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Are Central Bankers Poised To Break The World Again?

Tyler Durden's picture




 

Authored by Alexander Friedman, originally posted at Project Syndicate,

Today's Dark Lords Of Finance

In his Pulitzer-Prize-winning book, Lords of Finance, the economist Liaquat Ahamad tells the story of how four central bankers, driven by staunch adherence to the gold standard, “broke the world” and triggered the Great Depression. Today’s central bankers largely share a new conventional wisdom – about the benefits of loose monetary policy. Are monetary policymakers poised to break the world again?

Orthodox monetary policy no longer enshrines the gold standard, which caused the central bankers of the 1920s to mismanage interest rates, triggering a global economic meltdown that ultimately set the stage for World War II. But the unprecedented period of coordinated loose monetary policy since the beginning of the financial crisis in 2008 could be just as problematic. Indeed, the discernible effect on financial markets has already been huge.

The first-order impact is clear. Institutional investors have found it difficult to achieve positive real yields in any of the traditional safe-haven investments. Life insurers, for example, have struggled to meet their guaranteed rates of return. According to a recent report by Swiss Re, had government bonds been trading closer to their “fair value,” insurers in America and Europe would have earned some $40-$80 billion from 2008 to 2013 (assuming a typical 50-60% allocation to fixed income). For public pension funds, an additional 1% yield during this period would have increased annual income by $40-50 billion.

Investors have responded to near-zero interest rates with unprecedented adjustments in the way they allocate assets. In most cases, they have taken on more risk. For starters, they have moved into riskier credit instruments, resulting in a compression of corporate-bond spreads. Once returns on commercial paper had been driven to all-time lows, investors continued to push into equities. Approximately 63% of global institutional investors increased allocations in developed-market equities in the six months prior to April 2015, according to data from a recent State Street survey – even though some 60% of them expect a market correction of 10-20%.

Even the world’s most conservative investors have taken on unprecedented risk. Japan’s public pension funds, which include the world’s largest, have dumped local bonds at record rates. In addition to boosting investments in foreign stocks and bonds, they have now raised their holdings of domestic stocks for the fifth consecutive quarter.

These allocation decisions are understandable, given the paltry yields available in fixed-income investments, but the resulting second-order impact could ultimately prove devastating.

The equity bull market is now six years old. Even after the market volatility following the crisis in Greece and the Chinese stock market’s plunge, valuations appear to be high. The S&P 500 has surpassed pre-2008 levels, with companies’ shares trading at 18 times their earnings.

As long as the tailwinds of global quantitative easing, cheap oil, and further institutional inflows keep blowing, equities could continue to rally. But at some point, a real market correction will arrive. And when it does, pension funds and insurance companies will be more exposed than ever before to volatility in the equity markets.

This overexposure comes at a time when demographic trends are working against pension funds. In Germany, for example, where 20% of the population is older than 65, the number of working-age adults will shrink from about 50 million today to as few as 34 million by 2060. Among emerging markets, rapidly rising life expectancy and plunging fertility are likely to double the share of China’s over-60 population by 2050 – adding roughly a half-billion people who require support in their unproductive years.

If the combined effect of steep losses in equity markets and rising dependency ratios cause pension funds to struggle to meet their obligations, it will be up to governments to provide safety nets – if they can. Government debt as a percentage of global GDP has increased at an annual rate of 9.3% since 2007.

In Europe, for example, Greece is not the only country drowning in debt. In 2014, debt levels throughout the eurozone continued to climb, reaching nearly 92% of GDP – the highest since the single currency’s introduction in 1999. If pensions and governments both prove unable to provide for the elderly, countries across the continent could experience rising social instability – a broader version of the saga playing out in Greece.

The new Lords of Finance have arguably been successful in many of their objectives since the financial crisis erupted seven years ago. For this, they deserve credit. But, when an emergency strikes, large-scale policy responses always produce unintended consequences typically sowing the seeds for the next full-blown crisis. Given recent market turmoil, the question now is whether the next crisis has already begun.

 

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Tue, 07/14/2015 - 12:29 | 6311211 Bullionaire
Bullionaire's picture

"...four central bankers, driven by staunch adherence to the gold standard, “broke the world” and triggered the Great Depression."

 

Stopped right there.

Tue, 07/14/2015 - 12:36 | 6311240 agstacks
agstacks's picture

I got a little further, but stopped at this:

"..which caused the central bankers of the 1920s to mismanage interest rates, triggering a global economic meltdown that ultimately set the stage for World War II"

Tue, 07/14/2015 - 12:39 | 6311255 TeamDepends
Tue, 07/14/2015 - 12:45 | 6311274 Pinto Currency
Pinto Currency's picture

 

Agree with all.

These central planners ran a loose monetary policy during and after the war that blew up the world's economy.

 

“Paul Warburg was the man who got the Federal Reserve Act together after the Aldrich Plan aroused such nationwide resentment and opposition. The mastermind of both plans was Baron Alfred Rothschild of London.” ( Roosevelt, Wilson and the Federal Reserve , by Colonel Ely Garrison).

Tue, 07/14/2015 - 13:07 | 6311375 tmosley
tmosley's picture

The gold standard did not cause the fucking central bankers to mismanage interest rates.  They did that all on their own.  It is something that is inherent in their very existance.  Give a small group of men the ability to set the price of money, and they will ALWAYS get it wrong, and that's before they start trying to use that power to manipulate the economy.  Interest rates should be set by the markets, and if they aren't, then you DON'T HAVE A FREE MARKET, period end of story.

Tue, 07/14/2015 - 13:10 | 6311401 mojojojo
mojojojo's picture

Greece seems to be doin ok, isnt it?

Tue, 07/14/2015 - 14:49 | 6311773 Save_America1st
Save_America1st's picture

Well it shouldnt be too hard to guess what comes next.  When the banksters play all their cards like this then as always they restart the game again with a world war.

 

Tue, 07/14/2015 - 14:53 | 6311793 detached.amusement
detached.amusement's picture

yaveh wants your gold, that's specifically why the slave race was created

Tue, 07/14/2015 - 12:57 | 6311277 Captain Debtcrash
Captain Debtcrash's picture

Yet again we hear how the cause of the great depression was the gold standard when nothing could be further from the truth, as with the panics of the 19th century.  It was fractional reserve banking and credit expansions that resulted in crashes. 

I'm sick of economists hijacking history and blaming things on the gold standard when we had two forms of money gold/silver and debt-based money and the instability was caused by the debt based portion. Under the gold standard the growth may not have been as spectacular as the credit created booms, but it would have been much healthier. Explained clearly here.

Even the term panic used in the 19th century, which now has morphed into the terms recession and depression, was used to describe the panic that would ensue when the people realized that the bank could not make good on their deposits, resulting in a credit contraction and crash. These panics had nothing to do with the gold and silver money but the debt based money created through fractional reserve banking.

Tue, 07/14/2015 - 13:27 | 6311478 Zymurguy
Zymurguy's picture

I've hit the up arrow 1000 times for you... sorry it only registered one.

+1000 to you sir/ma'am

Tue, 07/14/2015 - 12:46 | 6311270 Pinto Currency
Pinto Currency's picture

.

Tue, 07/14/2015 - 12:41 | 6311262 Dr. Acula
Dr. Acula's picture

"Instead of preventing inflation by prohibiting fractional-reserve banking as fraudulent, governments have uniformly moved in the opposite direction, and have step-by-step removed these free-market checks to bank credit expansion, at the same time putting themselves in a position to direct the inflation. In various ways, they have artificially bolstered public confidence in the banks, encouraged public use of paper and deposits instead of gold (finally outlawing gold), and shepherded all the banks under one roof so that they can all expand together. The main device for accomplishing these aims has been Central Banking, an institution which America finally acquired as the Federal Reserve System in 1913."

https://mises.org/sites/default/files/Americas%20Great%20Depression_3.pdf

Tue, 07/14/2015 - 12:53 | 6311318 Ferrari
Ferrari's picture

I thought the Great Depression was engineered by central bankers. Apparently all of the great financiers miraculously got out before the crash. Just a coincidence I guess.

Tue, 07/14/2015 - 13:05 | 6311372 Hugh G Rection
Hugh G Rection's picture

Yeah, and the Rothschilds didn't engineer a crash in the London market after circulating lies about Napoleon winning at Waterloo.  It was just a coincidence that they bought up an entire Country for pennies on the dollar.

Tue, 07/14/2015 - 13:14 | 6311417 jpc578
jpc578's picture

I read Lords of Finance and that characterization is probably an oversimplification of the book's thesis on gold. I would say that the book better describes how central bankers “broke the world” by mismanaging the gold standard system post WWI. The British foolishly reestablished the British Pound gold weight to pre-war levels. The US, which benefited from a massive importation of gold due to the war, hogged gold after the war. The book also discusses the unsustainable system of war debts and reparations that put nations that forced Germany into hyperinflation and stagnant growth while keeping Britain and France stubbornly forceful on forcing German payments.

Tue, 07/14/2015 - 13:21 | 6311447 ParkAveFlasher
ParkAveFlasher's picture

Thanks for this clarifying comment regarding the book and its thesis.

Credit expansion has one purpose: to fuel wars of discretion. 

Tue, 07/14/2015 - 17:15 | 6312631 sgt_doom
sgt_doom's picture

First of all, did you say "economist" when you meant to say, super-crook?

Wasn't he at the World Bank w/Mrs. Michael Beschloss when she invested World Bank funds in the Carlyle Group, then got a job with them to manage said funds, and eventually founded the hedge fund, Rock Creek Group, which the author also belongs to?

Just asking????

Now, let's get a few facts straight on that Great Crash thingy.

First of all, mortgage CDOs are nothing new, they existed, under different names and terminology, leading up to the Great Depression:

http://www.docstoc.com/docs/906179/securitization-process

Securitization originated in the 1920s when mortgage insurance companies sold guaranteed mortgage participation certificates for pools of mortgage loans. Investors actively traded these certificates until the real estate market crashed during the Great Depression. In the late 1970s and early 1980s securitization rose like a phoenix from the ashes. The twin energy crises of the 1970s wreaked havoc on the economy and banks experienced severe disintermediation. Freddie Mac – a federal purchaser of mortgages from members of the Federal Reserve System – responded to this by taking legislative initiatives to improve liquidity in the secondary market for mortgage loans so as to increase the availability of investment capital for housing finance.”

Now, there was another gigantic factor, one Andrew Mellon, who had occupied the position of Secretary of Treasury for three successive administrations, sowing the vile seeds of procedures and processes that would greatly usher in the Great Crash and resultant Great Depression.  (BTW, his descendant, Chris Mellon, while occupying a high position with the Defense Intelligence Agency, would "leak" the fiction that Iran was just about to have nuke weapons back in 2001-2002, allowing for those 12-year sanctions which removed Iranian oil officially from the world stage, pumping up the prices of American and Saudi oil (what an effing COINCIDENCE:  the Iraqi invasion, effing up oil prices, and those Iranian sanctions, both around 2003!).

Tue, 07/14/2015 - 12:30 | 6311217 This is it
This is it's picture

Uh Huh...

 

Tue, 07/14/2015 - 12:35 | 6311224 Hugh G Rection
Hugh G Rection's picture

Gold standard?

I used to think that was the way to go.  As long as the currency is debt free and backed by something like labor then these cunts can't fleece the world so much.

Look into the German Miracle in the 30's.  Why did they go from the worst unemployment rate in the world to full employment in a few short years?  Oh yeah, issuing a labor backed currency and kicking out the bankers may have played a role.  Nevermind, let's all watch more Hollywood fairy tales about Hitler and Nazi zombies making human fat soap and gassing people with bug spray...

"The victor will never be asked if he told the truth"

Put dogma aside and just listen to his words:

https://www.youtube.com/watch?v=Z-G2F8LPQWk

Tue, 07/14/2015 - 13:09 | 6311393 The Delicate Genius
The Delicate Genius's picture

agreed.

I dont think it needs to ba backed by gold - what matters is the currency being issued debt free by government - not by private banks at interest.

that doesnt mean fiat doesnt have problems, is surely does, but gold backing isnt fuckery proof...

and what really matters is the issuing power being in the hands of a small group of bankers charging us for the privilege of printing our fucking currency.

Tue, 07/14/2015 - 13:13 | 6311410 Hugh G Rection
Tue, 07/14/2015 - 13:15 | 6311421 tmosley
tmosley's picture

Full retard.

You can't back money with labor.  "Backing" money means you can take it to a treasury window and get something in return for it.  Labor isn't fungible. What kind of labor are you going to get at a Nazi treasury window? Aryan blow jobs? Its no better than assignats. Actually, it's worse.  At least with assignats, you could in theory get a deed out of the deal.

The "German Miracle" was based on borrowing gold from the international markets, defaulting on war debts, and Keynesian spending.  It worked great for a while, they made lots of tanks and such, and everyone was employed building weapons of war. Then the borrowed funds started to run out, so they had to invade other countries to get gold to pay back the debts and continue to pay down trade imbalances (no-one outside of Germany accepted their scrip).  When they ran out of gold to steal, they collapsed like a sack full of diarrhea.

This is LITERALLY THE EXACT SAME economic policy followed by the Romans, leading to their collapse, and it is very, VERY similar to the one the US is following now, only we are a lot better at pretending the gold doesn't have a role in our economic system.

Tue, 07/14/2015 - 13:18 | 6311431 Hugh G Rection
Hugh G Rection's picture

Your version of history is quite kosher.  You should write a screenplay... I'm positive it would get picked up in Hollywood.

Tue, 07/14/2015 - 13:22 | 6311451 tmosley
tmosley's picture

Wow, so you're a Nazi yourself.  Great.

Well, you just waltz your ass right down the primrose path to complete economic devastation.  Your "third way" requires rulers to be angels. When its humans, everyone suffers.

Tue, 07/14/2015 - 16:08 | 6312233 Hugh G Rection
Hugh G Rection's picture

Oh no, someone called me a Notsee for questioning official bullshit narratives... That hasn't happened before.

Actually I'm not a National Socialist, and I think our founders did a great job setting up a Constitutional Republic.  It's just been destroyed by the likes of people that the National Socialists were fighting.

Tue, 07/14/2015 - 13:31 | 6311495 Mr. Frosty
Mr. Frosty's picture

Word for word from the central banker propaganda machine.

 

Nazi=EVIL in every way shape and form! Ignore their economic recovery! Ignore their quality of life! Ignore their incredible technological achievements! If you notice these things, then you are EVIL too!

Tue, 07/14/2015 - 13:52 | 6311579 tmosley
tmosley's picture

Right, so 11 years in a bubble (followed by utter collapse)==greatest economic system in the history of the world.

Fuck off you god damn idiot.

And where EXACTLY did I say Nazis were evil? I said they were STUPID and had a piss poor economic system that was 120% Keynesian.

The tech advances had nothing to do with the self-destructive ideology.  Germany was already the worlds technical and scientific superpower, and had been for a century prior.  The Nazis destroyed all of that just like the Republocrats have done in the US.

But hey, you feel free to goose step into oblivion with your friend there. You absolutely will not be missed.

Tue, 07/14/2015 - 15:43 | 6312063 Mr. Frosty
Mr. Frosty's picture

Discussing taboo world history really seems to rustle your jimmies. Why not just pop a blue pill, turn on CNN and relax.

Tue, 07/14/2015 - 13:24 | 6311464 Mr. Frosty
Mr. Frosty's picture

+100

 

Gold-backed is certainly better than debt-backed, but it still has issues. Banks and governments are the only ones with large gold reserves, so they still have a lot of influence over the currency. Also, the total value of the currency can only equal the total value of the gold reserves held by the issuer, thus the currency is rare and has low velocity.

 

Fiat is higher velocity and its value is equal to the sum of the entire economy that utilizes the currency. The problem is no government or bank can resist the temptation to simply print money to balance their books, thus fiat currency is always destroyed by the issuers.

Tue, 07/14/2015 - 13:27 | 6311476 tmosley
tmosley's picture

I like how nobody at all remembers free banking at all.  All they remember is central banks and their fiat, or central banks with a gold standard.  There was a time before that, when people could be their own central bank and issue currency backed by whatever they liked, and the market decided based on their records, reputations, and audits who to trust.

But hey, I guess leaving the power in the hands of the people is too "Jewish" for some. Fucking ridiculous.

Tue, 07/14/2015 - 17:18 | 6312651 sgt_doom
sgt_doom's picture

You nailed it perfectly, Hugh G Rection (we must be related???).  Both Adolf Hitler and FDR ended laissez-faire capitalism in their respective countries.

Tue, 07/14/2015 - 12:33 | 6311228 Philo Beddoe
Philo Beddoe's picture

Even the world’s most conservative investors have taken on unprecedented risk. 

 Bullshit. The world's most conservative investors have been buying PMs. Yes, and getting kicked in the teeth for doing so. Hey, fuck em...too late to buy fucking garbage paper anyhow. 

Tue, 07/14/2015 - 17:20 | 6312664 sgt_doom
sgt_doom's picture

Exactamundo!

And let us not forget those effing "liquidity puts" from Citigroup - - which is why they should have never been bailed out (nor should any of the others).

To those who aren't clear on them:  Citigroup sold trash CDOs with the proviso that the investor would be refunded at the original purchase price should they go under????

Pure, NO-RISK investments!

Tue, 07/14/2015 - 12:33 | 6311229 Fish Gone Bad
Fish Gone Bad's picture

Must be a slow day.

Tue, 07/14/2015 - 12:37 | 6311243 This is it
This is it's picture

Someone had that piece out of extreme boredom.

Tue, 07/14/2015 - 12:34 | 6311233 Lady Jessica
Lady Jessica's picture

Nothing was fixed.

The inevitable was just delayed.

Tue, 07/14/2015 - 14:24 | 6311704 Amish Hacker
Amish Hacker's picture

Precisely, but nowadays that counts as a central bank roaring success.

Tue, 07/14/2015 - 12:36 | 6311241 Doubleguns
Doubleguns's picture

Time to break some skulls.

Tue, 07/14/2015 - 12:37 | 6311244 KnuckleDragger-X
KnuckleDragger-X's picture

The lords of the universe rely on iffy economic theory (theology) and unrealistic models and will push it all forward no matter what reality does. Things are going from bad to worse and monetary policy now exists to paper over the cracks, but the cracks just keep getting bigger. At this point all they can do is eventually make things much worse, but their ego's can't allow them to admit any mistakes, so the tragedy will be played out to the bitter end......

Tue, 07/14/2015 - 12:39 | 6311254 aliki
aliki's picture

they've already broke the people so i guess the world is next

Tue, 07/14/2015 - 12:53 | 6311320 smartknowledgeu
smartknowledgeu's picture

I've read The Lords of Finance, and that book is so littered with lies and deceit that it deserved the Pulitzer Prize as much as Obama deserved the Nobel Peace Prize. I'm guessing it "won" [aka was chosen to receive] the Pulitzer Prize because it was a great contribution to the bread & circuses spectacle to keep people stupid and misinformed.

Tue, 07/14/2015 - 13:02 | 6311358 Mat Cauthon
Mat Cauthon's picture

The biggest mistake ever made in regards to the gold standard was when nations, like the United States, assigned a value to gold and never let IT float, versus allowing currencies backed by gold to float.

The proper way to run on a gold standard is to have gold be the centralized reserve and all currencies valued in relation to gold.  If you over print your money supply, the value of gold in your currency is much greater.  If you are more monetarily responsible, your value in relation to gold is more, and the cost for gold in your currency is less.

Sometimes a nation must expand the money supply, and sometimes they must contract it... but that is fine if gold is allowed to float in relation to all currencies, and ANY restriction to free market price discovery is what has caused every major depression or monetary collapse in history.

And it doesn't take a 'Nobel or Pulitzer Prize' winning economist to see this.  But man is flawed to always put his hand in and 'fix' things that aren't broken.

 

 

 

Dovie'andi se tovya sagain (It's time to toss the dice)

Got Karatbars?

Tue, 07/14/2015 - 13:12 | 6311407 gmak
gmak's picture

You are confusing value and price. The value of gold never changes, just the price in various currencies.

Tue, 07/14/2015 - 13:34 | 6311513 Mat Cauthon
Mat Cauthon's picture

Probably true, but I think you got the gist.  And in my opinion, I think this is exactly what China is planning when they usher out the Gold Trade Note for use in bi-lateral trade soon.

 

 

 

Dovie'andi se tovya sagain (It's time to toss the dice)

Got Karatbars?

Wed, 07/15/2015 - 07:02 | 6314397 Ghordius
Ghordius's picture

you too, are confusing value and price

price is set by markets, is a record of past transaction or what you are willing to pay for something now

value is personal. value is what sets price

I value my third cow less then your third horse, you value my third cow more then your third horse. so I have milk, but you can ride, while you don't have milk and I can't ride

exchange is possible, the price can be one cow for one horse... depending on the haggling skills, but if it's all we have, there it is, done

but now I have two cows and one horse, while you have one cow and two horses. you might wish for another cow, but I now do have a horse, and don't want to forsake another cow for a horse

this actually means that we both value my second cow more then your second horse, and so exchange is not possible

so the last "market" price for cows was one horse... period. it's personal valuation that sets market prices, which are only a record of past transactions

and so in the desert a thirsty man might be willing to pay the highest price for a glass of water, and nothing when drowning in a sweet water lake

Tue, 07/14/2015 - 13:03 | 6311368 Chuck Knoblauch
Chuck Knoblauch's picture

Average Joe on the street know its the banksters this time.

Good luck with that next false flag.

Joe's coming for you.

Tue, 07/14/2015 - 13:06 | 6311373 jpc578
jpc578's picture

This article illustrates exactly why the Federal Reserve will be insane should they ever raise interest rates ever again. If central banks don't push up currency values of the riskiest assets they will unleash an economic death spiral that will be unprecedended in world history.

Tue, 07/14/2015 - 13:09 | 6311387 shouldvekilledthem
shouldvekilledthem's picture

Bitcoin is the antidote against the cancer of central banking.

Tue, 07/14/2015 - 13:10 | 6311402 The Delicate Genius
The Delicate Genius's picture

in theory, bitcoin is an answer.

in theory...

in theory - communism works...

in theory...

Tue, 07/14/2015 - 13:17 | 6311428 Lin S
Lin S's picture

Wait, what?

Are you saying communism doesn't work? Is that what you're saying?

Please take that back before you shatter my cherished delusions!

Tue, 07/14/2015 - 13:18 | 6311430 tmosley
tmosley's picture

What do you mean "in theory"? Bitcoin is outside of their system, and works fine.  What you mean to say is "in practice" because it is, in fact, in practice.

Tue, 07/14/2015 - 13:37 | 6311522 Mat Cauthon
Mat Cauthon's picture

Until you can get the Gated Community generation to understand it, and retailers en masse to accept it, then it will simply be a barter currency used by anarcho-capitalists gathered at Porcfest.

 

 

Dovie'andi se tovya sagain (It's time to toss the dice)

Got Karatbars?

Tue, 07/14/2015 - 13:44 | 6311554 Winston Churchill
Winston Churchill's picture

Bitcoin piggybacks on their systems, so is a derevative of a derivative.

Much as I want another alternative, BTC just isn't it.

Tue, 07/14/2015 - 13:40 | 6311537 Mr. Frosty
Mr. Frosty's picture

A fiat currency whose quantity is algorithmically regulated. A high-velocity currency that cannot hyperinflate. Game-changer, the birth of a new, honest financial system that will change the world beyond our imagination.

Tue, 07/14/2015 - 13:15 | 6311423 mojojojo
mojojojo's picture

You guys are all snakeoil salesmen, quacks, fraudsters, liars, con men, charlatons. Gold is a yieldless relic. Central banks are comparatively more efficient than the market at setting the price of credit and inflating the money supply. If you don't beleive me, ask Greece.

Tue, 07/14/2015 - 13:28 | 6311486 ParkAveFlasher
ParkAveFlasher's picture

Credit is not money.  Gold doesn't need to yield anything because it is economic ballast.  You conflate ballast with anchorage. 

Tue, 07/14/2015 - 14:09 | 6311634 mojojojo
mojojojo's picture

That isn't true. Credit is currency. And money is currency. money is gold. so. so credit is gold.

Tue, 07/14/2015 - 14:24 | 6311705 Dr. Engali
Dr. Engali's picture

Currency is not money. One of the characteristics of money is that it has to be store of value, which currency does not.

Tue, 07/14/2015 - 15:44 | 6312067 mojojojo
mojojojo's picture

currency is money and credit is gold and currency is value and gold is barbarous and fed prints gold and dollar is in backwardation. the fed is dumping gold in the comex to suppress the value of currency. people are being paid in gold if they lend their precious fiat to the market

Tue, 07/14/2015 - 20:28 | 6313465 bluskyes
bluskyes's picture

until credit loses it's credibility, and becomes a liability.

Wed, 07/15/2015 - 06:40 | 6314355 mojojojo
mojojojo's picture

ang gold is liability and credit has intrinsic value

Tue, 07/14/2015 - 13:37 | 6311523 large_wooden_badger
large_wooden_badger's picture

The squid always wins because the squid makes the rules.

Easier said than done, but the only way to starve the beast is by refusing to deal in its currency.

Time to play a new game.

Tue, 07/14/2015 - 13:37 | 6311526 BoPeople
BoPeople's picture

Satan's minions and damn proud of it.

Tue, 07/14/2015 - 13:50 | 6311570 Econophile
Econophile's picture

This guy Friedman understands so little. The "money lords" blame the gold standard for the Great Depression? How about fiscal mismanagement, government interference in the market, wage controls, draconian fascist-type economic controls, bad inflationary monetary policy, Hoover and Roosevelt. If you don't understand the past, how can you understand the future? It's the fabian socialists in UK who blame the gold standard. Funny that it worked ok for the previous 5,000 years.

Tue, 07/14/2015 - 14:13 | 6311657 kchrisc
kchrisc's picture

Central banksters do not "break" anything. They steal it.

The "breaking" is really their victims just discovering the theft.

Liberty is a demand. Tyranny is submission..

Tue, 07/14/2015 - 14:16 | 6311671 Quinvarius
Quinvarius's picture

The gold standard did not cause the Great Depression.  It was a standard credit implosion caused by bankers extending too much credit, as usual.  It didn't matter what kind of money they were using.  They loaned out way more than existed.  And then everyone devalued anyway.  The gold standard was not a factor at all becaus ethe gold exchange rates were changed to reflect the new money they printed that time too.  Great Depression was caused by banker stupidity, as always.

Tue, 07/14/2015 - 14:56 | 6311810 sam site
sam site's picture

It was the abandonment of the 100% gold standard begun in 1914 that set up the Great Depression.

Before 1914 there was virtually no new money being counterfeited as we were on a 100% gold standard.  The damage to our economy occurred with the Feds new 40% gold backing that allowed new currency to be created through typically 10% bank reserve requirements, so $100 deposited in the bank could now back $1000 in new counterfeited money.

By 1945 only 17% was backed by gold.  There was no gold in the banks, not just because the Fed counterfeited our money supply, but also because the Fed were gold thieves as well.  According to House Banking Chairman Louis McFadden, the Fed stole our gold and sent it to Germany.  Later it was discovered to have funded our next conjured up enemy – Hitler.

After the bank runs of 1931-33 when America discovered the bank gold theft and money supply debasement, Senator Bronson Cutting led the fight to eliminate fractional reserve banking but was assassinated in a plane crash.

See Louis McFadden’s 1934 congressional speech imploring his fellow congressmen to arrest the Fed for gold theft and treason.  They were scared sh*tless of the foreign bankers controlling America through the Fed and Wall St because they knew they could be killed.  They abandoned him to be assassinated on their 3rd attempt in 1936.

 

House Banking Chairman Louis McFadden - An Astounding Exposure

http://www.afn.org/~govern/mcfadden.html     

 

Tue, 07/14/2015 - 15:46 | 6312071 malek
malek's picture

So in short:
Sticking to the rules cause the Great Depression where more lies would have easily prevented it. Yeah sure asshole.

Tue, 07/14/2015 - 18:13 | 6312872 Magooo
Magooo's picture

Nah..... 

 

This is what is going to break the world:

 

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

 

THE END OF CHEAP OIL  Global production of conventional oil will begin to decline sooner than most people think, probably within 10 years  Feb 14, 1998 |By Colin J. Campbell and Jean H. Laherrre    http://www.scientificamerican.com/article/the-end-of-cheap-oil/

 

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

 

BUT WE NEED HIGH OIL PRICES:  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/

 

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

 

 

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