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David Stockman: "We Are Entering The Terminal Phase Of The Global Financial System"
by Eric King via Contra Corner blog,
Today David Stockman, the man President Ronald Reagan called upon along with Dr. Paul Craig Roberts to help save the United States from disaster in 1981, warned King World News that we are now entering the “terminal phase” of the global financial system that will end in total collapse.
Eric King: “David, I wanted to get your thoughts on gold in the midst of this big deflation you think is in front of us. When you look at the collapse of 2008 – 2009, gold was one of the best performing asset classes. Gold went down but it went down much less relative to virtually everything else. Contrast that to 1973 – 1974, where we had a 47 percent stock market collapse. But during that time we had skyrocketing gold and silver. What’s in front of us because it looks like gold and silver may be ending a 4 year bear market and ready for a 1973 – 1974-style up-move?”
David Stockman:
“Yes. I think the two periods are quite different. Although at the bottom it’s central bank errors that underlie each. But remember that in the 1970s we had just finally exited a semi-stable Bretton Woods Gold Exchange Standard system. There still was, at the end of the day, an anchor on the central banks that was thrown overboard by Nixon in 1971….
"So the first go-round was a rip-roaring price inflation because there had not yet been enough time under the fiat money and balance sheet expansion by the central banks to create excess capacity in the world industrial system. So as the boom in demand took off, commodity prices soared. That fed into domestic costs and labor wages in particular.
There weren’t a million cheap workers coming out of the rice paddies in China yet because it was still in the Dark Ages of Mao and not part of the world economy. And so you had a classic inflation blowoff and flight to gold in the 1970s as a result of that initial money printing cycle.
Now, I think 40 years later central banks are erring to much greater extent but the cycle is different. We have now created massive excess industrial shipping, mining and manufacturing capacity in the world. Therefore we don’t have a short-run consumer price blowoff. We still have massive cheap labor in the world and so therefore we don’t have a wage price spiral.
We Will See Total Collapse
The result is that all of the massive stimulus from the central banks has gone into the financial inflation, not goods and services. The financial inflation is obviously the great bubble that afflicts the entire financial system of the world. It’s becoming increasingly unstable and it will eventually collapse. And when it does I think it will mark the complete failure of a monetary system that has basically been metastasizing since 1971.
World Will Panic Into Gold And The Price Will Go Parabolic
Well, when a monetary system finally fails, there will be a flight to the only money that’s left in the system and that will be gold. That will be the hour in which the next great surge in the gold price occurs. You can’t predict the exact moment, but you can certainly have a pretty confident view of the direction (parabolic).
The central banks are clearly destroying the monetary system that emerged after Nixon went to Camp David in August, 1971. So here we are 45 years later and we are nearing the end of an unstable fiat central bank driven system and the alternative is fairly obvious — at some point going back to real money. I don’t think governments will do that voluntarily, but certainly people trying to protect their wealth will. When that happens it will trigger a huge political crisis and hopefully an opportunity to change the regime and get back to some kind of viable and sound financial and monetary system.”
Eric King: “David, it was fascinating listening to you talk about the difference between the 1970s vs today. During the horrific 1973 – 1974 bear market (in stocks) we saw gold skyrocketing. And we have seen gold trade very strongly through a number of crises from 2000 – 2011, at one point rising a stunning 700 percent.”
We Are Entering The “Terminal Phase” Of The Global Financial System
David Stockman: “Yes. Well, I think those cycles that you mentioned are relevant benchmarks, but they were warmups. What happened in each of those episodes was a short-run break in the system, collapse of confidence and flight to gold. What I think we are facing now is a terminal phase of a monetary system that isn’t viable, stable or sustainable. Therefore gold has but one characteristic — massive upside in the years ahead.”
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They'll steal your shit and then they'll eat you.
Why chase a moose when you have a Domino's delivery?
The Canadian thing to do here is chase the moose. I'm not long on Domino's stock, frankly. And I'm pretty sure I would not taste very good if the Zombies cooked me up and ate me, but before they eat me they will have to catch me and kill me first. And sitting in a pot of boiling water like an unwitting frog is not my thing. Let me know how that works out for you, eh?
25% of Dumb-Ass Americans actually turned-in their gold (1930's). Not sure how they came up with that number and also, no one was arrested for hoarding said gold. Of course, our government is far more corrupt and evil compared to FDR's time so all bets are off this time. I say let them come for our Real Money. Many have Real Large Caliber Weapons too. If they want to steal whats left of your livelyhood I say take at least 10 of them with you!!!
Govt has bigger caliber. How about a nice cluster bomb on your home?
Why so shy? Just nuke'm from orbit.
Afterwards you can go and pickup their gold coins... oh, wait
The man who helped build the Reaganomics "fire asset supply side ramp up" --to dry out the labour inflation that was the result of oil price hikes (and matching social spend)-- pushed the petrodollar debt machine recycling mechanism towards WS assets with the sky as limit.
Now he says that Nixon's age was just a warm up to the subsequent hubris of Reaganomics and NWO's enhancement into derivative bonanza and labour outsourcing.
Haha, David is now saying that he helped engineer the scam but he was kicked out by Reagan before it really took off !
Well, better late than never!
Now David is writing the epitaph to the whole shooting match-- from BW revoke, Nixonian petrodollar poke, to Reaganomics smoke and finally GWB's Iraq hoax and subsequent bubble-o-nomics gone broke !
What a choke this man is now adding to his belzebubian tale of Pax Americana's fiat Inferno stoking unending sick joke that this game of ZIRP/NIRP/QE has become : "Its all gonna come down like a house or cards"-- is Dave Cassandra's "last roundup" predication, an awesome lasso made of rope to which will hang the Oligarchy Popes, like longhorns heading for Dodge's meat train to boot hill.
Play on ! And take no prisoners!
Always worth the read for the color which with you imbue your posts.
But like the universe itself----which was expanding at a rapidly diminishing rate, following the big bang, and now seems bent on succumbing to Newton's third--- the question is not IF but WHEN.
Comparing the universe's timeline to Pax Americana's petrodollar time line is like comparing the Sahara to a grain of sand.
But relativity of scales apart I'll have to give you the benefit of the doubt as "if" and "when" have a meaning in the heavens that can't be measured by my intelligence which is more attuned to appreciating Beethoven's fifth or seventh than Newton's third applied to big-bang-o-nomics!
.;.,,
U r a gentleman, or lady, and a scholar.
Excellent post I now understand the meaning of gibberish. What was that. UGH does it hurt a lot?
stick to crosswords; you know if you are puzzled.
You'll find gibberish is sister to gobbledygook.
As for its roots they lie in Gibraltar!
Ya know that place? Battle of Trafalgar! Djebel Tarek for the historical minded and rooty fruity.
While what you write is certainly agreeable on, point us to:
- either how David is currently still doing the psychopaths' bidding in sheeps' clothing
- or what other writers offer a more clear-sighted view than him
I never said that, what I said is the SYSTEM morph is greater than the ability of each and every individual who now is being taken along by the rip-tide.
For a world system to know such level 8 systemic earthquake making potential along a huge financial fault line is a situation that we live once in a century.
Dave Stockman, in 2013, suddenly found the light that his generation refused to see since donkey's years...I can volunteer that opinion at my humble level as some of us KNEW from the day Reagan and Thatcher took over the world like the catholic kings of the world, initiating the Neo-liberal inquisition world-wide, that THAT mindset imposed DID NOT BODE WELL.
It was a worse twist than the Nixonian mantra that had created BW revoke... and NAM continuation, spreading the war to Cambodia.
I don't judge him personally but I do judge the momentum of Pax Americana. And even Stockman today iMO is not addressing the underlying issues of civilization breakdown in west. Imagine, we are married to the worst obscurantists of the world ALL FOR OIL !
Its not just a question of "go for gold"...its much deeper than that!
Thats my point. And if you say the greatest powerhouse nation is RUN by psychopaths then the 330 million people of the USA whom these people represent have a debt to pay back to humanity.
Get rid of them as even today you do have a true democracy.
Gold's not going anywhere except in the toilet - end of story.
So advanced that even a creature with an intelligence level equal to the protoplasm can crap on the Internet. Like you, for example.
Methinks you're annoyed that gold has gone nowhere while equities have gone everywhere these past few years.
But it makes no sense to blame me for your poor decisions, shit for brains. :-)
exactly. Safely stashed in the septic tank. I might even tell them I flushed it, just to see 'em have to paw through my decaying feces to find it.
He who laughs last...
What you do is, dig a big hole in yard put a compost bin in hole. put your gold in the bing and lots of compost on top.
ssshhhhhh.....
FDR fixed it so you couldn't trade your paper dollars For gold.......They've already played that hand. Confiscating gold from individuals cannot happen without voluntary compliance.
That's not saying there are really stupid people who will voluntarily give up their gold!!!!
An Israeli official, Moshe Yaalon, invokes the American decision to drop nuclear bombs on Japan in World War II in response to a question about “dealing with Iran.”
What do you make of Yaalon’s threat?
Join us on ?#presstvdebate? at 18:33 GMT
So what's holding them back if they think that will solve their problems? Have at it.
Yak yak.
Gold!
STOCK UP on fuel, food, drink, supplies, seeds, meds, a wood stove and a lot of wood if you can. There won't be food, in the stores, after SHTF.
No shit sherlock. The ones who can't comprehend that pretty much deserve to die.
And what do you think a few boxes of ball Canning Lids, will be worth on the barter table ?
Nothing,
if someone won't part with the jars.
UK Government Legalizes the GCHQ Hacking Into Computers The UK Government has exempt the GCHQ and other intelligence agencies from the law, allowing them to legally hack any computer.
http://beforeitsnews.com/prophecy/2015/05/apocalypse-foretold-understand...
It is very important to know about Fatima. It really happend 100 years ago!
Klemens,
Fatima is not really the "Apocalypse Foretold", and it is not merely "100 years ago".
She provided more the keys to the solution than a description of the problem. A proper understanding of Fatima explains what is happening now and over the last several decades and, most importantly, what we can do about it. That information is available here: http://fatima.org/ .
We got a secret you need to know.
So tell us.
No. It's bad.
Ok.
Gold going to $5000-10000? Its still priced in Dollars so what's the point. Are you going to go down to the local grocery store and pick up eggs bread and milk with a 1/100 of a gram? Do you work out a deal with Walmart or Target or Macy's where you have an ounce of gold and have credit. Do you have to pay a bank to break it down for you? Do you get a "credit card" for daily use that debits fractions of an ounce for gas, food, paying bills, ect. The problem with using Gold as payment is measuring it and who's holding it for you. Everyone can't be running around with gold dust to pay for everyday items, to many people on the planet for that.
File the edges of the gold coins right there on the counter @ Wal-Mart. USB scales connected to the cell phone is all we need.
Milk may cost 3 grains. Hamburger, 2 dram a pound.
Silver.
this is why reputable goldsmiths issued warehouse receipts for gold on deposit and invented banking. Bankers took the idea, defrauded on the concept and VOILA! bank runs, currency collapse, manias, panics, fiascos, boondoggles, boomtowns and finally, Hoovervilles.
History repeats, the letters on the coins and their metal composition changes, always to a lower core value.
Let's see...Terminal Phase of a Global Financial Meltdown.....Jade Helm....gotta be a coincidence, right?
Yet MOAR fearmongering and MOAR crying wolf.
The USA love a scare, don't they. THREAT THREAT THREAT COLLAPSE COLLAPSE COLLAPSE AGGRESSION AGGRESSION AGGRESSION THE END OF THE WORLD IS NIGH FEMA CAMPS IS OBAMA A THREAT CHEMTRAILS HAARP BOMB SHELTERS RUN SAVE BY BUYING DON'T FORGET UR PREMIUM COUPONS AND NOW LET'S GET BACK TO OUR PROGRAM DEAR VIEWERS THREAT THREAT THREAT COLLAPSE COLLAPSE COLLAPSE AGGRESSION AGGRESSION AGGRESSION THE END OF THE WORLD IS NIGH.
ZH - Pumping the shiny-shiny since 2009.
what's interesting, speaking as someone presently trying to convert some fiat into .999+purity gold or silver, is the difference in what the "martket" claims the current price of those metals are vs what you actually need to pay in a give-fiat-for-coin-or-bar-of-metal transaction. What I have learned - THE SPOT PRICE IS 100% FICTIONAL (at least 20% lower than reality)!!!
I think if you have not already got your metal in-hand, you've missed the boat because trying to buy it right now via face-to-face-fiat-for-metal transactions is signifantly more expensive than what prices allegedly are.
That's true for any similar commodity. Do you expect them to not charge anything for their trouble?
In europe (and I guess all the world) follow the papergold price and the decent gold dealers operate at around 5% markup based on that.
NO system survives if ran for the benefit of sociopaths, by sociopaths. Nothing, because their actions will not match their words, especially with no conscience nor empathy.
I don't think Gold & Silver are not going to be the miracle Investment.
Why?
When thiS terrible experiment ends lots of things ain't going to be the same. My guess the wealth destruction is going to be real quick, and if you haven't got your positions in place before it's going to be too late.
If the market goes limit down with no bids for days, weeks where's the funds to buy gold & Silver.
A slow decline allows sellers to liquidate, Obtain cash, and buy physical, but it ain't going happen with record levels of margin & leverage.
Some smart cash holders may go into physical, but stocks will be attractive as well.
My bet is agriculture (farmland with water), as basic needs must be met, with two years supply of fuel. Or buy Stocks in the basic food chain, milk processors, meat processors, Orchards, and market gardens.
If cash is banned America will become a black market nation immediately.
How will I pay my cell phone bill - trade 7 grams of home grown primo weed to Verizon?
Blood will continue to be an acceptable form of currency.
Smoke it yourself and pretend your phone still works.
i know right think how great it will be! we will save so much on taxes
If cash is banned in the US, and it's not done globally, another currency will fill the void in the US.
It will become a blackmarket currency, only if it's backed by gold or some combo thereof.
This is like watching a train crash in slow motion.
Anyone else feel that way?
The planners think they are so clever.
Maybe arrogance will be their downfall once again?
We all realize that the issue of a commodity based currency is an automatic declaration of W A R.
Ras says it's time to spread the word.
Why do you think there are no batmans in the world.
Do they all work for hollywood?
African Musk bitches will save America with Wallpower, crack, OC
How did they get the gold last time? Goob said "hand it over" and the sheeple handed it over,
my grandfather handed them a lunch bag of 20.00 gold pieces without a wimper.
I wouldn't depend on those kinds of grandfathers this time around, more likely they will be handing over the goob mass quanities of lead
Seriously? The WWII guys were wusses but the metrosexual video game generation is full of real men? You're in for a rude awakening.
And metrosexual video game enthusiasts are the ones buying gold bullion?
Everybody I know that is buying gold is also buying lead.
yeah but metrosexuals won't be the ones keeping it from Toecutter & Friends
maybe these bucks will begin to circulate, afterall they were designed and printed by progressive democrats
I love Stockman, and agree with his principles
BUT
this is nonsense, the regimes can keep this debt party going for many many more years
No boating accident here. Instead, a motley crew of coin collectors drop gold and silver coins into Salvation Army kettles every Christmas time. Some of us have given away all our gold, even though the kettles don't give receipts. It's just like the carol, bring Him silver and gold...
When an area's "coin collectors" all do the same thing, everyone has a true story that they gave gold coins to charity, doing good then and good in the Orwellian future, denying "government" thieves their easy takings.
at this point, the sooner everything implodes, the sooner we can begin to really recover. bring it.
HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies. http://www.bloomberg.com/news/articles/2012-09-23/how-high-oil-prices-will-permanently-cap-economic-growth
HIGH PRICED OIL DESTROYS GROWTH According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices. http://www.iea.org/textbase/npsum/high_oil04sum.pdf
BUT WE NEED HIGH OIL PRICES:
The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
Marginal oil production costs are heading towards $100/barrel http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/
Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html
Sanford C. Bernstein, the Wall Street research company, calls the rapid increase in production costs “the dark side of the golden age of shale”. In a recent analysis, it estimates that non-Opec marginal cost of production rose last year to $104.5 a barrel, up more than 13 per cent from $92.3 a barrel in 2011. http://www.ft.com/intl/cms/s/0/ec3bb622-c794-11e2-9c52-00144feab7de.html#axzz3T4sTXDB5
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
Great information.
Gail T. has been saying exactly this for more than a decade now.
Biophysical Economics for the win...
Stockman is right on the money as this week's Dow Jones Industrials update verifies. There are only days left before a major collaspe in equity prices...
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
Gold is in a bear market rally and should see the $1400 area before trning back down.
http://www.globaldeflationnews.com/gold-elliott-wave-update-for-week-end...
The plebs and the elite are thinking the same sort of things right now...
The elite are thinking OK, I got the next few days well sorted, but what will it be like over the next few years, if I create WW3 and mayhem, where will my portfolio be, I could end up with nothing, maybe the negativity will rebound?
The plebs are wondering something similar, what is going to happen to me and my family over the next few days, money, food, heating etc? But over the next few years... Well if I get that far, I must be sorted... I can muddle through for forever!
The meek will inherit the Earth! :-)
Observe the hustle, the bamboozle, the speechifying. Not 1 mention of theft, fraud or criminal acts :
Central Bank errors
mistakes
money printing
balance sheet expansion
monetary system...metastasizing since 1971
unstable fiat
cycles
short-run break in the system
collapse of confidence
I totally agree :-)
B-b-b-u-t-t-t, gold was supposed to be a rocket ship that was going to propel me from poverty to a life on Easy Street.
Uh huh....
Easy Street will be full of Toe-cutter and friends.
I got a Harley, I just need some football pads and hockey shinguards and I'm ready to go.
maybe one of those multicolored Afro wigs...
The gov. won't have to seize your 401/ira accounts. When the stock bubble crashes and people start losing 50+ % of their "retirement," good ole Uncle Sam will rush in and offer stable 7% returns without the risk those nasty gamblers took. Trillons of new dollars for all kinds of gov programs and enough left over to pay off the debt. WINNING
P.S. And of course , a few select financial institutions with the size to handle them, will administer the new USA4YOU retirement program. For a small fee of course
There is no financial collapse coming, Zero Hedge morons. Just a bunch of obstinately obtuse, lonely men waiting for Godot.
But watch the play - Godot never comes.
"And when it does I think it will mark the complete failure of a monetary system that has basically been metastasizing since 1971."
Yes the US has been collapsing since oil production first peaked.
Silver Rounds are the spendable "cash' when it all comes crashing down. Gold is great but who will have change of a Double Eagle?
Silver Rounds are the spendable "cash' when it all comes crashing down. Gold is great but who will have change of a Double Eagle?
Given that Gold and Silver is no longer manipulated in the near future(which we know they are), all you need to do is look to BitCoin in order to see what happens to a currency which has a limited supply and increasing demand = surge in price.
Also, in a healthy economy you shouldn't need gold nor silver. Hitler proved it and he proved that a country didn't need gold and silver in order to function. Gold and silver, or PM in general, work mainly as a hedge against people who make crappy monetary decisions...such as we have today.
And you did see what the banksters did to Hitler's Germany. https://www.youtube.com/watch?v=GMCOKNCwHmQ
Ofcourse..but the fact remains that economies don't need gold and silver as long as governments don't continually overspend, borrow and ruin their budgets. That is where PM metals come in. And in the enviroment we have today, even if it still takes years before economies collapse(which btw is surely to come), everyone should put some of their savings into physical bullion.
Tell 'em what they've won, Dave!
Cash will never die.
The bread and butter of the international drug trade is the the 500 Euro note, having surpassed the 100 Dollar bill in recent years.
Without cash the spice would not flow.
GOOD call by Stockman. I think that he's right.
In 2008 they managed to keep the system up-and-running, although it came close to collapse (around the time of the Lehman implosion). I don't think they will be so lucky, when the system goes down globally. NEXT TIME, it will be global. So make sure you've got some cash stashed in a safe place. There is a good reason why bank managers in the USA have been issued with personal survival kits.
Couldn't tell you how people will react to a global collapse. I think that when the average American takes their car to the gas pump, and their debit card DOES NOT WORK, the sh*t is going to hit the proverbial fan.
JUST an opinion!
They'll always take pussy.
Better get some.
There is no economy. It's gone and won't be back. Has left the fucking building. All there is now is massive chain stores with numerous executives directing your elected representative on how to best maintain the "company". The great oz behind the curtain is a lying pathological huckster with no intention of ever telling you the truth with his permanat smile painted on.
omit
I sometimes wonder why Dave Stockman bothers. He's 68 or 69 years old and should be pretty comfortable.
Maybe he was asked to. (Hey Dave, now its your turn to repay those who gave you everything you have today).
Maybe he wants a legacy. (But he does not seem to be the graven idol seeking kind of guy).
Maybe it is just genuine concern for a world that has gone a bit out of balance and a youth that has not yet come into its own.
... or maybe he knows the truth.
Here's the deal --- and Stockman is afraid to go here:
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel. http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf