A Peek Behind The Mirage Of The Dollar's "Flight To Safety"

Tyler Durden's picture

Whether by intent or good fortune, gold's plunge in the last few days has reduced its appeal as a store of wealth and spurred the more central-planner-biased view that the US Dollar is the 'safest' place to deposit your hard-earned after-tax wealth. However, as Cypriots learned the hard way, trust in the entire system depends on the counterparty (in the case of bank deposits, you are implicitly lending your money for no return to a highly-leveraged entity) covered by an FIDC guarantee. As the following infographic makes very clear, that level of trust is remarkable when the reality is that gold is an asset without any counterparty risk and without any implied risk.


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IridiumRebel's picture

All your deposits are belong to us.

macholatte's picture
The Dollar's "Flight To Safety" ???


Where does the dollar go when it's looking for a place to hide?


hooligan2009's picture

seems to me that we have the wrong designation on dollar bills...should be the banks issuing the currency rather than the pretend "in god we trust" folk at the fed...its in JPM or GS or BofA etc

Manthong's picture

"gold's plunge in the last few days has reduced its appeal as a store of wealth"

..only to those who don't understand and feel that this time is different.

dunce's picture

Before the banks took over the world it might have been safe to put trust in God, but today the safer bet is to put your trust in go"l"d.

Papasmurf's picture

Ezekiel 7:19  "'They will throw their silver into the streets, and their gold will be treated as a thing unclean. Their silver and gold will not be able to deliver them in the day of the LORD's wrath. It will not satisfy their hunger or fill their stomachs, for it has caused them to stumble into sin.

Scarlett's picture


They go to Argentina, where "Buying or selling dollars in the black market has been considered an ACT OF TERRORISM since December 2011 and carries prison sentence of as long as eight years"



That's the future.  Buying/selling gold, silver, bitcoin, etc is for TERRORISTS, enemies of the police state.  Please report to your local Gestapo, boys.


hooligan2009's picture

bitcoin now having a great time at 69 bucks (and deer...sic?)


Seer's picture

"Argentina, where "Buying or selling dollars in the black market has been considered an ACT OF TERRORISM"

Here in the US they openly endorse the circulation of counterfeit currency that is the USD.  Have to wonder who it is that's the fucked up country...

Poor Argentina, the test ground for Chicago economics...

smlbizman's picture

exactly...they printed them, they must be theirs....we should be grateful assholes and thank them for allowing us to use them...

RideTheWalrus's picture

This kind of printing would actually provide a lot of jobs if they required all that cotton, paper, warehouses, cranes, fork-lifts and everything else associated with running a mega-factory.

If they HAD to actually print every dollar they make, even in $100 bills, it would create many jobs.

FL_Conservative's picture

So.....you're saying that lack of counterparty risk is a good thing?  What kind of Keynesian are you?



As an aside, this is truly the most moronic article I've read in some time.  Truly astonishing and what must be an attempt by the Fed through the MSM to move the sheeple to the dollar.....or equities;



Stoploss's picture

This is the last ditch effort before it gets out that there is no gold for physical delivery. Or silver.


Croesus's picture

Yep. It doesn't matter what the gold 'price' is.....what matters is whether or not you have any.

DIgnified's picture

theres gold in posessiom, no doubt.  the 50 countries that bought the same gold bar can fight it out for who gets to keep it. 

Panafrican Funktron Robot's picture

Indeed, this is the mechanism backing "too big to fail", "too big to jail", "too big to do anything".   $9.269 trillion dollars are effectively "unsecured deposits".  That is 61.4% of the nominal US GDP, or 13.2% of the entire global GDP price in nominal USD.

RaceToTheBottom's picture

OK, I am guessing that AGQ means that I am also funked as well. Only three times as much

kchrisc's picture

I agree. The FDIC is irrelevant after Cyprus.

Bankster: "And it's gone!"

Sheeple: "But what about the FDIC?! I only had 3 grand in my account."

Bankster: "That went toward the 'bail-in.'"

Sheeple: "The what?!"

Bankster: "We saved the bank by using your money again to save the bank from the bad loans we made using your money the first time. Aren't you glad the bank's still around?"

Sheeple: "What about the large depositors?"

Bankster: "They were given a heads up and got out early or withdrew their money from our London branch. Now please step aside for customers that actually have money in this bank."


LasVegasDave's picture

What'cha gonna do

When Hulka-mania runs wild over you?!!!!


Hobbleknee's picture

It's nice to see the size FDIC fund there.  And all the sheeple think their $300 live savings is safe.

fonzannoon's picture

when do these derivatives finally start tripping over each other...and what would be the catalyst?

McMolotov's picture

I just wish the catalyst would hurry up and... catalyze(?). The picture says the big banks and the White House get crushed in a derivatives implosion, and the only collateral damage would be a semi, a house, some empty football fields, and the Statue of Liberty. I can live with that.

fonzannoon's picture

there is hundreds of trillions in notional derivates right? They will all start imploding is the theory. I'd love someone on here to tell me the catalyst because I truly don't understand what the spark will be.


eddiebe's picture

Fonz, how can anyone possibly know what that spark will be? Could be anything once a certain saturation point has been reached. 

Imagine Hercules rolling a gigantic boulder over to the edge of a cliff. Even for Herc it takes a herculean effort. Perched on the very edge the boulder it perches. A little birdie shits on the outer edge of the boulder.... 

Will it be a little birdie that does it? Maybe. We know for certain that we've been pushing the dollar all over the world with gargantuan efforts involving too many efforts and means to mention. Looks to me like it is getting awefully close to the cliff..

fonzannoon's picture

I just keep coming back to 85 billion a month. Man that plugs a lot of holes. Probably for a very long time. There was no 85 bil a month in 2008. If they said they were increasing it to 150 bil/mo I bet no one would complain.

McMolotov's picture

I still have no idea about the derivative shit, but for the broader economy and its response to the Hot Bernanke Injection, I see it like it's a campfire.

Say you and your cousin want to cook a pot of beans, so you make your fire with a pile of wood. It burns and works great for a while, but it starts getting too low. Then, instead of getting off your asses and adding more wood, your idiot cousin decides it's a swell idea to add squirts of lighter fluid. You packed plenty of extra lighter fluid, and this way no one has to do the hard work of collecting wood, and it's not like he's pouring the whole thing on... So what the hell? It might be interesting to see what happens.

It makes some big flames, but they don't last long, so he starts spraying more on. Again, big flames that don't last long, and the wood seems to be disappearing quicker with each shot of lighter fluid. At this point, your idiot cousin grabs the gas can from the back of his truck and lobs it into the fire.

Papasmurf's picture

Your cousin is much smarter than Bernanke. 

BigJim's picture

 ...There was no 85 bil a month in 2008. If they said they were increasing it to 150 bil/mo I bet no one would complain.

Yeah? I'd wager Krugpot would complain.

I can hear him now: but why aren't we doing more?

andrewp111's picture

There is a limit. According to The Bernank himself, the Fed can only buy Treasuries and Agency debt. Once they buy the whole issue of both, QE can no longer be increased. In fact, they may have already reached the point of diminishing returns. Every bond they buy reduces the interest income to the private sector and is actually deflationary. The Fed is legally constrained. The only thing left for them to buy is gold.

The Fed could buy gold. It is legal since gold is a monetary metal. Unlike bond buying, it would pump new money into the real private economy. However, it could come at a big price. If the Fed did QE by buying gold, it could destroy the value of the dollar. They wouldn't do this unless they got really desperate.

dunce's picture

Nobody really understands the $85 million a month thing, they just know instinctively that it is as wrong as sex with sheep.

McMolotov's picture

Speaking as an outsider, I think the problem is that the system has become complicated to the point of complete unpredictability. No one knows what the spark could be, not even the main participants, because their little wealth-extraction machine, as it grew wobbly over the years, was "repaired" with the financial equivalent of bubblegum and twine. Each and every quick fix seems in retrospect to have been intended solely to push the inevitable collapse out into the future rather than actually stop the wobbling.

Short version: We might be able to perform a post-mortem, but I don't think we'll be able to anticipate anything.

DIgnified's picture

indeed.  lets get this over with.  


imho, americans are too armed to the teeth. but theyre working on it.  the sandyhook memorialbombing and the ricin sent to the gop senator backing gun control are a nice touch. i think that will be the catalyst. a major event of the phony, flagish nature, culminating in an outright ban. 

McMolotov's picture

+1 for "sandyhook memorialbombing."

nmewn's picture

Full faith & credit backed by a counterfeiting operation...what could possibly go wrong?

prains's picture

the printer jams.....

nmewn's picture

Yes...lol...even in a digitized world.

The debt is never repaid, even at zero percent it continues to accumulate against it.

reTARD's picture

Competition from too many other counterfeiting operations? ;-)

That's why the military industrial complex must be maintained at all costs (even to the point of paying your centurions in precious metals).

nmewn's picture

They should be careful thinking every centurion is motivated solely by profit, Anwar Sadat had very good bodyguards ;-)

SMG's picture

I'm all for getting out of the Oligarchs system, but remember they have tons of gold hidden away that they have stolen over the years.  There may be much more gold than is publically know, and therefore may not be the best store of wealth.  I contend the better way to get out of the system is Silver, Food, Medicine, Land, Shelter, Guns, and Ammo.  All of those have no counter party risk as well.

john39's picture

all that gold they stole will go along way towards reparations for their crimes against humanity....  a long way, but not all the way.

Whalley World's picture

If that is the case, think Yamashita's gold, then do the math, aprox 1 oz gold per human growing at an extraction rate of 1% year and falling, compared to a world population that is growing fast.

If you don't have gold, what have you got, a paper currency system controlled by nefarious charactors who can Chavez your currency overnight.  All due respect to Hugo however, RIP.

And if your a Chavez hater, watch "the revolution will not be televised"  epic

dunce's picture

You left out some sort of energy, the grid may just be down and out. With no power the pumps will not provide water. There will still be water but not at the tap. Think and prepare.

Papasmurf's picture

There's a huge counterparty risk.  Anyone who wants your "Silver, Food, Medicine, Land, Shelter, Guns, and Ammo" may find he's a counterparty at great risk.

bobm2626's picture

FYI, just checked gainsville for silver eagles-not shipping til May 10th. Also I made my last purchase for AU thru tulving back on Feb 23 and it took 29days for my package to arrive. The whole month I waited I was tripping the system would blow up and they would never get here but they did March 22nd. I can imagine what wait times will be like now were below 1400 & 24. 

UH-60 Driver's picture

Too much information, who are the new judges on Dancing With The Stars?

//SARC// 011


CheapBastard's picture

The amigos in Venezuela, Argentina and many other countries thought their currency was safe and sound until they woke up one Monday morning and discovered their pesos to be worth 40% less as a result of devaluation.


"Things are 'safe' until they aren't."


Old Latvian Proverb

Yen Cross's picture

 I love Tylers 'comparisons'  Pictures dispose (of) traitors!