. Eventually, you may be tying your home together with strips of hide or hair, but that in and of itself is not evidence of inflation.

Thu, 12/20/2012 - 14:13 | Link to Comment TuPhat
TuPhat's picture

Good luck with the high speed Pb trading.  Don't be caught short of delivery devices.

Thu, 12/20/2012 - 12:07 | Link to Comment Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Damn!  I bought some physical AG yesterday, timeing the bottom is a bitch!

Thu, 12/20/2012 - 12:56 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

Keep stackin'....  in the long run price is got no where to go but up...

Thu, 12/20/2012 - 13:01 | Link to Comment Snoopy the Economist
Snoopy the Economist's picture

You really thought the bottom was in when the monthly and weekly stochastics were rolling over and the VIX is so low?

Thu, 12/20/2012 - 13:36 | Link to Comment Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Actually no, but I don't buy on technicals I buy on weakness and if I ever do time the bottom it will be pure luck and nothing more.  Happy stacking!

Thu, 12/20/2012 - 14:02 | Link to Comment Whalley World
Whalley World's picture

I hate to say this but i have a sizeable commission coming at month end and hope they can keep the prices down till then.

 

Thu, 12/20/2012 - 12:07 | Link to Comment Unprepared
Unprepared's picture

B. Shalome B. is slacking. Get to work Mr. Chairman!

Thu, 12/20/2012 - 12:07 | Link to Comment Dr. Engali
Dr. Engali's picture

Let the day traders ignore this fact to their own peril. I will gladdly capitalize on any weakness I can.

Thu, 12/20/2012 - 12:07 | Link to Comment youngman
youngman's picture

It will happen...the question is when....at what point does the "world" finally quits playing this game...I drink way to much pondering this question...

Thu, 12/20/2012 - 12:08 | Link to Comment mdtrader
mdtrader's picture

That should send gold below $1536 and into a bear market.

Thu, 12/20/2012 - 12:13 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

So short it and save up to buy first printings of the new $100 dollar bills on QVC. Only costs $250 each....but there is a strict limit of five per customer.

Thu, 12/20/2012 - 12:38 | Link to Comment CPL
CPL's picture

Shut up and put your money were your mouth is.

 

Short DUG and we'll talk in a month.

Thu, 12/20/2012 - 16:02 | Link to Comment Frozen IcQb
Frozen IcQb's picture

I would prefer shorting both DUG and DIG simultaneously. The basis convergences on these products are steeper than your borrowing costs.

Thu, 12/20/2012 - 12:11 | Link to Comment buzzsaw99
buzzsaw99's picture

everyone here would agree that the multi trillion $ stock market ponzi could collapse at any time, same same for the mega multi trillon $ bond market yet everyone is expecting hyperinflation. whatever.

Thu, 12/20/2012 - 12:17 | Link to Comment adr
adr's picture

Basically you're fucked unless you figured out a way to make money without working.

Sadly millions have, along with everyone for the last few thousand years whose last name ends with ein.

Thu, 12/20/2012 - 13:42 | Link to Comment halodoc
halodoc's picture

Of course there will be hyperinflation, after the self-correcting, hyper-deflation that is.

Thu, 12/20/2012 - 12:10 | Link to Comment praps
praps's picture

 

Stocks and bonds to be liquidated next.

Thu, 12/20/2012 - 12:11 | Link to Comment Schmuck Raker
Schmuck Raker's picture

The US is waaaaaay behind in this horse race(to the glue factory).

"Get to work Mr. Bernanke", and fuck you.

Thu, 12/20/2012 - 12:12 | Link to Comment jbvtme
jbvtme's picture

check out tulving and how much product they are sold out of...

Thu, 12/20/2012 - 12:33 | Link to Comment LeisureSmith
LeisureSmith's picture

derp.

Thu, 12/20/2012 - 12:14 | Link to Comment adr
adr's picture

Life measures inflation better than Bernanke.

Six years ago I could easily get by on $20 a day to feed my family.

Four years ago it was about $25-$30.

Now it is hard to spend less than $40. I find $50 a day leaving my wallet very easily.

100% inflation in six years. But that is only food so it doesn't count, right? And no we didn't add more kids.

Thu, 12/20/2012 - 14:08 | Link to Comment Whalley World
Whalley World's picture

Vegan's eat cheap, not sheep

Thu, 12/20/2012 - 12:15 | Link to Comment wcvarones
wcvarones's picture

WTF are those left axis labels?

Thu, 12/20/2012 - 12:16 | Link to Comment wcvarones
wcvarones's picture

Ah, % of GDP I guess

Thu, 12/20/2012 - 12:16 | Link to Comment rsnoble
rsnoble's picture

And exactly why should daytraders give a fuck about any of this?

As long as they are putting some of their $ elsewhere (considering if they are profitable) none of this bullshit matters.

Thu, 12/20/2012 - 12:18 | Link to Comment adr
adr's picture

Kind of like the banking post. By participating in the market, even if you make money, you are supporting an immoral institution bent on destroying the world.

Thu, 12/20/2012 - 12:27 | Link to Comment rsnoble
rsnoble's picture

Right, of course you are making a different point that is perhaps more in tune with the article.

Thu, 12/20/2012 - 13:37 | Link to Comment viahj
viahj's picture

same as spending 50 Bernie Bucks a day on eating out, surely that supports the immoral institution as well.

Thu, 12/20/2012 - 12:17 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

..is to devalue currencies but not against one another, but in a coordinated fashion against a hard asset(s)

I have been saying it here for years...syncronized diving.

Germany, like Japan, are post-war pawns. Their currencies are DESIGNED to be debased, as and when needed, to achieve synchronized diving with the pound and dollar. If Germany wasn't in the Euro, its prior experience with hyper-inflation would prevent it from debasing when instructed to do so (obviously not a problem with the Nips). Both countries go along as willing pawns simply because they have been re-created post-war as export nations totally reliant on weak currencies.

 

The PIIGS profligate spending has ALWAYS been there, like a fat store, and can be used by the brain when needed to feed the body.

 

http://www.zerohedge.com/contributed/2012-21-24/will-grexit-be-euro-positive-or-euro-negative

Thu, 12/20/2012 - 12:18 | Link to Comment Smuckers
Smuckers's picture

Why does it feel like we are getting water-boarded with the Kool-Aid?

Thu, 12/20/2012 - 12:18 | Link to Comment youngman
youngman's picture

It is sureal....the NYSE being sold????? gold and silver dropping....in my little Econ 101 mind this is ass backwards....Central banks all printing....dollar down....????  WTF

Thu, 12/20/2012 - 12:45 | Link to Comment nope-1004
nope-1004's picture

If it isn't believable, then it's a con.  Simple as that.  Your gut is correct, this is ponzinomics at its finest in the name of desperation by money laundering banksters.

 

Thu, 12/20/2012 - 12:18 | Link to Comment Iam Yue2
Iam Yue2's picture

Don't worry; The upswing in US real estate prices, is the first real sign of an asset price bubble, that will be followed by inflation. 

Thu, 12/20/2012 - 12:21 | Link to Comment adr
adr's picture

Not seeing any upswing in my town.

Now Beachwood, OH Jewdos, there's some appreciation there.

Thu, 12/20/2012 - 12:20 | Link to Comment casaananda
casaananda's picture

I've got close to 460 oz of gold and some 1000 oz of silver well secured, own a 700k house outright and and renting a room in it to help offset taxes and expenses, but not completely. No other debts of any kind. I can't even get a Sears charge card because I have no fucking credit history whatsoever. And I have friends who are flat broke and getting ads all the time for credit cards. It's an insane system. O yeah, and another 140k at the moment, if liquidated, in a brokerage acct full of dogs (mining stocks and such) containing unrealized losses of 160k. This current PM price decline is hurting a lot, but I will hold on cause I just cannot see anywhere else to invest at age 65. Bonds are a huge bubble, as may well be stocks in general.I have a 27 year old son who has no debt and is working in Asia, but coming home next summer to go to medical school, either in NC or Rhode Island and sadly, I don't feel I can assist him financially and he will have to load up on debt to get through the next four hard years of study. He's a very bright kid and got into a number of the top med schools in the US, but the debt thing bothers me and I hope he will be okay. But at the same time I am utterly despondent about the US now and all the goddamn shenanigans, manipulated markets, dysfunctional government, US support of Israel (which is nuts), social fraying, decimation of the middle class, Obama's BS and all the rest. I hope I live long enough to see virtue triumph, but I don't think I shall. Yes, I know a lot of ZH'ers are not in such good shape relatively, but what a pain. O I do remember the 80s when one could collect 7-8 percent in muni bonds, tax free, but I don't think the US will ever again see that. Wish the whole fucking system would crash and we could start from strratch and we could start from scratch and and rebuild the USA. Any comments suggested, esp re PMs at thisnpoint. My cost basis BTW was about 800/oz. I gotta wonder, too, about people like James Turk and others calling for 5k plus gold. It seems like utter BS at this point...

 

Thu, 12/20/2012 - 12:46 | Link to Comment northerngirl
northerngirl's picture

You have set a wonderful example for your son.  I hope he will forgo massive debt in student loans and work his way through medical school.  It is tough, but can be done. Uncle Sam has taken over the student loan program, and he will be a debt slave for many years, and that is not including the massive debt he will have to pay in the form of income taxes.

I tell my children to buy and hold PM, and when I say hold I mean hold until you need that silver or gold to purchase a loaf of bread. Most of the time they will just roll their eyes at me, but when I ask them for a better alternative they are silent.  They understand that the massive bail outs and Fed monetizing has done nothing more than keep worthless assets at artificial unrealistic prices.  While they do not fully understand the entire scope of what is happening in our world, they understand enough to realize that their friends that are absorbing debt in the form of student loans, car loans, and credit cards are making fool hardy decisions.  

I don't care what the talking heads say there will come a time when gold and silver will prove to be the safe/smart investment, maybe not in my life time, but in my children's.  The world will only stay upside down for so long eventually we will turn right side up! 

Thu, 12/20/2012 - 13:11 | Link to Comment Snoopy the Economist
Snoopy the Economist's picture

How much profit will be realized once one pays taxes to gov't when selling PMs and being paid back in inflated dollars? Doesn't that decimate the profit?

Thu, 12/20/2012 - 17:21 | Link to Comment marathonman
marathonman's picture

Ding, ding, ding!  Winner, winner, chicken dinner!

You have to buy the physical with debt and let the currency devaluation provide the profit.

Thu, 12/20/2012 - 12:51 | Link to Comment zebrasquid
zebrasquid's picture

You might consider buying some short term GLL puts to hedge your gold. Might be a bumpy ride for awhile.

Thu, 12/20/2012 - 12:52 | Link to Comment Frozen IcQb
Frozen IcQb's picture

Your post was moving and the content share by many here. As for PM shares, you have to ride it out as I’m sure you know but may want to hear it from others. Both shares and bullion are insanely cheap considering the increases in the money supply. Any small lack of confidence and the velocity of money will detonate and ignite the money supply as barrels of fuel. Quality hard assets will spike.

Thu, 12/20/2012 - 13:04 | Link to Comment SmoothCoolSmoke
SmoothCoolSmoke's picture

Good luck to you. Idea for your son regarding Med School.  Tell him to join the Army/Navy/AF.  Service will pick-up the entire cost of Med School + living expenses.  For that he has to serve 4 years upon graduation....... but he'll get some of the best on the job medical experience there is in the service.  When he's all done he'll be 36-37, an MD with an impressive CV....and debt free. 

Thu, 12/20/2012 - 17:24 | Link to Comment marathonman
marathonman's picture

Unless he gets his ass killed in the next war to keep sustaining an unsustainable debt based system....

Thu, 12/20/2012 - 13:18 | Link to Comment Crash N. Burn
Crash N. Burn's picture

The silver you can hold in your hand is real. The shares of silver mining companies are real. The (limited) number of legitimate bullion-ETF's who directly hold their own silver are real. But in the “magical” world of silver, everything else is merely a bankster-illusion.

 What else is real - "We know that by 2005 silver inventories had been reduced by 90% in just 15 years".

Inventory-Fraud Increases in Silver Market

Thu, 12/20/2012 - 12:23 | Link to Comment FLUSA.com
FLUSA.com's picture

One of the only thing doing worse then Silver today is NIA's Sync stock suggestion down 6.23% today alone. NIA used to be so great a producing videos on Silver and the economy...I miss the old NIA

Thu, 12/20/2012 - 12:24 | Link to Comment Silver Garbage Man
Silver Garbage Man's picture

Right now you can pick up a monster box for less than 17 grand.
Bury $17000 and a monster box(500 oz silver). Which one do you think will have more buying power in 2 or 5 or 10 years ?

Thu, 12/20/2012 - 14:58 | Link to Comment Anusocracy
Anusocracy's picture

Bury $17000 and Ben Bernanke.

Which one do you think will have more purchasing power in 2 or 5 or 10 years?

My guess is Ben's corpse. It probably has gold fillings.

Thu, 12/20/2012 - 12:26 | Link to Comment muppet_master
muppet_master's picture

spx @ 1447 = TOP

just 2 days ago.....just like spx 1474 on day after QE3 = TOP...yes i called both TOPS here on ZH...

NO i'm not dyslexic !!

Thu, 12/20/2012 - 12:30 | Link to Comment SelfGov
SelfGov's picture

Get your gold and silver before the oil production decline really sets in.

Seriously

Thu, 12/20/2012 - 12:32 | Link to Comment holdbuysell
holdbuysell's picture

Gresham's Law to kick into overdrive in 3...2...1...

Thu, 12/20/2012 - 12:51 | Link to Comment stockscooter
stockscooter's picture

Here's my Chart of the Week.  It could pertain to the central bankers, as well.  Maybe they need to buy gold on the cheap. There could be a relationship to gold breaking down here and the short-cover rally on the broad markets this week.  I would be interested to see what others think is going on.

http://stockscooter.wordpress.com/2012/12/20/gold-aint-lookin-pretty/

Thu, 12/20/2012 - 12:51 | Link to Comment Quinvarius
Quinvarius's picture

Are we starting to see capital flight from the USA?  This move in gold along with the crap treasury data makes me think people are selling here and moving overseas.  I think Peter Schiff is possibly about to be right again.  It will be interesting to watch stocks and see if they can stay up.  If you don't understand that, read up on what Martin Armstrong said about 1987. 

http://www.freerepublic.com/focus/f-bloggers/2799459/posts

>>>Martin: Well, I think largely the difference was that our clientele was international. And that really forced me to look at everything through everybody else’s eyes. And what you begin to see is that unfortunately in the United States, the predominant economic community tends to look at just the United States as if we are the only thing that really matters. And I think largely that is where they always end up failing. For example, the ’87 crash, the reason we were really the only firm that was able to forecast that was simply because it is a fairly common sense thing. I mean, if you have sold all these assets – I mean the Japanese bought Rockefeller Center, all the bonds in the United States et cetera they were buying – and then you stand up, you form G-5, which is now G-20. But in 1985, and then you say, well to ease the trade problems and create employment in the United States, we are going to force the dollar down by 40%. So they do not understand because they only look at it from an American perspective. But if you bought a lot of assets in Mexico, and Mexico stands up and says, by the way, we are going to devalue the Mexican peso by 50% next week. Don’t you think you would sell and get out of there?

That is the problem in America is that we do not understand or respect so much the impact that we have globally. And the ’87 crash took place because of foreigners selling everything. And if you look at the economic statistics, nothing happened. Interest rates didn’t rise. There were no bad economic numbers, absolutely nothing. And that is what made it such a shock to everybody domestically, and that is when we got called in and the Brady Commission at the end said – well they did not want to admit that the G-5 cost them. At the end they said, well we think it had something to do with currency. And when you are getting into these currency swings of 30 – 40% in a two or three year period, you are dramatically changing the way capital moves globally. And probably any of your listeners that are invested in emerging markets or in Europe, whatever you have made on a particular stock in Europe, you have lost by the decline in the Euro. So, it does not much matter if I say, gee look I can make you a billion dollars real quick in Zimbabwe and they are going through hyperinflation. And it doesn’t mean anything. So, you have to really look at things on a global perspective, and that has been largely the problem in the United States that it is too domestic in all its forecasting and everything else. <<<

Thu, 12/20/2012 - 13:14 | Link to Comment casaananda
casaananda's picture

Thanks for the thoughful comments re my long situational post above. Truly, I understand I am going to survive at least until I get ill, but of course the worry is primarily over children living in this insane country. Son will do well in med school, unless he's somehow overwhelmed by distractions like debt uptake and general chaos in the US. But I hope not, of course. The real problem I think we all face is just having CONFIDENCE (like we formerly could) in our instituions, where they be legislative or regulatory. CONFIDENCE that decent people are running to show. Of course for a long time any thoughful person would have to say it's not attainable right now. This is one reason I bought PM's with savings in 2008 and incrementally more since then, but when I see what's happened in the past week, and at other times, it's hard even to have confidence in one's investment decisions, or even in PM's. The weird thing is that one one owns some PM, has it physicially, it's well nigh impossible to go back to paper, to sell any of it. I can't and I won't, and I hope to God I don't have to start selling it to pay my expenses.

Thu, 12/20/2012 - 15:23 | Link to Comment Nobody For President
Nobody For President's picture

I know exactly what you mean - I'm 73 and been in the markets since '64. Been playing at day trading the last 18 months to keep me occupied - I can assure you the markets are very broken indeed - the Russel 2000 index this last month for example...

Investing is more or less dead - it is shortest time frame possible for profit taking - usually less than a second.

Fundamentals are dead.

I have 3 college graduated children - one doing very well in tech and avoiding debt, one very middle class semi-debt ridden, and one under-employed but debt free and considering a retreat to grad school, which her college fund can handle - but it is truly a bitch for my grandchildren. And with the NDAA unleashed upon us, I fear, as a veteran, very much for my country.

I am not as well off as you, but have enough, mostly because I live in the boonies in a good community of friends, and we will probably get by staying together in the future, no matter what, but I could be wrong about that, too. I have no debt - as in zero except this month's credit card bill, which will be paid when due. Own the house and land, off the grid - I actually consider myself rich, but most people would not.

But such a mess we have left the children.

I weep for what my country has become. So much optimism and hope has been killed by the greed of the few. I certainly have no advise for you, except perhaps to move out of the city if you are in one to a more rural, community-based environment, and get to know your neighbors...

Thu, 12/20/2012 - 15:27 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Noticed that you said (and in two instances, all caps) confidence.  You managed to see through the con (which is what confidence is) and divested from that con.  Now they're trying to con you into doubting your disbelief in their con.  Tricky stuff.  KISS principle.  They literally can't hit the brakes on the USD devaluation, because they are presently bankrupt.  You are one of the few people in this country with actual money.  This will become disconcertingly obvious over the next few years, as it has over the past 10 years.  Mind you, gold priced in dollars dropped 30% during the stock market crash.  The stock market crashed 50%+.  This begs the question:  "Why not stay in cash then, or UST's", but of course, you already know why.  

Thu, 12/20/2012 - 13:40 | Link to Comment youngman
youngman's picture

An interesting factoid came out today....it was on Bloomberg....that China has cancelled severl soybeans contracts with the USA.....and instead is buying from Latin America countries...hmmmmm...wonder why????  Cheaper????  or is it to control the production???  Commodity control????

Thu, 12/20/2012 - 15:10 | Link to Comment Nobody For President
Nobody For President's picture

youngman, it could be more a matter of currency control - i.e. they are using the yuan instead of dollar standard with Latin America.

Thu, 12/20/2012 - 14:20 | Link to Comment donkshover
donkshover's picture

I am putting my retirement future into poker  I can just wheel my butt into a poker room   or play online. I just hope the feds dont legalize it because their rake will be huge!

Fri, 12/21/2012 - 05:11 | Link to Comment Element
Element's picture

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