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"Gold Is A 6,000 Year Old Bubble" - Citi's Dutch Strategist Throws Up All Over Gold, Days After Dutch Gold Repatriation
Citigroup may have been unable to prevent the Netherlands from repatriating some 122 tons of "a fiat commodity currency with insignificant intrinsic value", or in the words of Ben Bernanke, "tradition", but it sure won't stop that erudite expert on the timing of Greece's exit from the Eurozone, Willem Buiter, from doing all in his power to throw up all over the "fiat currency" known as gold. So with Buiter no longer predicting with certainly just which month in 2010, 2011, 2012 Grexit will take place, here are his bullet points that make readers scratch their heads in wonder:
- Gold is a fiat commodity currency (with insignificant intrinsic value).
- Bitcoin is a fiat virtual peer-to-peer currency (without intrinsic value).
- Gold and Bitcoin are costly to produce and store.
- Gold as an asset is equivalent to shiny Bitcoin.
- Central bank fiat paper currency and fiat electronic currency are socially superior to gold and Bitcoin as currencies and assets.
- There is no economic or financial case for a central bank to hold any single commodity, even if this commodity had intrinsic value.
- Forbidding a central bank from ever selling any gold it owns reduces the value of those gold holdings to zero
Scratching... because some may ask if gold is indeed such a worthless insignificant "fiat currency" (don't ask), then why just two months ago, did Citibank rush to be "reclassified as a spot Market Making Member of the London Bullion Market Association with effect from today, 25th September, 2014... In order to qualify as a LBMA Market Maker, a company must offer two-way quotations in both gold and silver to the other Market Makers throughout the London business day." Could it be that gold actually has some value to Citi, if nothing else than pocketing commissions from traders, now that the bank's rigging of everything from Libor, to FX to, drumroll, gold, is no longer possible?
Here are some of the more amusing punchlines from Citi in its blitz-propaganda campaign aimed at the undecideds in the Swiss gold referendum:
On November 30th, 2014, the Swiss will vote in a referendum on a popular initiative 'Save our Swiss gold' (henceforth the Gold Initiative). If the Gold Initiative passes three consequences follow: (1) the Swiss National Bank (the SNB) must hold 20% of its assets as gold, (2) the SNB has to repatriate the 30% of its official gold stock that is now held abroad by the Bank of England and Bank of Canada and has to physically hold all its gold in Switzerland, and (3) the SNB may never sell any gold again.
Figure 1 shows the total assets of the SNB, its gold reserves and its other foreign exchange reserves, the sum of foreign currency investments, the reserve position with the IMF and international payment instruments. There is a break in the series for the value of the gold holdings and for total assets: as of 2000, gold holdings have been priced at market value. Until 1999, they were valued at the official parity price of CHF 4,596 per kilogram.
As can be seen from Figure 1, the balance sheet of the SNB has exploded in size since it began to lean against the appreciation of the Swiss Franc by active foreign exchange interventions early in 2009. Its balance sheet at the end of September 2014 stood at 522 bn Swiss Francs, about 83% of annual GDP. On that same date, the value of its gold reserves was about 39 bn Swiss Francs, about 7.5% of the value of its total assets. That represented 1,040 metric tonnes of gold, almost 129 grams (4.5 oz.) per capita. In 2000, the SNB held 2,500 tonnes of gold and it has also been the biggest national seller since.
If the gold initiative passes, the SNB would have to purchase at least 1,733 metric tonnes of gold to meet the 20% threshold by 2019 (based on end-of September 2014 SNB balance sheet size and gold price). The world’s annual production of gold is around 2,500 metric tons.
The price of gold, like that of any asset price, is volatile. In nominal terms it has increased spectacularly over the more than 200-year period shown in Figure 2, and especially since the end of the gold peg of the US dollar in 1971. In real terms, the increase has been somewhat less spectacular, from $10.08 in 1971 (measured in 1913 dollars) to $59.89 in 2013. The real price of gold hit $73.60 in 1980 and $73.30 in 2012, underlining the volatility of the (real) gold price. Someone who invested in gold in 1971 and held onto it for 42 years, that is, till 2013, would have achieved an annual real rate of return of 4.3 percent - reasonable given the riskiness of the asset.
Item (2) on the Gold Initiative ballot makes little sense to us. Holding all one’s physical assets in one nation means ignoring the benefits of geographic diversification of ‘custodial risk’. Item (3) is quite extraordinary because it would make the SNB’s gold holdings worthless. Making it illegal to ever sell any of the gold the central bank has now or acquires in the future and enforcing this gold sale ban effectively would make the gold useless as an international reserve. The gold stock can never be used for foreign exchange market interventions and it cannot be used as collateral. The gold becomes useless as a store of value of any kind. The gold has no consumption value to the central bank. Its value is therefore zero.
Apparently the Russian, the Germans and the Dutch never got this particular memo. Ukraine however sure did...
Yet in an attempt to at least appear somewhat objective, Buiter devotes a few hundreds words to what he views is "The good news for gold bugs":
Since gold is a fiat commodity currency, its value will be determined largely by its attractiveness relative to other fiat currencies – the fiat paper currencies issued by central banks. Gold should not be analyzed as one of a set of intrinsically valuable commodities (silver, iron, lead, zinc, platinum, aluminum, titanium etc. etc.) but as part of a set of intrinsically useless and valueless fiat currencies – the US dollar, the yen, the Yuan, the euro, sterling, the rupee, the rouble, Bitcoin etc. etc.). It is therefore in times that market participants are nervous about the future value of most other fiat currencies that gold will be most attractive.
Such a time is what we are going through now. Many systemically important central banks have expanded their base money stocks and balance sheets massively. The Fed has quadrupled the size of its balance sheet. The Bank of England has more than tripled the size of its balance sheet. Many central banks have bought vast amounts of public debt. In the UK, out of the initial £375 bn of quantitative easing, almost everything was spent on gilts. Over the past two years, the Fed added $1.7 trillion to its balance sheet (which is around $4.5 trillion as of end-October 2014) through large-scale asset purchases involving Treasuries and Agency MBS.
Although in most of the developed world low-flation or even deflation is the immediate threat, there is a medium and long-term threat of much higher inflation in all countries with enlarged central bank balance sheets and the prospect of large future fiscal deficits. The great advantage to investors of gold is that, although it is not intrinsically valuable, it is very costly to increase its stock. The tap can be opened at the drop of a hat for fiat paper and electronic currency. The tap produces never more than a trickle in the case of gold.
So when fiscal profligacy threatens price stability in some of the main industrial countries (especially the US and the UK) because the central banks in these countries may be forced to monetize both the stock and large new net flows of public debt, the one fiat money whose quantity cannot be varied at will by a monetary authority will do well. We see that with gold today. We also see that, to a lesser degree, in the strength of the euro. The ECB is by far the most independent of the leading central banks. It also has a heavily asymmetric de-facto interpretation of price stability: inflation is unacceptable, deflation is OK.
So until the risk of serious inflation is removed from the medium-term outlook for the US, the UK and other fiat currencies, gold could be a relatively attractive store of value despite the cost of storing it.
This argument, however, assumes that if paper or electronic fiat money loses its value, gold will keep its value. That is an assumption and, as I shall argue in what follows, most likely an unwarranted assumption.
That's the good news to "gold bugs." And now comes the propaganda.
An economy with fiat money can have many different equilibria. To make the point as clearly and simply as possible, consider a stationary economy. Population, endowments, technology, government spending, taxes and preferences are all constant. The government budget is balanced. Prices are flexible. There is a constant stock of fiat money (which could be paper money, gold, Rai, pet rocks, or Bitcoin). This fiat money is perfectly durable and therefore can serve as a store of value. It pays no interest. Because this fiat money exists and is durable, it can, in principle, be a store of value – an asset. It is may help, but is not necessary for the argument that follows to assume that, should this fiat money have positive value, society has (informally/spontaneously/collectively) decided to use it as a medium of exchange or as means of payment. It could even be legal tender.
With a bit of further work, it can be shown that such an economy will have an equilibrium with a positive, constant price of money (a constant general price level). Economists call this the fundamental equilibrium. This stationary economy will, however, also have many other (in fact infinitely many other) non-stationary equilibria, called (speculative) bubbles. They always have equilibria in which the value of money starts at a positive value but falls steadily towards zero – the general price level rises without bound even though the quantity of money is constant. The holders of money anticipate the future inflation and thereby reduce the real stock of money balances they want to hold. This further increases the actual and expected rate of inflation, and the real stock of money balances goes to zero: the general price level goes to infinity or the price of money goes to zero. In other words, the economy becomes Zimbabwe.
What is often ignored is that this economy has an equilibrium that is even more ‘fundamental’ than the ‘fundamental’ equilibrium with a constant positive value of money. That is the equilibrium in which the price of money is zero in every period, not just in the long run (as with the speculative inflationary bubble equilibria). Remember, fiat money, including gold or Bitcoin, is intrinsically useless. It has value only because people believe it to have value. If everyone expects that money will have no value in the next period, it will have no value this period, because no-one will be willing to take receipt of money to carry it into the next period where it will be valueless. So fiat money with a zero value is always an (unfortunate) fundamental equilibrium.
I would actually call it the only fundamental equilibrium. All other equilibria with a positive price of money – an asset with no intrinsic value – are benign (relatively speaking) bubbles. The constant price of money (constant general price level) equilibrium is also a bubble, based entirely on belief and trust – a beneficial bootstrap equilibrium, lifting itself by its hair, like the Baron von Münchhausen. In a world with multiple fiat moneys, the zero value of money equilibrium lurks for each of the fiat currencies, including gold and Bitcoin. In a classic paper, Kareken and Wallace (1984) have shown that even in the other (nice) fundamental equilibrium, in which each of these fiat currencies has a constant positive value, those constant positive values can be anything – there is exchange rate indeterminacy between the various fiat currencies. This holds for paper or electronic fiat money, gold and Bitcoin.
So if gold has positive, albeit wildly fluctuating value, it is because we are in a benign bubble for gold. Likewise, Bitcoin’s positive value represents a benign Bitcoin bubble. The gold bubble is, of course, pretty impressive. Intrinsically useless gold has positive value. It has had positive value for nigh-on 6,000 years. That must make it the longest-lasting bubble in human history.
Yup, Citi just called gold a 6,000 year old bubble: just call it "tradition."
Is there a possibility that, out of the blue, the market could produce a zero value for central bank-issued fiat paper and electronic money (base money)? Yes, if the prices of goods and services in terms of base money are freely flexible. Fortunately they are not. The world is Keynesian. Nobody understands the mysteries of the unit of account or numéraire, but for some reason in most societies and most of the time, central-bank issued fiat money or base money has been the unit of account for most contracts, and prices of goods and services in terms of this numéraire, are sticky - empirically and for reasons we don’t understand, but they undoubtedly involve limited computational capacity and other manifestations of bounded rationality. Nominal wage and price rigidities therefore rule out the zero price of base money equilibrium (notwithstanding the fundamental equilibrium at the end of a hyperinflation).
He's right: the world is Keynesian. That explains why never in the history of mankind have all central banks had to coordinate all their efforts to inject trillions of liquidity in the system to keep it from collapsing on itself, and provide the required credit money for a world in which growth is only possible as long as inside or outside money is created de novo out of thin air. It also explains, why over the past decade, western finance has gone from bubble to burst to bigger buggle, to more explosive burst... until we now find ourselves in the ultimate bubble - one where all central banks have bet all in on inflating away a global debt load which guarantees the world a slow, miserable, deflationary collapse - in the words of Albert Edwards, an Ice Age - unless there is a dramatic surge in inflation (see: Japan). Perhaps as the only natural offset to this sheer Keynesian lunacy, gold's "6000 year old bubble" nature does not seem all that shocking after all...
But other asset prices are not sticky in terms of the numéraire. There exists therefore an equilibrium in which the price of all other fiat moneys (including Bitcoin and gold) in terms of base money is zero. We are obviously not in an equilibrium in which the prices of gold and Bitcoin at zero. Does that mean that in the future also the value of gold and of Bitcoin will be (relatively stable) even if the central bank were to start running the printing presses at full speed, producing a hyperinflation in terms of base money prices? Not necessarily. Assume the initial prices of both gold and Bitcoin in terms of base money are positive and that the value of base money in terms of goods and services is positive. Once gold and Bitcoin have positive value in terms of base money today, their future value is determined by no-arbitrage relationships between these three fiat moneys – all of which don’t have any intrinsic value as consumer goods, intermediate goods or capital goods. No arbitrage means the absence of risk-free pure profits from buying and selling these three stores of value against each other. Since neither currency nor gold nor Bitcoin is interest-bearing, the exchange rate between currency, gold and Bitcoin should be expected to be constant over time. Any change in the currency price of Bitcoin and gold is therefore unanticipated. There must have been a lot of major surprises! The fact that the stocks of Gold and Bitcoin are finite does therefore not suffice to keep them safe from hyperinflationary base money issuance by the central bank.
In other words, even if, and Buiter is quite close to suggesting that is the endgame here, there is hyperinflation at the end, even then gold may well be worthless. So... can we just use LBMA market maker Citigroup to sell it to Citigroup's prop desk?
And now, the punchline. Here is Buiter's conclusion:
I don’t want to argue with a 6,000-year old bubble. There have been hyperinflations with the value of central bank base money going to zero, but the price of gold has not followed that of paper money. Perhaps that was because, at the time, gold still had some intrinsic value as a productive input, even today retains intrinsic value as a consumer good. Even if we view gold as an intrinsically valued commodity, it would still be unsound to invest 20% of the central bank’s balance sheet in a single commodity. If the central bank is to invest in commodities, better to have abalanced portfolio of commodities or, more conveniently, a balanced portfolio of commodity ETFs or other derivatives.
Requiring a central bank to put 20 percent of its balance sheet in any single commodity, even if that commodity had meaningful intrinsic value, represents a highly unorthodox and risky investment strategy, in our view, regardless of whether one judges it by its likely future profitability or by its wider social benefits. We conjecture that the SNB is most concerned that the Gold Initiative might pass.
Even though I view gold as a pure bubble, that bubble may well be good for another 6,000 years. Its value may go from $1,200 per fine ounce to $1,500 or $5,000 for all I know. Investing a vast amount of money in something whose value is based on nothing more than a set of self-confirming beliefs will make for an exciting ride. Whether that is enough to impose it as a requirement on one’s central bank is another matter.
Dear Willem, thank you for that valiant effort.After reading a few thousands words of empty propaganda we understand your "confusion": our advice, if you want to understand what gold really is, read the following from Kyle Bass:
"Buying gold is just buying a put against the idiocy of the political cycle. It's That Simple"
Because if there is a bubble that is even bigger and longer than the "6000-year-old gold bubble" it is that of human corruption, greed, and idiocy. And that doesn't even include the stupidity of those who don't grasp this simple truth.
As for gold being a nearly worthless fiat currency, if you can perhaps first convince your homeland to return those 122 tons of gold it just repatriated in secret from the NY Fed in direct refuation of, well, everything you just said before you go ahead advising foreign nations what they should do, well that would be just swell.
Finally, we are confident that upon reading the above JPMorgan will promptly recant and admit that what he really meant was "gold is a 6,000 year old bubble and nothing else"...
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his ramble was so pathetic.....i think he may a super duper double secret agent for Gold Bugs !!!!
Visa, MasterCard, Am Ex, Kohl’s…. will all have giant vaults of silver and gold. When people swipe, the workers throw coins back and forth like monkeys.
That article sure makes a good case for using ammo as a medium of exchange.
Citi would obviously be against GOLD because Fiats are good for Banksters, Gold is bad for Banksters.
All you need to know...
Gold is to Banksters what a Cross is to Vampires!
Willem. Good doggie, now you get a bone!
Hey, you have to be able to avoid nailguns somehow.
The Citi guy is a nutter. Shame the name Citi gives these kooks a platform that, unfortunately, some people actually listen.
Gold is the ultimate collateral. Except for these Banker idiots as they think it is cool or smart or clever (whatever) to put the same Gold Brick up as collateral over 100 times. That is the real scam. All these Bankers live in a world of Fractional Reserve everything. They would lend their mother out 100 times if they could.
Just as one side of Wall Street wants to securitize everything, the Banker side wants to Fractional Reserve everything. I admit the concepts are cool but their applications in this world are pure evil. Simple as that.
This is all about taking back what belongs to the people. Drop a bomb on all these Wall Street criminals. Put them all out of a job. The poor man becomes rich and the rich man becomes poor.
"a fiat commodity currency with insignificant intrinsic value"
So how about Buiter-for-brains hands over whatever gold he happens to own, incluing what he gave to his wife and girlfriends, to me at some insignificant price. I can think of a bunch of uses for it.
On a more serious note, I get it. He is thinking "trascendent" value rather than "intrinsic" but I'd like to posit that more people died trying to obtain items of transcendent value then items of intrinsic value in all of recorded history. So who is he kidding?
He's talking about the Swiss referendum, it prohibits the Central bank to sell gold, EVER.
Now his question: "What is an asset worth, if you are prohibit to sell it? That makes it a worthless asset."
Duhhuhh, how about it backs up your paper, Bankster.
Is this guy one of the Tribe?
You know how they like to change their names; Roddy Piper has some glasses you can see them with, though.
It backs nothing if it cant be sold.
Yee guys don't, get it.
The rising price of gold shows up the falicy of the time value of money.
This concept is at the root of usury.
In a modern economy only the national dividend can get around this banking device.
They will always tell you what they fear. You just have to listen.
I have some dry powder that may have to get traded for real money next week.
+1000, Hammerman!
the value of fiat goes to zero when the currency is transactional only. then it becomes what it was always meant to be, a means of exchange for goods and services, not a store of value. suppose gold is the real tulip mania? when paper goes to zero intrinsic value, then gold is really in a bubble, (driven there by CB monetary policy) but not to worry, even if gold drops in value, it will always be worth more than an exchange currency with no store of value. to be obtuse it comes down to this, the CBs can cut your nuts off if you own gold, but they have to cut their own heads off to do it.
"what it was always meant to be, a means of exchange for goods and services, not a store of value"
That's the key right there
The eurozone is the most extreme banked currency on the planet.
Everything that CH Douglas said about bank money is there in vivid colours.
Mercantilism leading to war.
They're saying one thing and playing the other side, like GS does, except they're not as smart.
Listen, if you really want to be rich, and leave a so-called legacy to your children, start procuring water rights.
Instead of measuring in OZ’s, use gallons.
Theyre getting desperate....
That's OK, Bankster, I'll hold on to my Au/Ag 'Bubble' with a strong grip.
I had exactly the same thought, when I read the "argument" about the Swiss referendum and how bad it would be for diversivication if all the gold was stored in the motherland. Where does the US store their gold?
When propaganda becomes outright ridiculous, they not only are lacking arguments, they are even lacking plausible lies!!!
Ask the fool what branch of economic he studied and what he knows about the gold standard and its architecture. I'm sure he will give you blank stare!
A very small band of Academics and bankers in the modern world know how gold functions within a true gold standard system.
Guys a moron and an expendable fool anyway.
Love the conclusion ZH, LMAO!
If a bankster calls Gold a 6000 year old bubble, could it be have reached PEAK BANKSTERS?
Old sayings coming home to roost. " Can't dazzle them with brilliance, baffle them with bullshit." AND " Remain quiet and, let them think your stupid, don't open your mouth and, prove them right "
Willem Buiter is just another bankster trying to support worthless fiat.
Paper backed by nothing.
The only thing it'll be good for is using it for burning the banksters at the stake.
It does get kind of soft over time. A second use might be to wipe the dirty off your butt.
He is trying to swing the Switerzland vote. Nothing else. I rather get into a 6000+ years bubble and keep blowing than a 6 years burst bubble cycle.
The TBTJ banks ate scared chytless because we are at the endgame and there is 1 and only 1 semi stable path out of this 5. Only gold going parabolic to reliquify the system can avoid cascading collapse of deflationary defaults.
Am definitely confused.
I definitely remember some old sayings - "as good as gold", "go for gold", "worth its weight in gold".
Never heard of "go for fiat", "as good as fiat", "worth its weight in fiat" before.
And I always thought that fiat is a tad too light compared to that yellow stuff.
Ah, but you forgot the "fiat standard", the "fiat rule", "heart of fiat", etc.
Then there's the Spider, the 500, the 500e...
And James Bond in "Fiat Finger."
That's good news then, won't cost me too many potatoes to gold plate my fucking pitchfork.
Prat.
What a totally idiotic statement!
How the fuck can you have a 6000 year old bubble, what a complete dickhead lol.
We could also see it as a mirror of our time and be thankful for it.
It shows what kind of intellectual "honesty" and "quality" it takes to cover leading positions in the financial branch of this regime.
How the fuck can you have a 6000 year old bubble, what a complete dickhead lol.
Especially when the mechanism for creating bubbles, paper money, is < 2000 years old.
Yes I would
No I would not
If any country was to back their currency with gold tomorrow, How many people would trade their countries currency (unbacked) in for the gold backed currency?
This is how you would make the non gold backed currencies of the world worthless.
Probably start a war as well!
This is why it is important. The desire to hold gold means that the NWO is breaking apart. It is important that the fascists are destroyed and brought to justice before they kill us. That is why everyone should buy gold bitchez.
To all Central Banks - I will gladly clean out your vaults of that useless, barbaric relic and make ample room for pallets of paper - I will do this for FREE!.....
Oh, Citi is the experts? Look at their balance sheet!
Finally, Citi gets something right.
+1000000000
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
– Elgin Groseclose
Funny remark for a guy that lives in a totally artifical world of stocks/bonds/currencies that is now not even a market anymore thanks to central bank money to bail out banks and people like him :) Anyhow wtf is Buiter did he make any money in his live except for accepting a pay check from his masters? Funny how all these "intelligent" people seem not to be able to make money outside the bank like the Goldmans.
Blood is in the water. ..Let us Golden sharks swim.
The earth is a bubble of hot lava with a chimp out going on top. Happy Thanksgiving!
Government is the 6000 year old bubble. Not gold.
Is that the same guy that was long tulip bulbs at the top ?
No, that was his great-great-great grandfather.
* Dianne Feinstein, Senator; Trilateral Commission
* Madelaine Albright (Miriam Korbel); Trilateral Commission, Council on Foreign Relations
* Richard C. Holbrooke (Richard Moos); Trilateral Commission, Council on Foreign Relations, Bilderberg Group
* Henry Kissinger; Trilateral Commission, Bilderberg Group
* Alan Greenspan; Trilateral Commission, Council on Foreign Relations
* Stanley Fischer, Chief Economist IMF, Chairman Bank of Israel; Bilderberg Group, Council on Foreign Relations
* Paul Wolfowitz, Neocon; Bilderberg Group
* Richarad Perle, Neocon; Bilderberg Group
* Nadine Strossen, Executive Director, ACLU; Council on Foreign Relations
* Mortimer Zuckerman, Chairman U.S. News and World Report; Trilateral Commission, Bilderberg Group
* Stephen Friedman, Co-Chairman Goldman Sachs & Co; Trilateral Commission
* Robert E. Rubin, Director Citigroup Inc; Council on Foreign Relations
* Peter R. Kann, CEO of Wall Street Journal; Trilateral Commission
* Katharine Graham, President Newsweek: Council on Foreign Relations
* Richard N. Haass; President, Council on Foreign Relations
* Martin S. Feldstein, President, National Bureau of Economic Research, Inc; Trilateral Commission, Council on Foreign Relations, Bilderberg Group
From the same pot!
Willem Buiter - From 1977 until 2011, he was a Research Associate in the Financial Markets and Monetary Economics Program of the National Bureau of Economic ResearchSpoken like a true Zionist minion!
Gold has not built anything in this world. Human ingenuity has. Tying the latter down with the former is akin to continuously proclaiming that the world is flat.
Bablyon was finance by gold, the old chinese empire was built on gold/silver, Roman empire etc. Your telling me that your 100yrs of fiat trumps thousands of years of civilization building based on the gold standard. Utter moron!
First of all, yes, the last 100 years of zero, effective, gold standard have created more wealth around the world than existed before, combined. That is not debatable.
Secondly, I never said that there was NO development under the gold standard. The oft-cited period betwen 1870-1914 as the zenith of the gold standard was nothing more than luck in having the growth in gold closely track world output growth. However, it wasn't actually great because of the countless finanical crisis we had during that time which led to your dreaded Federal Reserve being created.
Third of all, you can make a case that way back when (as I have often said), gold did play a role because the level of trust in monetary systems was far less than today where people rarely actually even see their fiat.
And, by the way, flat earthers, such as yourself, are supposed to write FIAT in all caps to really drive home your insanity.
I did not know you have a PhD in monetary history????? Based on what evidence except the conventional BS?????
Do you even know how fiat came about?? You are an absolutely clueless idiot!
Brother, again, you need to type in all caps. Until you do, I can't really tell how insane you are. Just a heads up for your prepper convention.
For a complete dickhead that knows nothing about MONEY, a little history lesson for a moron!
http://www.chinahighlights.com/travelguide/china-history/the-ming-dynast...
This is the stuff you can read, I won't even present stuff you cannot read/comprehend.
Hongwu's Monetary PolicyLike the Yuan Dynasty clan, the Hongwu Emperor also issued paper currency. Paper currency became the main currency in the Yuan Empire after his death.
However, due to inflation, by 1425 paper currency was worth only a few percent of the printed value. So silver and bronze coins became the main currency of the empire.
I know nothing about monetary history?
You advocate for a system that has not existed for 100 years and will never exist again.
But, yes, by all means, carry on.
Go take your meds and stop wasting my time.
The American Empire was at its peak when it was in possession of 10K+ tons of the stuff. Now, its running on fiat fumes. Why is everyone doing Yuan swap facilities. Where do idiotic minions like yourself come from. You better get back to your happy meals.
I got news for you, jackass. The "gold standard" from 1914 until Nixon officially killed it was nothing more than an illusion. Treasury and the Fed ran inflationary policies post WWII, which is subsequently got us out of the depression and off gold.
Again, these are facts, not opinion.
So to conclude, dude, "stack" as much "physical" as you can. Blow all of your FIAT on it. Do it.
then I guess an Einstein like yourself (full of shit) trumps the PBOC, Central Bank of Russia, BRICS, SCO nations in terms of brain power as they are all stacking! I love it when you keep bashing out the conventional propoganda, just shows how uninformed and MKéd you are. Well done indeed and my finances are my business, I suggest you keep clipping coupons becoz you will need them, not that its any of my business.
You're citing the central banks of Russia,Brazil, India, and South Africa for fiscal prudence?
Agree to disagree, Happy Thanksgiving.
They are all creditor nations (well maybe Africa is the weakling as they have been pillaged for decades), US/EU are both broke. Not that I'm happy they are.
Yes, Happy Thanksgiving! No hard feels. But do study my inputs. I wish the best for everyone and this discussion is not about opinion's. Its about ones future prosperity and history (if you look back long enough) tells a very different story that we are fed.
I feel charitable today so I will point out that WWI & II period the US was never on a gold standard, it was on a gold exchange standard. They are not the same and function very differently. I won't waste my time explaining the difference to Einstein though becoz he has universal knowledge (Not)!
Thank you, I am aware of the difference.
The Age of Oil, not fiat currency, did that. Net Energy Surplus per capita is what matters as machines labor replaced human labor and global commerce app possible from inexpensive oil. Will unwind in 21st Century. Physics and thermodynamics are the Costanzo.
I wonder if the people against gold are also against health insurance and fire insurance.
Insurance is insurance.
Gold is something one buys in the hopes that there will be greater number of people who think the world is coming to an end tomorrow than today.
Take away those folks, it's value drops by 95%.
It's a classic Ponzi, built on nothing more than the type of people who thought the first printed books were a gift from the devil, and every other invention that has come since.
if the central bankers were not doing what they are doing, the price of gold would be considerably lower. nuff said
"Central bank fiat paper currency and fiat electronic currency are socially superior to gold and Bitcoin as currencies and assets."
There is absolute truth to this statement.
Gold and Bitcoin cannot be easily seized as the currency of the savers in Cyprus was during the first (and not last) of the word's enforced buy-ins.
"socially superior," but to whose society is the real question.
Gold and Bitcoin may turn out to be socially superior in the long term to the average person who sit in a different society than do the 1%
ha ha ha bankster bitches starting to panic ha ha ha
Sixteen dollar silver, now that is something to truly be thankful for. There's still time to load up.
Fiat means decree. If you mean that gold is money by divine decree, then I'll give you that. But a much more important decree is the one that divides these globalist minions, and prevents their nefarious schemes; the decree against Babylon:
24 God that made the world and all things therein, seeing that he is Lord of heaven and earth, dwelleth not in temples made with hands; 25 Neither is worshipped with men's hands, as though he needed any thing, seeing he giveth to all life, and breath, and all things; 26 And hath made of one blood all nations of men for to dwell on all the face of the earth, and hath determined the times before appointed, and the bounds of their habitation;
Acts 17 King James Bible
8 So the LORD scattered them abroad from thence upon the face of all the earth: and they left off to build the city. 9 Therefore is the name of it called Babel; because the LORD did there confound the language of all the earth: and from thence did the LORD scatter them abroad upon the face of all the earth.
Genesis 11 King James Bible
Our founding fathers, understanding the reason for this decree, and the fact that men are evil, and that power corrupts, gave us a government based upon the division of power. This was to act as a check against the schemes of evil greedy men. And ever since that time, evil schemers have sought to overthrow it, and unite us and the world again under totalitarianism.
Call it the principle of divine decentralization if you will. It is not something that will be overthrown until it is the time appointed by divine decree.
Bitcoin, being the least fiat of all moneys, seeing that it was created by man, is another pox on the bankster's houses. Although one might argue that arithmetic is divine, it has value only because men see value in its intrinsic properties.
Bitcoin and gold, being what they are by nature, shall make the bankster "gnash with his teeth, and melt away".
Happy thanksgiving
Silver For The People
The Bitcoin Channel
"There is no economic or financial case for a central bank"
I absolutely agree.
But what he does not understand, is that asset prices are just a reflection of debt load. What is the intrinsic value of a debt security? It went "poof" so many times in history, when the people kick bankster's and government's ass, like in the American revolution. Gold went never poof in history.
Because its the only currency that bankers can't counterfeit and steal from you without you eventually finding out and having legal recourse against them.
The entire reason we use dollars and bank credit notes, is because the Bankers can fake these notes and credits with no reprecussions.
Banking is in a 6000 year old bubble.
And
Gold just reflects the security it provides against criminal banks.
He should look up the meaning of Fiat in a dictionary before he makes an even bigger fool of himself.
Hats off to these guys. Arguing that gold is worthless and supporting that assumption with page after page of empty rhetorics is sure a feat, all the more as they know they're lying, which makes the exercise that much harder.
They must have needed lots of aspirin and handkerchiefs to wipe off the sweat of heir foreheads.
So let me get this right, gold has been in a bubble for 6,000 years. A single, world wide accepted form of money. One form of money, 6,000 years. If I've done my homework and reading correctly, approximately 4,000 different forms of fiat currencies have been created, used, and failed over the past 2,000 plus years. Not sure what the longest run of any single fiat currency has been but let's assume 300+/- years. So 1 and 6,000 years versus 4,000 and maybe 300 years (maximum). Hard to believe this SFB didn't do more homework on this subject as the facts of history are completely stacked against his assessment. Man must TPTB be getting desparate to shovel this shit to the media.
There is no such thing as "intrinsic value". All value judgments are subjective.
just another anti-referendem rant.
i'll make it as easy as i can.
i can't sell my neighbors house, it's not mine.
i can't sublet, or set-up time-shares, on rothchilds castles, or estates, their not mine.
citizens from concerned, and prudent countries are trying to make it law, which all countries should do, it's either BIS'S gold, or it belongs to switzerland, (the swiss citizens).
have people thought about it, 6 yrs. ago when americas puppet was put in place, one of the first things that happened, was repatriating, what america thought was rightfully theirs, from switzerland.
always remember netherlands stated reason for getting their gold back, they wanted their currency back up and running, backed by gold, as soon as they could in case of eu. colapse.
Hiring retards like this is precisely why Citi's stock is $5 (adjusted for the 10 for 1 reverse split) and they need perpetual bailout.
I disagree. The reason Citi has been bailed out more times than we can count is because they constantly get into business areas they have no business being in, leveraging themselves in the process. Recipe for disaster.
Feel free to disagree with me, but having a few people around who think differently isn't always a bad thing.
Happy Thanksgiving.
Every bank does that, but C seems to get the low end talent. Guys who are so clueless they believe gold is in a 6,000 year bubble. As if that thesis is even possible. After the first, say, 1000 years a rational person would conclude the item has value (whether perceived or real), demand, etc. Meanwhile, he's not writing about the 30 year bond bubble, which is a much more mysterious event and a more relevant story to the modern economy. The guy is just trying to gold bash and using the worst hypothesis yet to do it. I'm not a gold bug, but Jesus, one thing that cannot be debated is it's time tested and holds value over long periods of time. I mean gold went through a 20+ year vicious bear market, and he still thought that was a bubble (implying a mania, parabolic phase, etc)? Employees like this guy bankrupt corporations with their low IQs and then we have to bail them out. Unless he just wants to buy gold; then it makes sense.
I get your point. I do. To be honest, I don't take what this guy says literally.
I interpret it as to get a rise out of people and that what he really means is that over each passing generation, gold has progressively less value.
Which I agree with, everyone else can attack me all they want.
The real point Citi, B of A, and the rest miss is that they are likely to be irrelevant, in the form they exist now, within a decade, maybe less.
All of their legacy assets are becoming liabilities with each passing day. The more people trust what the actual concept of money can be in the 21st century (not a physical thing or location...i.e. bank branches, bank notes let alone gold) will drive these rentiers from existence. They'll slowly fade away.
What I'm trying to say is that internet banks that never really got going in the last tech bubble (without all the legacy liabilities and public hatred) will, I believe,take hold in the next decade crushing Citi, B of A, and Wells' of the world.
When more people are ever willing to send digital money through a smart phone or a "dumb phone" in the unbanked world (i.e. mpesa in africa), I just don't see how gold will be worth more in, say 10 years, than it does now.
Again, feel free to disagree.
I don't agree or disagree really because I don't know the future and there are a million variables, but I think your argument can be made for many things. For example, each passing generation becomes less interested in Ty Cobb rookie cards or Picasso artwork, but they still go up. So considering fiat is everywhere and gold is relatively scarce....considering the dollar is losing chunks of value most "collectables" (which gold is listed as) should go up. The rich (financially prudent) flock into these assets. It's not just bunker dwellers buying gold. Buffet and Gates own gold, despite what they say on 60 Minutes.
The only thing that will absolutely kill gold is if they can extract it with cheap energy. Like solar energy to mine gold, or sending robots to mine comets. That will crush gold, maybe even to near zero. But at that point what does have value? Baseline value is derived from labor and input costs before demand unless there's a weird anomoly like a giffen good (S&P right now. lol).
I don't think so. What will happen is they'll lobby, put out propaganda, or engulf any interesting idea (bitcoin, internet banks, etc) into their abyss where they will die. Govt will back these banks to the bitter end, despite how inefficient and bloated they become. Govt is on the hook for FDIC...it's cheaper to bail these banks out via the treasury mechanism (which also happens to keep interest payments down) than to enact FDIC and pay individuals. If they truly wanted to stimulate the economy and inflation they'd mail everyone a check. FDIC is a farce to stop bank runs, but they have no intention of every paying out at the TBTF banks.
You very well could be right. I just believe, maybe too optimistically, that the banks that exist today, banks that fundamentally do not do what they are supposed to...channel money from savers to borrowers will fade away as others can do it better, cheaper.
Governments and lobbyists can only keep a lid on the future for so long.
Agree in theory since that is how real capitalism works, but we don't have capitalism. We have crony cap, socialism, and some fascism. The few pockets of true capitalism are struggling. But even consider this "net neutrality" ruling...we see Comcast et al want control of the "fast" and "slow" lanes. They fail to mention the "no" lanes, where info can be censored. Check out what AT&T did to Pearl Jam. There are many examples of censorship by the IP providers, and those companies are incestuous with the government. Google "tailors" search results to individual users, so if you and I search the same term we get different results. This because they have built profiles on us from past searches and our IP, MAC, cookies, etc. So you can't get real information anymore. So while there is better, cheaper, etc, we won't get it because it means the end of all these old fucks who have the govt by the balls, and once net neutrality passes (and it will, as the FCC is bought off), it'll be more and more difficult to find real information, and average users won't even know it. In your example regarding banks, if anything Chase, BA, C will buy the good banks or interesting ideas and try to integrate them into their bloated models, but those banks will never take over these TBTF in this current paradigm. Bitcoin got crushed and then JPM started buying in. That's what will happen if it takes off more, and then JPM will control our bitcoins. We need a dollar crash or some massive event that is so big the CBs can't bail out. I am not sure what that would be other than nobody wanting fiat, and that seems a ways off. We've spoken in the past and I am no bunker dweller. This just seems like the blatent paradigm, and changing it means catastrophic event. Right now CBs and govts have printing so coordinated that I see this going on for a long time.
You're right, if there are any significant chnages there will be blood. I guess I'm just a little bit more optimistic, in the long term, in America. You're also right that the existing banks will try, in fact they already are, to buy up the new technologies for banking.
Like all existing companies, they will probably miss the actual next big thing whether that's bit coin or something yet to be fathomed.
It's not just the banks, unfortunately. Tech giants and big energy don't innovate, either. Have you heard of the Kondratiev Wave? If the next wave is healthcare we're in trouble. Milking dying baby boomers is our best idea apparently. What we really need is renewable energy to be the next wave in order to achieve real prosperity. Since we can't raise wages in this country we need to reduce inputs somehow, which is equivalent to raising wages. IMO the next K. Wave must be (a) renewables and (b) efficiency. We are just so bloated in every imaginable way. It's just not fiat and refunding these banks holding us back, but it's the entire attitude. We need a president who realizes this...a leader instead of a puppet. But we keep getting the same shit, so there's no reason to be bullish until the attitude is correct.
I think we talked about all the bunker dwellers on this site in the past. Yes, they're insane. They're living in a 1800s mentality of gold and oil wells. Gold is good. I own 20% holdings myself and have no issue with anyone holding gold. Makes total sense. But to live in absolute fear is draining. I used to prep very lightly...like just basic stuff, and when watching videos I'd see guys who had shit like shovels and axes in their bugout bags. I was like WTF! Carrying 400lbs of gear around? Stuff like that made me realize how insane and far into a rabbit hole (or bunker) someone can go. I think it's key to be trained and prepared for bad, but to just live a normal life without fear. A big part of that is coming to grips with death. If you don't fear that all this shit is meaningless and you can just banter and joke around and bounce ideas off people. One thing that pisses me off about ZH and the readers/commenters is they whine about everything yet never offer solutions or suggest meeting up to actually change things. I make the comment "let's whine on the internet and do nothing about it" a lot on this site...because that's really all it is. Where are the fucking Lenins and Trostskys? Instead we get these bunker dwelling eggheads who whine and then do shit other than constantly claiming to "back up the truck"...lol. Same eggheads who check their price of their gold IN DOLLARS every morning.
Economic collapse is not a huge long term problem. Reprice gold, restructure/haircut bonds, temporary gold standard, new currency, etc. It would be over in a few months. Bigger problem is getting the next paradigm right and having real men lead. Nobody is talking about that.
I agree with what you are saying from a broad perspective. I definitely agree with you on needing a paradigm shift, politically. We have a chance in 2016 to have the best election in awhile.
If Warren v. Paul happens in 2016 America can have the chance to vote for a true left versus a true right, unlike our recent elections of corporatist party candidates.
Alas, it might also be Clinton v. Bush which would be the death knell for this country no matter who wins.
To me, the Japanese situation is both the most dire and most telling as they are just about two decades ahead of where the west is right now. Evryone rights off the Japanese as being devoid of all hope. The exact opposite of their position in the 80's. However, because the Japanese problems are economic in nature, they are also solveable. We got through the depression and Hitler in the 30's and came out of it better; the west's problems now should be far easier to solve. If the Japanese can solve their problem (I'll admit it doesn't look promising now) they can serve as the blueprint for other western countries going forward.
It seems kind of obvious the guy is pissed he was not on the inside line on repatriation.
The guy does not understand anything.
Fiat come from the Latin "he trusts".
In fiat money the base money is issued against credit instruments, which require trust in a third party.
With gold the only thing you need to trust is that there won´t be a huge Gold meterorite equivalent to printing money to the neck. You have no "fiat" in Gold. Quite the opposite, no need to trust any human being.
THe guy must not get laid often. Gold has always, always got favors with women. Big gold necklaces and bracelets, always get the favor of women. Ask the poor Chinese men who have cut their wrists buying Gold to get ladies in their beds...
THIS IS BY FAR THE MOST PRECIOUS USAGE OF GOLD. Getting the favors of ladies.
So "Fiat Lux" means "He trusts Light?"
Bb used to write for the ft. Enough said. Channel izzie I regurgitate I hate gold and bit coin is worth less with a banker to print it. Mavrickecon blogger extraordinaire once channeled dollar with good til expired dates.
Only someone from such a predatory, criminal outfit as Citi would say something like that.
Now, that is my kind of bubble!
Re-cast that chart in semi-log form, and you will be even more impressed how reasonably priced gold is.
It's always nice when the tools of the elites show their hand so poorly, but, frankly, this sort of drivel is spewed out every day on university campuses every day all over the world. It's why most people are not informed enough to know how badly Buiter is lying.
The slope from here to collapse and rebuilding is slippery. Best put on your snow tires.
Happy Thanksgiving to all. I'm thankful that we've held together for another year...more time to prep.
Gold miners would be wise to form a cartel like the diamand, drug, and oil industries. Give the illusion of scarcity by controlling what comes to market. That's about the only way to fight "manipulation" (if it does exist...gold went up 11 years in a row so manipulation arguments seem suspect), yet the mining CEOs are not the brightest bunch. Guys like Sprott keep saying if anyone takes delivery on Comex it will implode the gold market, yet Sprott himself has the resources to do just that and never does. I have no fucking clue what that is all about. But it does make sense for citizens to own at least 10% gold in this climate. Fiat bubble is what we have, so this Citi article is pretty maddening to read.
fuckin idiot
Gold is in a 6000-year "bubble", because banks and governments have been failing so many times.
http://willembuiter.com/gold2.pdf
The gold cap stones on the great pyramid must have been stolen for some other reason than their value?
You guys talking about Billy Buiter???
Yeah. It's in a 6,000 year old bubble and it's going to pop any thousand year now. Might even pop before 2,900AD so I'm going to sell. I don't want to be a 940 year old man hanging onto a depriciating asset. Going to stick with U.S. Debt. That will be the sound investment.
the gold is owned by the nation/individuals of switzerland not the central bank is it not?
Only thing he got half-right was the fact that gold needs an intermediate currency to trade. If you have hyperinflation then you're dead even if you're sitting on gold bullions; you'll need to pay for your basic needs and if you do that with a buillion then you'll get your change in worthless paper. Few weeks down the line your wealth is gone too. Storing wealth in a non-tradeable physical commodity is not the way to go. Buying production lines for something you can trade with is, as for example a paper mill that will be used to make the paper for the worthless money, will guarantee your prosperity.
I think the only word that can describe Mr Buiter is MORON.
If gold is a bubble (it's not) then it's only beginning because now the French want their gold back, too. The SUI referendum is not going to slow down the accelerating train for physical gold. Fuck the private bankster fiat currency tokens.
The FIAT Currenies A.K.A. the IMF's SDR four =US, UK, EU, Japan <<< the non-stop, limitless PRINTERS have come to the end of a 43 year experimental SCAM ...and they're backs are against the wall & very DESPERATE now
https://www.youtube.com/watch?v=j58gikUjyIoDe Gaulle sees the PROBLEM U.S. dollar as world currency -1965 (Eng Captions)
he knew for sure in 1965 once he saw the US remove Silver Coinage (1964 was the last year of silver coins in US, telling that the 1971 reneg of the Bretton Woods Agreement was Planned, a London/Washington DC scheme root)
Is it not awful that most people are so just simply.........dumb?
:(
What is multiple equilibria? It totally went off the rails right there.
A positive price of money? What is a negative?
They literally just started copying and pasting from various essays relating to hold and threw this garbage out there
Multiple equilibria is just another name for multiple vantage points from which scam artists can rip off the trusting public and investors.
There are so many things wrong with this article and its source that I don't know where to begin. I don't really have to. The view from 10,000 feet is a loser whining about something that is not going his way. Some place between "then they fight you" and "then you win", there is going to be someone crying like this.
The guy's a loon, trying vainly to defeat the Swiss referendum. It doesn't need his help. It will fail, but, the issue has been raised, and just like the Scottish referendum, there's a tinylight shining at the end of the tunnel.
One of my favorite quotes is from Victor Hugo.
""All the forces in the world are not so powerful as an idea whose time has come."
Wow. "The real price of gold hit $73.60 in 1980 and $73.30 in 2012...." I don't think anyone, anywhere in the world, can get an ounce of gold out of the Earth for $73.30. Therefore, I wonder how the $73.30 per ounce price was calculated. I was unable to find that calculation in the quoted material.
Also, the quoted material appears to use the commonly used illogic of including, without providing a justification, one item in a set of completely different items, and then noting a property of those different items, and then stating that, since the one item is included in the set, it must also have the property. Let's try it. "We will now, without giving a reason, include cows in the set of cats. Since cats eat meat, everything in the set which includes cats must eat meat, and therefore cows must eat meat". Or, "We will now include water in a set of things which are solids, like dirt, concrete, steel, and furniture. Since water is in the set, water must be a solid."
I think I see this type of reasoning frequently by TPTB to "prove" all sorts of things which everyone should instantly be able to see as patently false.
This falls under the basic mathematics of SET THEORY, which states that you CANNOT include an item in a set of very different items. You must place water in the set of liquids, since water is in fact a liquid. You must place dirt, concrete, steel and furniture in the set of solids, since they are in fact solids. The set of solids does not in fact overlap the set of liquids. Therefore, nothing can be in both sets. Therefore, water cannot be in both sets. Therefore water CANNOT be in the set of solids. You erred when you placed water in the set of solids, and anything you calculated based on that error is also an error, a falsity, an untruth, a mistake.
Therefore, the mathematics of the quoted material are hereby given the grade of "F".
That is, gold cannot be placed in the set of fiat monies. This is because a fiat money, by definition, is a money that is backed only by fiat, which means by government order. A government can, from a practical standpoint, only order to accept its fiat money those people over which it can exert physical force For example, the government of Zimbabwe can only force the people of Zimbabwe to accept its Zimbabwean money. The government of Zimbabwe cannot force the people of France to accept Zimbabwean money, because the government of Zimbit cannot exert physical force over the people of France. On the other hand, gold is the universal money, which relies on no government order, no fiat, because people everywhere in the world already accept gold.
So, saying gold is "fiat money" is like saying that red is green.
And the only way for a fiat money proponent to get around this problem is to simply lie, by saying "red IS green", or, in this case, by saying "gold IS fiat money". And of course, he must NOT explain WHY "gold is fiat money". So he doesn't.
I'm just trying to "get my head around" exactly how lies work. I think that one way most lies can be explained is by employing basic mathematics, and it is helpful to me, and perhaps to others, when I can do this and note which basic mathematics are being violated by the lie.
I believe this particular lie (error, falsity, untruth, mistake), is made by placing one item (gold money) in a set in which it does not belong (fiat monies). This is a Venn Diagram error.
http://en.wikipedia.org/wiki/Venn_diagram
Venn Diagrams are one of the basic tools of Set Theory, which is a basic branch of mathematics.
http://en.wikipedia.org/wiki/Set_theory
I know others on this thread have posted basically the same thoughts, but this is just an attempt to look at these thoughts a certain way, which is, as a math problem, and I think that was helpful to me.
buying gold is just a CALL on the idiocy of the cycle of the goldbug
I like to think of it as a PUT on human nature. Not much has really changed in 6000 years.
Gold is great to acquire but thanks to Dixie Nixie the price for Gold skyrocketed haha for actual value in the currency games from Wall ST.Happy Holidays lol
Have you guys seen this?
http://rt.com/business/209023-metals-price-fixing-lawsuit/
MillionDollarBonus was much better as a troll.
Say what you want about gold, but I guarantee you that gold will outlive the USD. It has outlived countless other paper garbage in those 6000 years.
Meet Haymans portfolio performance and that Gold trade he had with the University of Texas.....
Never have so few done so much for so many to demonstrate the meaning of the word "Oxymoron".
"Bubble' means unsustainable speculation, and through the ephemeral nature of bubbles in nature implies imminent bursting.
6000 years is a hell of a lot of sustainment.
Actually, it is the most sustainment of demand known.