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Steve Forbes Warns Of Economic "Catastrophe" Due To Fed’s Dollar Debasement
Today’s AM fix was USD 1,262.50, EUR 932.63 and GBP 751.76 per ounce.
Yesterday’s AM fix was USD 1,253.50, EUR 924.62 and GBP 746.22 per ounce.
Gold ended with a gain of just 0.016% to close at $1,261/oz today. Silver ended with a loss of 0.1% at $19.21/oz.
Gold and silver rose strongly yesterday on short covering and speculation that Indian demand is picking up.
Prime Minister Narendra Modi's new government has signalled a loosening of gold import rules and this morning India’s Trade Secretary said that India needs to rationalise import duties on gold bullion. Gold may also have been bid higher due to concerns about commodity financing deals in China.
Gold held near the highest in almost two weeks and palladium traded near over a three-year high at $852 per ounce. Palladium has surged 19% this year due to concerns regarding Russian supply and continuing, significant industrial unrest in South Africa, the second-largest producer after Russia. Labour talks ended acrimoniously again two days ago in South Africa.
The global gold price setting benchmark or "fix" is open to manipulation, said the head of the London Metal Exchange (LME), which is competing to offer an alternative to the silver fix when the system is disbanded in August.
Gold in U.S. Dollars - 1 Year (Thomson Reuters)
Fed’s Dollar Debasement Could Lead To “Economic Meltdown” - Steve Forbes
The chairman and founder of one of the world’s top financial magazines and former presidential candidate Steve Forbes’ has issued a warning that the Federal Reserve and other central banks ultra loose dollar policies could trigger an “economic meltdown.”
The Fed’s "vastly misguided monetary policies are now setting the stage for a new economic and social catastrophe -- one that could rival the financial crisis and horrors of the 1930s,” Forbes warns.
His warnings come at a time of important recent monetary and geopolitical developments regarding the increasing use of the renminbi in the international payments system, as a trade currency and as a reserve currency. In 2000, the U.S. dollar made up 71% of all reserves held by governments around the world. Today it accounts for just 62% and this number is expected to fall this year and in the coming years.
Overnight came news that Azerbaijan’s sovereign wealth fund plans to invest up to $1.8 billion in renminbi this year, in what would be one of the largest investments in the Chinese currency to be made public – and a further indication of its rapid move towards reserve currency status.
Shahmar Movsumov, chief executive of the $37 billion State Oil Fund of Azerbaijan (Sofaz), told the Financial Times that the fund hoped to start investing in the currency by the end of the year.“It’s one of the currencies that are becoming important, so why not invest in renminbi?” he said.
Forbes warns about this trend and advises a return to a “gold standard” as the only way to avoid disaster in his new book, ‘Money: How the Destruction of the Dollar Threatens the Global Economy -- and What We Can Do About It’ (McGraw Hill, May 2014).
He says that U.S. economic success and prosperity will only return if the dollar is fixed to gold bullion and not subject to the Fed’s arbitrary liquidity hydrants.
The book is co-authored by the respected Elizabeth Ames. It says that a gold standard would “lower interest rates,” provide for “cheaper capital” and lead to “gangbuster growth,” Forbes says, adding: “If the American economy had the growth rates it once achieved under a gold standard, it would be three times -- instead of two times -- the size of the Chinese economy today.”
Steve Forbes believes that a new gold standard would curtail reckless government spending and make government more accountable. Alas, today’s Fed is now abetting the reckless spendthrifts in government by buying and monetizing U.S. debt.
Forbes adds that those inflation fears could be assuaged by a gold-based currency board, which he adds have been around for more than 150 years. In fact, Hong Kong, Denmark, Lithuania and Bulgaria use a currency board, a basket of currencies, euros and euro bonds along with gold, to back their national currencies.
Gold is not a strict, unwavering standard, as critics suggest as the price can change. “Gold is far less rigid than people realize. It is both flexible and stable,” Forbes wrote. “A gold standard no more means a fixed supply of money than a use of the metric system means there has to be a fixed number of rulers.”
The Fed’s easy money policies could end up being the black swan event that leads to market meltdown. Interest rate spikes and inflation hikes frequently lead to economic crises. Currently, economists note inflation is not a problem, but once the trillions in bank reserves, created by the Fed, come pouring into the U.S. economy, that will change.
Higher commodity prices are the canary in the coal mine for inflation, notably food price spikes.
There is also the fact that the Fed and other central banks have again created significant and dangerous bubbles in certain stock, bond and property markets.
The size and complexity of the U.S. economy would make the conversion to a gold standard difficult to do, analysts have noted. In order to back the dollars now in circulation and on deposit -- about $2.7 trillion -- with the approximately 261 million ounces of gold believed to be held by the U.S. government, gold prices would have to rise as high as $10,000 an ounce.
Gold Bars At 1.6% and 6 Months Free Storage In Singapore Or Zurich
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Won't work. Just look at the regulators in the US that are supposed to oversee finances and commodities. They are co-opted, corrupt.
The only solution I can see (and it is purely hypothetical) is to return to using actual gold and silver coins so it is in constant circulation and truly decentralized. Then the primary challenge is to keep tungsten impregnated bars and coins out of circulation.
The moment you use a medium of exchange that the laws of physics don't prevent duplication of, all bets are off. There is no way around this. Gold backed currency will not make the slightest difference.
Instead some international cabal (isn't that how we got here in the first place?) how about a simple process by which the US Treasury/Mint is publicly audited every year with randon assays of some % of the metal? Yes, I said Treasury. There is no need for a privately owned FedRes to manage the economy with a gold standard.
I feel very confident in Tim Geithner and Jack Lew to do the right thing..
{S}
..but I get your point...
You're not thinking like a crook. OK, so your gold reserves are locked down and audited and there is a high degree of confidence that the gold the government claims to have is actually there. So the government goes and prints money anyway and doesn't declare it, doesn't enter it in the ledger.
Surely after 5 years of the greatest wealth transfer in history, the greatest and most brazen corruption we have ever known, surely we must realise people cannot be trusted, EVER.
I could see a lot of people lining up for that job!
"The chairman and founder of one of the world’s top financial magazines and former presidential candidate Steve Forbes’ has issued a warning that the Federal Reserve and other central banks ultra loose dollar policies could trigger an “economic meltdown.”"
--Huh, you don't say...
How much'd you make on the book deal, btw? Where's the share for ZHers?
Bitchez...
Buying gold so you can profit off of price fluctuations is a losers game.
You don't do gold to make profits trading...you buy it as insurance, that will only pay off if things get screwed up enough that you'd need it. It will ALWAYS seem to be a losing 'investment' while things are still functioning.
Its value only becomes common knowledge when the prevailing system starts to collapse. Fiat will crumple like a cheap lawn chair in the face of gold and silver...
Predicting the value of gold in the future is a tough issue. Because of the uncertainty in today's market and the direction events might take the subject of "value and worth" continues to garner a fair amount of interest and remains relevant. History is chucked full of distorted markets, debts unpaid, promises unfilled, and bubbles.
These "interesting times" play havoc with the value of things and what they are worth. Like some of the cruel games children play you don't want to find yourself without a chair or holding the "hot potato" when the game ends. Below is the full article sporting a minor facelift and update.
http://brucewilds.blogspot.com/2014/05/value-and-worth-constantly-change...
This silly affected ponce just wants to protect daddy's hundreds of millions.
I contend the primary reason that inflation has not raised its ugly head or become a major economic issue is because we are pouring such a large percentage of wealth into intangible products or goods. If faith drops in these intangible "promises" and money suddenly flows into tangible goods seeking a safe haven inflation will soar. Like many of those who study the economy I worry about the massive debt being accumulated by governments and the rate that central banks have expanded the money supply.
The timetable on which economic events unfold is often quite uneven and this supports the possibility of an inflation scenario. A key issue being one of timing. If the price of gas jumps to $8 a gallon overnight do you buy gas and not make your car payment or stop driving the twenty miles to work? Answer, it could be months before your car is repossessed so you buy gas. It is important to remember that debts can go unpaid and promises be left unfilled. Is this possible and if so where would that leave us? Chaos and major disruption would result from such a scenario. As we have seen from the economic crisis of 2008 and following many other unsettling developments legal actions can continue to drag on for years. More in the article below.
http://brucewilds.blogspot.com/2014/04/inflation-seed-of-economic-chaos....
The inflation of counterfeit is still being exported to the world.
Rising prices will hit sooner due to the deflation of productive work.
http://ocsure.blogspot.com/2014/05/inflation-or-deflation-of-currency.html
This is news?
Of course the above is a summary so perhaps to be excused for some inaccuracies. Forbes has some good observations but errs in several areas. For example, a gold standard does not lower interest rates. Instead it more importantly stabilizes rates. That's a key element that Forbes and his co-author perhaps do not understand. Furthermore, the article says that he is not talking about a gold standard to be implemented but rather a currency board. That's a whole different kettle of fish with little or none of the benefits that would be conferred by a true gold standard. And by gold standard, we should be specific to state a "gold coin standard" whereby holders of coins may have them freely melted with no charge other than minor seigniorage.
I really think the dollar is heading for an economic Custer's last stand, and its gonna go all guns blazing. Maybe faith in the US gubment is the modern General Custer, and he got himself killed.
Germany calling... Gold is in the Mail. That one made me smile litemine.
Not noted is although Americans may hold 261 million Oz of gold......there are many claims on it. Again the tax payer will pay. Germany calling......We're tired of you saying the Gold is in the Mail. When you make your bed.....sleep in it. Trust in the USA is GONE, GONE , GONE
Me thinks no matter how you slice it, the future of the dollar as the reserve currency is grim; the patient is terminally ill. As to how it all plays out including any return to sound money, all I that I suspect with any confidence is that it will be painful. SOMEBODY is gonna be left holding the bag....most of us will feel it in some manner but primarily it will hit anyone who hasn't done something to prepare for it. Personally I'm out of anything cash-based including debt (except the mortgage) and keep my bank account to as close to zero as possible. The house is essentially off the grid. Real estate may hang in for a couple of years and AU/AG are slowly being herded into the Ark.
All this stuff used to scare the hell out of me. Now, while doing all that I can do with what I think will help me when the time comes, it's become more of an amusement ride watching current events unfold.
Jesus, anyone out there got a better idea? If all the big players, including China and central banks, are indeed scarfing up the yellow metal, why would I not do the same? Surely the idiots at the top are not idiots, right? They can see what is about to come down. So me thinks, ok, what are THEY doing to cover their asses?
And if they really aren't idiots, who the hell is driving up the stock market?
Russia dumping treasuries? SDRs? Renmimbi? Gold/Silver? Real Estate? Deflation then inflation? Al-schnida in Mosul? Perpetual war?
Agghhhhhhhhh! I need a stiff drink....hand me the bourbon please.
If I was king, I would bring everyone home, terminate foreign aid, shrink the gubment, cut taxes, bring back sound money, turn productive people loose, arm ourselves to the teeth, and set an example for the world as to what real capitalism can do.
As hopeless as that seems at this juncture, I'll advocate for it till the day that I die.
Yeah, all the "smart guys" are "scarfing up gold."
Which, of course, is why it keeps going down.
Smart guys never need facts to prove they're "right." They only need paranoia and conspiracy theories.
In that world, the Renmimbi, backed by cheap knock-off iphones, and a facist dictatorship will replace the US Dollar as the world's reserve currency.
When an Egyptian cab driver takes Chinese paper, wake me up.
Anyone who uses the words "paranoia" and "conspiracy theory" in the same sentence has a very good chance of being a troll. So pathetic, how does anyone pay for such a terrible service?
See link to Jim Rickards interview on USA Watchdog below. This is precisely what he contends, that the "smart" guys are scarfing up gold and this will continue until there is a demand shock.
You forgot to hang the Bankers and the crooks at Goldman Sachs and most of the other parasitic financial institutions on Wall Street.
Yep. I'd vote for anyone and everyone heading in those directions.
Let's toast that bourbon to it!
I don't think it is possible to "vote" for a smaller government because there are either no candidates that will run on that platform or if they do, if they were elected, they'd reneg and continue with the status quo.
This problem has to be resolved via calamity, I think this is just the human way. While the getting is good and hundreds of thousands if not millions of people are sucking off the government teat one way or another whether on the payroll, welfare recipients, contractors, wall street traders, banskers noone will have the discipline to stop the gravy train. People will just never want the good times to stop. If the whole construct collapses though, whether from economic collapse and depression, WWIII or civil war then people have a reason why the good times stopped and deal with it. It's bloody subtle and difficult to illierate but this is just the human way.
beased on that I'd elect you king
What he didn't say is that as soon as everyone was armed, that he would resign as king.
bullshit!
steve forbes is dead.
I agree. Seen him at the Money Shows over the years.
Dead alright.
But the US guberment would never use gold to back the existing 2.7 trillion of confetti, that's just trash to keep the wheels on. No there will be a new virgin, always honored, gold backed piece of paper. And it will be available to some on some sort of trade in basis. IMO.
I agree NEKO, and to expand there will be a good warning for the rich and connected to get out of dollars in time before the plug is pulled; Johnny S. Pack will get fuck-all.
You'll have to turn in your cash at a 50-1 conversion (and you'd better by Allah be able to explain why you have more than 1000 dollars outside of the banks - because terrorism).
How many years (or months) is "always"?
It says that a gold standard would “lower interest rates,” provide for “cheaper capital”
Yeah, I don't think so. Interest rates are below zero now, considering inflation. What a gold standard will do is raise (real) interest rates, rewarding savers and they will (eventually) provide the new capital.
But, in the near term, the backlog of malinvestment will fail. And that failure will be attributed to the use of gold in the monetary system. That would be a short-sighted judgement, but folks are generally short-sighted.
"Yeah, I don't think so. Interest rates are below zero now, considering inflation."
Interest rates are only low now because of the Fed's intervention. There is going to be an interest rate shock, as you say, eventually but at least Forbes is offering the most rational solution to staving off hyper-rates and a permanent solution to keep the theives out of our pockets.
One of these presidential elections soon, whomever runs on the gold standard premise at a time when the economy is collapsing around them, may be a sure thing.
Interest rates are low only for people who qualify: Wall Street speculators.
Nonsense. Up here in Canada, you can get a zero down mortgage for up to $1 million at 1.99%.
"Up here in Canada, you can get a zero down mortgage for up to $1 million at 1.99%."
For how long though? 5-10 years? Canada has more discipline than the US on lending. Borrowers don't get to write of mortgage interest, either.
It is all insured by the government through the CHMC, which is like Fannie and Freddie, except it is EXPLICITLY backed by the government. The banks are not taking risks, they are offloading the risks to the taxpayers. Since most taxpayers are homeowners, I suppose this is not terribly injust but still ...
Come in suckers! How long is that 1.99% fixed for? Let's see how that loan goes when it hits even 6%, nevermind 10 or even 12%.
You remember the 80's as well?
I do, dad didn't have much extra then, but his farm didn't get sold either. Many around us did, and today the kids of those farmers are living large like there is no tomorrow.
Consumer debt interest rates are NOT low; perhaps Steve is referring to Consumer debt interest. No doubt, savers should also be fairly compensated for the time value of their money.
"with the approximately 261 million ounces of gold believed to be held by the U.S. government, gold prices would have to rise as high as $10,000 an ounce"
fortunately for us, the dollar is not backed by gold.
so it's ok if the usg doesn't have any gold.
I'm tired of all the comparisons to fiat dollars as to what gold or silver are - or will be - worth. Just think of what you have NOW (in the form of PMs) as what they can buy you now. They try to goad people into thinking that gold or silver will "rise" in price - and the greed starts to sparkle in peoples' eyes. It doesn't work that way. The only reason to hold the PMs is to MAINTAIN the worth of your earnings... not to "grow" them. Yes, there may be an appreciable value gained or lost depending upon when you bought or sold your horde... but that's not the point. In this totally corrupt world, a prudent person should only care about the basics... that is MAINTAINING the wealth that you have earned. Think about the future... the point when all of this rot brings the unnatural edifice crashing to the ground. Only real wealth will form the basis for any re-building which must inevitably come. Paper and their promises decay... PMs do not.
been having fun with
0 % interest, for a year ,credit cards
pay them off in full month 11
save my capital for later..