This page has been archived and commenting is disabled.

An Annotated Paul Brodsky Responds To Bernanke's Latest Attempt To Discredit Gold

Tyler Durden's picture




 

Last week, Bernanke's first (of four) lecture at George Washington University was entirely dedicated to attempting to discredit gold and all that sound money stands for. The propaganda machine was so transparent that it hardly merited a response: those away from the MSM know the truth (which, simply said, is the "creation" of over $100 trillion in derivatives in just the first six months of 2011 to a record $707 trillion - how does one spell stability?), while those who rely on mainstream media for the news would never see an alternative perspective - financial firms are not among the top three sources of advertising dollars for legacy media for nothing. Still, for those who feel like the Chairman's word need to be challenged, the following extensive and annotated reply by QBAMCO's Paul Brodsky makes a mockery of the Fed's full on assault on gold, and any attempts by the subservient media to defend it. To wit: "Has anyone asked why so many powerful people are going out of their way to discredit an inert rock? We think it comes down to maintaining power and control over commercial economies. After professionally watching Fed chairmen cajole, threaten, persuade and manage sentiment in the markets since 1982, we argue this latest permutation is understandable, predictable and, for those willing to bet on the Fed’s ultimate success in saving the banking system (as we are), quite exciting.... Gold is no longer being ignored and gold holders are no longer being laughed at. “The Powers That Be” seem to have begun a campaign to discredit gold."

From QBAMCO

BB Gun

“First they ignore you, then they laugh at you, then they fight you, then you win.”
- Mohandas Karamchand Gandhi

As gold holders with fairly comprehensive views of global monetary policies and central banking we were asked to comment about the first of four installations of Ben Bernanke’s lecture series at George Washington University, entitled “The Federal Reserve and the Financial Crisis”. Despite thinking the lecture was woefully incomplete, diversionary and oftentimes quite disingenuous, our initial reaction about responding was to let it go. We think our anticipated macroeconomic outcome will be ignored and denied by public policy makers up until the time they are forced to adopt it and take ownership of it. The math and political expediency behind significant inflation, policy administered hyperinflation, and maybe even conversion to a new monetary system are too compelling to ignore.

However, while our business is not to debate publicly, especially the powerful Fed Chairman who represents and must navigate among multiple constituencies with various dissenting social, economic and political views, we take seriously false claims that serve to undermine our business. In our opinion the consensus view of the forces behind the general price level borne from misconceptions about money and banking is fundamentally wrong. Mr. Bernanke went out of his way last Monday to perpetuate such myths. (That the myths happen to be self-serving for central banks, including the Fed, and for the global banking system cannot be ignored.)

Mr. Bernanke’s lecture series is being delivered under the guise of reaching out to the public to explain better how central banks work and, we presume, how their policies help promote the public good. This is an assertion we think is contrary to the empirical facts. Most of the public believe central banks take the rough edges off unadulterated capitalism where greed, fear and inequitable resource distribution would otherwise dominate. Chairman Bernanke promoted central banking, implied it is more powerful than natural economic functions, and spent quite a bit of time implying gold has no place in a sophisticated and nuanced global economy that demands thoughtful monetary policies. We presume promoting the notion of providing an economic security blanket must be the rationale behind very smart people saying very dumb things in public.

Chairman Bernanke’s first lecture in the series included a long discussion of gold. This is as it should be because up until forty years ago global money was always backed in some way, shape or form with precious metals. Since 1971 the Fed and other central banks have been the monopoly issuers of currencies that have not been exchangeable into gold. We will not spend time here recounting what we have already taken 150,000 words over the last five years to discuss. Suffice to say US dollars and all the world’s currencies are backed by the full faith and credit of treasury ministry authority to have their central banks manufacture even more money. The question before us today is: how many new paper currency units are necessary to secure banking systems and protect against deflation? To which we answer: probably somewhere around 15 trillion new dollars and about 75 trillion new dollar-equivalent currencies across the world.

Our business, as fiduciaries, is allocating capital based on relative value within the macroeconomic environment we see as likely. In our opinion Mr. Bernanke’s lecture last Monday perpetuated bad or unimportant data, implied impossible outcomes, and was quite self-serving in its conclusions. His description of history was incomplete, his extrapolations were baseless, and his arguments were quite weak. (Ultimately we believe Fed policy will migrate -- or be suddenly reversed -- to meet the consequences of its current policies.)

As we pointed out only a few weeks ago following Warren Buffett’s unsolicited gold comments, (“Golden Boy”), and in December 2009 following Nouriel Roubini’s assertion that a gold bubble was about to pop (“Roubini Rebuttal”), gold is simply money - a savings (not investment) vehicle, a means of storing purchasing power in a time of paper money dilution. That’s it. Central banks compete directly with gold ownership because they manufacture competing savings vehicles in the form of baseless paper money. For the past twelve years global wealth holders have been converting their savings in increasing amounts from paper media of exchange (or financial assets denominated in them) to gold and natural resources. Why? Because central banks must dilute the purchasing power of their currencies to de-leverage the global banking system.

They can’t dilute gold. Has anyone asked why so many powerful people are going out of their way to discredit an inert rock? We think it comes down to maintaining power and control over commercial economies. After professionally watching Fed chairmen cajole, threaten, persuade and manage sentiment in the markets since 1982, we argue this latest permutation is understandable, predictable and, for those willing to bet on the Fed’s ultimate success in saving the banking system (as we are), quite exciting. Gandhi’s quote above rings true. Gold is no longer being ignored and gold holders are no longer being laughed at. “The Powers That Be” seem to have begun a campaign to discredit gold.
Below, we address specific points the Chairman raised in his lecture last Monday. It was a…

Tour de Farce

The quotes below were taken from Ben Bernanke’s slide presentation.

 

We take issue with the following:

BB: (Slide 6) “A central bank is not an ordinary bank, but a government agency.”

QB: As we understand it, a central bank is neither an ordinary bank nor a government agency. It is a privately-held for-profit bank (owned by its member banks, not funded with tax revenues) that has the exclusive power to print unlimited quantities of currency and take unlimited amounts of assets onto its balance sheet.

BB: (Slide 7) “All central banks strive for low and stable inflation; most try to promote stable growth in output and employment….Central banks try to ensure that the nation’s financial system functions properly; importantly, they try to prevent or mitigate financial panics or crises.”

QB: In the current baseless monetary system central banks actually create inflation and there is no other entity or economic dynamic that can create it. Increasing aggregate demand relative to supply does not create a sustainable increase in the general price level. Only an increase in the stock of money does. That central banks may “strive for low and stable inflation” implies central banks strive for low and stable money creation.

Fair enough, but their consistent performance shows they do not abide by their objectives. Indeed, they have been quite negligent. By maintaining easy credit within the banking system for decades, central banks promoted bank asset accumulation (and economy-wide debt accumulation) that would someday have to be serviced and paid-down with money that these same central banks did not yet create. A cynic could argue quite compellingly that central banks exist to help banks profit from issuing unreserved credit to the public and to governments and then to manufacture enough money to cover naked currency shorts embedded in bank loan books and government accounts. Current events support this idea.

As for financial panics, they can only arise from systemic credit deterioration. Systemic credit deterioration can only occur following a great systemic credit build-up. A great systemic credit build-up can only occur through the banking system, which the central bank regulates. Thus, trying “to prevent or mitigate financial panics or crises” implies central banks try to prevent their own contemporaneous negligence and then try to mitigate the consequences of that negligence through…money creation, which is necessary to offset credit deterioration. BB’s logic is quite circular.

BB: (Slide 8) “”In normal times, central banks adjust the level of short-term interest rates to influence spending, production, employment, and inflation… Central banks provide liquidity (short-term loans) to financial institutions or markets to help calm financial panics, serving as the lender of last resort.””

QB: By “normal times” BB is referring to a credit build-up in which the banking system creates and promotes its own assets in the form of credit, which is also systemic debt. The tertiary consequences of this process are the credit build-up’s impact on the commercial economy, including the levels of consumption, production and employment (and the general price level). As we can see presently, central banks provide systemic liquidity to financial institutions or markets but not directly to the commercial economy. Finally, yes, central banks are lenders of last resort; however, central banks do not advertise that they are also buyers of last resort. As we are witnessing today, the Fed is buying dubiously-marked assets from banks.

BB: (Slide 11) “Financial panics are sparked by a sudden loss of confidence in one or more financial institutions, leading the public to stop funding those institutions, for example, through deposits….Panics can cause:

  • Widespread bank runs
  • Restrictions on depositors’ access to their funds
  • Bank failures
  • Stock market crashes
  • Economic contractions”

QB: And what “sparks” a sudden loss of confidence financial institutions?! We would argue financial panics are caused by the realization by a quorum of the population that there is not enough money in existence to back outstanding credit. (What “sparks” this realization is of secondary concern.) BB’s implication is that financial panics and sudden losses of confidence are always unwarranted. We disagree. As for the consequences of financial panics that BB cites, please note his reference to access to depositor “funds” – not to depositor money. Over 80% of bank deposits in the US are not money but electronic credits. Money (bank reserves) would have to be created anew if all depositors wanted to withdraw their funds.

Further, by being the source of financial panics (through promoting easy credit conditions), and by listing economic contractions as a negative consequence of financial panics, BB is implicitly (and properly) indicting central banks as the source of the “economic cycle” (in reality the credit cycle). Rather than titling his presentation “The Federal Reserve and the Financial Crisis” we think BB should have considered a more apt title: “How the Federal Reserve Caused the Financial Crisis.”

BB: (Slide 13) “Short-term loans from the central bank replace losses of deposits or other private-sector loans, preventing the failure of solvent but illiquid firms.”

QB: Short-term loans made by central banks to depository institutions may be rolled over, in perpetuity, by central banks because in aggregate they have no balance sheet constraints (and their balance sheets are not audited). If BB’s use of the phrase “short term” was used to imply “temporary funding”, logic and evidence shows this to be not true. Central banks continue rolling overnight loans and the possibility that they will be able to extinguish them, which would hit bank reserve ratios (not to mention bank earnings, share re-purchase plans and dividend policies) seems remote.

It would also be inconsistent with the Fed’s treatment of its member banks to impose restrictive policies. Overnight repurchase agreements increased consistently over 12% per year from 1994 to 1996 (and of course the economy-wide debt accumulation and bank system funding mismatch this promoted would be soon felt.) Finally, bank illiquidity is the same as bank insolvency. There is no asset illiquidity at the market clearing prices of “illiquid” bank assets (there is always a price for everything).

Thus, central banks promote term-credit creation by targeting overly accommodative overnight funding rates, then, when the stuff hits the fan (as it must), provide funding for over-valued bank assets resulting from that mismatch. This perpetual overnight funding gums-up the real economy because banks are loath to lend to debtors who are not being equally subsidized (quite rational). Ultimately, central banks must provide a balance sheet on which preferred banks may sell their over-valued assets, and they must create new money with which to buy them.

BB: (Slide 16) “If financial firms can borrow freely from the central bank, using their assets as collateral, they can pay off depositors, avert “fire sales” of their assets, and restore the confidence of their depositors.”

QB: In a fractionally reserved banking system, maintaining depositor (and bank shareholder) confidence is necessary at all times, whether or not the assets and future income of banking institutions warrant such confidence. A reasonable person should conclude that executives of banking institutions, central bank representatives like Chairman Bernanke, and politicians charged with overseeing financial and economic matters will unite in trying to promote public confidence and funding for financial institutions in times of great stress (including at times just prior to sudden systemic credit de-levering).

Thus, it makes complete sense that The Powers That Be would become less concerned with intermediate and long term consequences of monetary policy and more concerned with perpetuating short-term public confidence. The question becomes; “can they succeed even if commercial and consumer incentives do not warrant such confidence?”

BB: (Slide 20) “Financial panics in 1873, 1884, 1890, 1893, and 1907 led to bank closings, losses by depositors and investors, and often to broader economic slowdowns… The 1907 financial panic led Congress to consider the creation of a central bank.”

QB: The repeated financial panics from 1873 to 1907 were discrete and contained within the banking system. They did not lead to broad or lingering economic contractions. Banks that leant too much over their reserves or that made poor loan judgments failed. In 1907, credit deteriorated and banks stopped lending. The broader economy was threatened with less credit, but that would have been resolved quickly once bad banks failed, new or solvent banks offered new credit collateralized by the very same assets marked down from the values at which they were held by the bad banks. Quickly finding market clearing prices would have solved the problem. Instead, J.P. Morgan – the man -- led a syndicate that injected new money into the banking system. This calmed public fears, avoided runs on the largest banks, (including his), and kept bank loans books valued too high relative to the real economy.

As for bank depositors, they used to care about the creditworthiness of bank balance sheets and they sought to save at banks they thought had adequate reserves. This, and the fact that bank failures tended to bankrupt bank owners, served as a discipline on bank balance sheet leverage.

As for depositor protections provided by central banks, most people today do not understand that a central bank still cannot insure the purchasing power of bank deposits. (Depositor insurance, such as the FDIC, is unfunded and so the Fed would have to manufacture currency that the FDIC would then credit to bank balances). Central banks can only backstop the nominal balances of depositors. Thus, in the US, most of the $9.7 trillion of bank deposits supported by $1.6 trillion in bank reserves are nominally safe; however, these figures imply the purchasing power guaranteed to depositors could be as low as 16.5% of what it is today ($1.6 / $9.7).

A reasonable person would conclude that a system where a saver could diversify her savings among deposits in a few solidly-reserved banks would be far safer in real terms than holding one’s savings in one banking system that is insolvent in real terms and for which the central bank must create more money to keep it solvent in nominal terms.

BB: (Slide 22) “The gold standard sets the money supply and price level generally with limited central bank intervention.”

QB: More accurately, in the gold standard BB is referencing, the government sets a fixed exchange rate of its economy’s media of exchange to an ounce of gold. This fixed exchange rate forces banking systems to be more careful about issuing unreserved credit denominated in the media of exchange. It also makes governments less able to deficit-spend. Extreme unreserved credit issuance or deficit spending would give incentive to holders of the paper media to exchange it for gold, which would not be diluted.

[It is important to understand that BB’s definition of the gold standard, while an accurate portrayal of past gold standards, is not market-based because the government is setting the fixed exchange rate. A true gold standard would treat gold as the collateral for all media of exchange, which in turn would be exchangeable at an exchange rate set by the markets. This would differ from today’s regime in that physical gold would be considered “money”, (the collateral for paper money and Visa credit cards), and so would not be subject to taxes of any kind. Additionally, there would be no gold futures markets, as there are today, in which issuers of the competing baseless currencies could potentially suppress the “floating” exchange rate (i.e. gold price) without limit.]

BB: (Slide 23) “The strength of the gold standard is also its weakness too: Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions.”

QB: This makes no sense at all. It is true that the supply of money could not be adjusted in response to changing economic conditions. However, in a gold standard system with a floating gold exchange rate the price of money would adjust in response to changing economic conditions. In other words, the value of money – determined by both its quantity and price (exchange rate to media) – would accommodate any economic environment. BB chose to pick on a government-priced and managed gold standard. Frankly, this is a straw man argument the Chairman seems to be using to mislead.

BB: (Slide 24) “All countries on the gold standard are forced to maintain fixed exchange rates. As a result, the effects of bad policies in one country can be transmitted to other countries if both are on the gold standard.”
 

QB: Exactly who would force countries to maintain fixed exchange rates? Governments. In a gold standard with floating gold exchange rates, governments would compete for money with the private sector. They would not be able to have central banks create money from thin air and so they would have to tax citizens to pay for government projects, wars, and any debts they may accrue. This inherent discipline would likely give great incentive to politicians to solicit the will of taxpayers more earnestly.

(It would be naïve to think that governments in liberal democracies would allow the private sector to control the terms of commercial and financial exchange. This is probably the reason gold advocates have developed a reputation as being politically conservative – even whacko anarchists. However, as we will show shortly, it seems obvious that maintaining government control over economies by giving banking systems priority over commerce has begun to be quite regressive -- not in the best interest of the vast majority of populations.)
 

BB: (Slide 25) “If not perfectly credible, a gold standard is subject to speculative attack and ultimate collapse as people try to exchange paper money for gold. The gold standard did not prevent frequent financial panics.”

QB: BB offered a gold standard that was not credible because it had a fixed exchange rate and was further accompanied by fractional reserve banking. As he suggests, it was (and would be) subject to speculative attack. This is no different than the current baseless monetary system, which is not credible and is, as we are seeing today, also subject to speculative attacks. The only reason today’s baseless currencies did not collapse in 2008 (or before) is because central banks can manufacture money, which delays systemic de-leveraging (de-leveraging = reconciliation between the amount of systemic credit/debt denominated in that currency and the amount of base money in that currency). Only credit deterioration or money creation can de-lever balance sheets.

Finally, it is true that fixed-exchange rate gold standards did not prevent frequent financial panics; however, they did repair them far more quickly and with far less damage to broader commercial economies. Wage earners and savers benefitted. Creditors suffered.

BB: (Slide 26) “Although the gold standard promoted price stability over the long run, over the medium run it sometimes caused periods of inflation and deflation.”

QB: Really? This implies BB thinks the raison d’être of central banks is to avoid periods of inflation and deflation in the “medium run” that might occur “sometimes”? This is certainly inconsistent with past and current policies, which show an overwhelming emphasis on solving for short-term crisis management. And please recall that the general price level may be a discrete function of the supply and demand for goods and services, BUT ONLY IF THE STOCK OF MONEY AND CREDIT DOES NOT RISE OR FALL (inflate or deflate) MORE, in which case the supply of money determines the GPL. Blaming gold for inflation and deflation is, well, either sloppy or a pre-meditated deception.

BB: (Slide 27) “In the second half of the 19th century, a global shortage of gold reduced the U.S. money supply and caused deflation (falling prices).”

QB: There cannot be a global shortage of gold because everything is relative. There can only be a shortage of gold at a certain exchange rate to government-issued media. If the gold price were to have risen then the value of the stock of gold would have risen and the U.S. money supply would have risen in sync. There would have been no shortage of gold. (The elegance and obviousness of this logic makes one question the institutionalized intelligence of, or motivations behind, contemporary economics.)

Demand for food and other inelastic items remained relatively constant throughout the second half of the 19th century. Falling prices were caused by consumers starved of money and credit and suppliers starved of working capital. (We can understand why banking systems and governments do not like fixed exchange rate gold standards. We cannot understand why wage earners at all levels do not demand floating rate gold standards. Actually, it probably has something to do with lectures like these from economic icons.)

BB: (Slide 28) “William Jennings Bryan ran for President on a platform of modifying the gold standard.”

“You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”

-William Jennings Bryan, July 9, 1896

QB: We agree that the gold standard, as practiced, was a political construct, as is the current monetary system. (We would also agree that politicians tend towards drama and populism, if that was BB’s point in including this frame.) However, if Mr. Jennings Bryan were alive today we are quite sure he would declare the following:

“You shall not press down upon the brow of labor this yolk of debt, you shall not shackle mankind to serve the banks.”

-The Ghost of William Jennings Bryan, 2012

Bryan was a populist and we would argue that the vast majority of populations in developed economies are not being served well by the current debt-based global monetary system. In today’s baseless monetary system labor cannot save its wages because banks may issue infinite credit that raises the general price level (GPL) above where it would naturally gravitate.

Economy means “thrift” (think home economics) and economies are organisms that work towards increasing affordability. Prices would naturally fall, not continually rise, in economies with population growth, innovation, economies-of-scale, and productivity improvements. This would benefit all wage earners because a lower GPL would make wages more competitive vis-à-vis the goods, services and assets available for purchase. Affordability would rise for all economic participants, and would be especially beneficial to those at the lower end of the wage scale.

Obviously this is not the monetary system we have, which is premised on continually rising prices and policies that seek to ensure that. The current monetary regime issues credit and creates systemic debt. In this system asset price growth can outpace wage growth for long stretches of time. Asset prices, however, may be driven higher by the availability of credit, not rising demand or productivity. The debt build up that goes hand-in-hand with the credit build up creates a drag on demand and productivity. Unemployment rises. Debt cannot be serviced or repaid easily through wages.

Central banks must ultimately dilute the purchasing power of their currencies by manufacturing more currency with which debtors can repay their debts or with which creditors can extend new credit to debtors so they can roll over their debts. Any saved wages lose their purchasing power if held in that currency. This gives incentive to laborers not to save in the currency in which they are paid. Rather, they are forced to speculate in financial asset markets (directly or indirectly).

Clearly, today’s global monetary system is built for the global banking system. We think Mr. Jennings Bryan would argue it is a system of financial servitude and we are quite certain he would be as passionate about ending it as he was about ending the government-controlled fixed exchange rate gold standard.
 

BB: (Slide 32) “The 1920s-the “Roaring Twenties”- was a period of great prosperity in the United States. Elsewhere many countries struggled to recover from World War I.”

QB: Unreserved credit built up in the U.S. banking system in the 1920s, just as it did from 1982 to 2006. This appeared contemporaneously to be great prosperity. The U.S. entered WWI late and as a result it did not deplete its gold stock. As a victor, the U.S. also did not have to pay reparations. This introduces a very big topic beyond the scope of this paper, but the U.S. remained a creditor with much of the world’s gold at a time when other developed economies were debtors with empty purses. In short, the United States banking system could leverage its gold reserves in the 1920s whereas other banking systems could not. (Off-the-charts central bank generated inflation occurred in the Weimar Republic in 1922, causing its baseless currency to fail.)

BB: (Slide 33) “In 1929, however, the world was hit by a Great Depression. The U.S. stock market crashed in October 1929, and the largest bank in Austria failed in 1931. Output and prices fell in many countries, and many experienced political turmoil. The Depression continued until the United States entered World War II in 1941.”

QB: BB frames these events as though they are beyond the influence of monetary policies. They are not, in fact central bank monetary policies in the twenties contributed greatly to them.

The stock market crash in October 1929 was the precise moment when a quorum of creditors and debtors acknowledged there was not enough money in the system to service and repay systemic debt. Throughout the 1920s, the Fed and the Bank of England maintained very easy monetary policies for their banking systems (“credit policies” would be more accurate, even today). “The Great Depression” that followed was in reality “The Great De-leveraging”. Because money was exchangeable for gold at a fixed exchange rate of $20.66/ounce, the only way to de-lever the system was to allow credit to deteriorate (rather than manufacture more money). Obviously this bankrupted most banks, which were fractionally reserved and saw the value of their loan books decline dramatically, and bankrupted many debtors who did not have enough gold in reserve against their debts.

As mentioned above, the only difference between the 1930s and today is that central banks can de-lever bank balance sheets by creating money. This, policy makers aver, is why gold should be thought of as a “barbarous relic”. Larry Summers went so far as to say that gold is “the creationism of economics”, implying he thinks econometric models and smart guys and gals can supersede commercial incentives over time. We shall see. What Messrs. Summers and Bernanke (and Geithner and Rubin, et al) do not seem to acknowledge is that monetary and fiscal policies cannot de-lever the broad economy in real terms unless no more money or credit is created and the economy grows. Do you think that is possible?

BB: (Slide 38) “What Caused the Great Depression?

There were many causes, including
-economic and financial repercussions of World War I, including the effects of reparations (sic) payments
-the structure of the international gold standard
-a bubble in stock prices
-financial panic and the collapse of major financial institutions”

QB: We covered most of this above but feel it is important to challenge BB’s inclusion of “the structure of the international gold standard” in his list of causes of the Great Depression. This is true -- the discipline of the gold standard did not allow the Fed or other central banks to print money in order to de-lever the banking system, as they are doing today.

However, four critical things should also be understood:

1) Money, per se, cannot cause economic or business cycles. Neither can monetary systems, including a gold standard. Money and monetary systems that do not reflect the real value of wages, goods, services and assets can and do cause business and economic cycles. The problem in the 1930s and today is that the value of money (not money and credit) is entirely inconsistent with the value of all things money is supposed to value.

2) Fractionally-reserved banking systems can and do cause economic and business cycles (in effect, credit cycles in which unreserved bank credit is built up into the system and ultimately reconciled through the de-leveraging process). BB blamed a money system when he should have blamed unreserved banking systems.

3) Had bank asset values been allowed to decline immediately to levels at which they could be sold to savers (gold holders), output and unemployment would likely have rebounded with great haste. There would have been a shift of wealth from creditors to savers. This was not allowed to occur.

4) The jury is not yet out about the success of de-leveraging the current economy through money manufacturing, though we think it is safe to assume enough money will be made to fully reserve bank assets. We doubt enough new money will be manufactured and distributed directly to debtors to meaningfully reduce the burden of repaying their debts.

Rather, central bank precedent suggests necessary liquidity for debtors will be executed through the soon-to-be-well-collateralized banking system in the form of abundant new credit. Central banks are and we think will continue to create money for their creditor banks, not their indebted populations.

Rather than falling prices, we think the likeliest outcome from this type of de-leveraging is substantially rising prices, followed by even more substantially rising prices, followed by the demise of the baseless monetary system and a reversion to a hard money system. (We doubt public awareness and hence sufficient political fortitude will exist to do away with fractionally-reserved banking.)

BB: (Slide 41) “The Fed kept money tight in part because it wanted to preserve the gold standard. When FDR abandoned the gold standard in 1933, monetary policy became less tight and deflation stopped.”
QB: BB’s remark above is misstated. The Fed kept money tight because if it did not then dollar holders would have exchanged their dollars for Treasury’s gold to the point of complete depletion, which would have bankrupted the government. When FDR abandoned the gold standard in 1933 (and forced all US citizens to turn in their gold to the government at $20.67), monetary policy became less tight and deflation stopped because dollars could no longer be exchanged for gold. (FDR then de-valued the dollar to $35.00 per ounce.)

BB: (Slide 48) “We will want to keep these lessons in mind as we consider the Fed’s response to the crisis of 2008-2009.”

QB: Indeed.

Kind regards,
Lee Quaintance & Paul Brodsky

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 03/25/2012 - 19:36 | 2289357 holdbuysell
holdbuysell's picture

The sequence of events that the Fed has been undertaking and has been communicated here on ZH speaks volumes.

The pot is getting stirred and TPTB don't like it.

Sun, 03/25/2012 - 20:33 | 2289450 Doña K
Doña K's picture

Benny had a nightmare last night:

Dramatis Personae: Bernanke and the Devil.

<FADE IN>

DEVIL: What is it gonna be Benny. Inflation or death?

BENNY: Errrr. Inflation.

DEVIL: Very well then! Death by inflation.

BENNY: You don't have to do this, I was just following orders.

<FADE OUT>

Sun, 03/25/2012 - 21:38 | 2289589 The Big Ching-aso
The Big Ching-aso's picture

 

 

I think people are really getting fed up with the Fed not helping them get fed.

Sun, 03/25/2012 - 22:24 | 2289797 SGS
SGS's picture

Shalom in your home!

Sun, 03/25/2012 - 23:25 | 2289909 The Big Ching-aso
The Big Ching-aso's picture

 

 

Mazal tov!  And here's your cocktail.

Mon, 03/26/2012 - 07:43 | 2290196 GetZeeGold
GetZeeGold's picture

 

 

Here's your piece of paper worth 3 cents......how many zeros do you want me to put on it?

 

Unlike mining....no one has every died from the printing of a bogus fiat bill.

 

...and don't forget our bubble headed bimbo motto......the problem with gold is that it's not backed by anything.

http://www.youtube.com/watch?v=ZLL2r3hXmjA

Mon, 03/26/2012 - 01:18 | 2290064 Dorky
Dorky's picture

DEVIL: What is it gonna be Benny. Inflation or death?

BENNY: Errrr. Inflation.

DEVIL: Very well then! Death by inflation.

BENNY: As you wish, my master.

Sun, 03/25/2012 - 21:43 | 2289603 Al Gorerhythm
Al Gorerhythm's picture

Someone, somewhere, compiled a timeline on that sequence of events that you mention, i.e. how the banks and powerful players would go about handling the demise of the dollar or paper currencies. I guess they studied their gameplan from episodes past. Can anyone recall it? I'd be interested to see how they intend to play it out again.

Cheers

Ag.

Sun, 03/25/2012 - 19:52 | 2289363 SHEEPFUKKER
SHEEPFUKKER's picture

I tell you what Benny Boy- you politely hand me your gold and I will gladly hand over my FRN's and we'll call it almost even. 

Sun, 03/25/2012 - 21:41 | 2289613 Al Gorerhythm
Al Gorerhythm's picture

After 100 years of insidious theft!!!!?????

Almost even; not by a long shot.

Mon, 03/26/2012 - 06:02 | 2290200 GetZeeGold
GetZeeGold's picture

 

 

We're really sorry about that.....here....let me write you a check for that.

 

Mon, 03/26/2012 - 07:08 | 2290246 Al Gorerhythm
Al Gorerhythm's picture

Even then they'll tell me; "Cheques in the mail".

Sun, 03/25/2012 - 19:39 | 2289364 Hedgetard55
Hedgetard55's picture

Why does that one FED President have over a million smacks in that dastardly relic?

Sun, 03/25/2012 - 19:51 | 2289387 Stax Edwards
Stax Edwards's picture

Based on the latest out of his camp, I would say it is because he is a good man.

http://www.dallasfed.org/fed/annual/index.cfm

As for the malcontents, I am not sure the FED alone can actually break up TBTF.  The people are going to have to demand that their government take action and apparently American Idol trumps actually giving a shit about anything important right now.

Sun, 03/25/2012 - 20:12 | 2289421 Papasmurf
Papasmurf's picture

What a load of crap this paper is.  The root cause of the depression is rampant fraud and the reason there is no recovery even after massive wealth transfer from savers to the banksters is no one was brought to justice.

Sun, 03/25/2012 - 20:29 | 2289443 Fluffybunny
Fluffybunny's picture

There's a lot more to the housing bubble and depression than just fraud at Wall Street.

Sun, 03/25/2012 - 20:40 | 2289458 Jendrzejczyk
Jendrzejczyk's picture

Say that with a mouth full of marshmallows.

Sun, 03/25/2012 - 21:18 | 2289555 Absalon
Absalon's picture

Fraud on Wall Street made the bubble possible.  Fraud on Wall Street "securitized" the bubble.  Fraud on Wall Street transmitted the bubble, and the fallout from the bubble, to the general financial markets.

 

 

Sun, 03/25/2012 - 22:35 | 2289825 Al Gorerhythm
Al Gorerhythm's picture

and all overseen by that government agency(sic) charged with regulating the financial markets, the FED. Says so above on Benny's powerpoint.

Sun, 04/15/2012 - 21:53 | 2347612 MeelionDollerBogus
MeelionDollerBogus's picture

SEC, CFTC, FEDERAL RESERVE

all regulate securitizing loans & making the credit bubble that allowed the housing bubble to start - without which there is no securititizing.

It's the PURPOSE for making the bubble, to "spur the economy" of securitizing loans.

It starts with the Fed.

Mon, 03/26/2012 - 00:12 | 2289994 StychoKiller
StychoKiller's picture

The "Creature" STILL stands among us...

"The Creature From Jekyll Island, a Second Look at the Federal System", 5th Ed., G. Edward Griffin, ISBN:  978-0-912986-45-6

Sun, 03/25/2012 - 21:53 | 2289685 Sean7k
Sean7k's picture

The authors appear to have contained their remarks to things that can be proven or are accepted facts and theories. While it is a conservative assessment, its' powerful arguments that completely dismantle Bernanke's points is going to be much more persuasive than you calling it crap.

Mon, 03/26/2012 - 10:21 | 2290751 i_fly_me
i_fly_me's picture

This paper is hardly "a load of crap."  Mr. Brodsky and Mr. Quaintance have contributed much timely, relevent, intelligent and well thought out discussion to this debate for some time now and this latest is no different.  Frankly, they deserve (at least) a more rational response and ideally a more courteous one.

Sun, 03/25/2012 - 20:53 | 2289494 Conrad Murray
Conrad Murray's picture

The Fed is the TBTFs. Same banks, same shareholders, same traitors and criminals. The people do not have to demand anything from "their" government because the federal government is no longer representative of the people. It is wholly captured; a system of fascism/corporatism run by crony kleptocratic oligarchs.

What the people have to do is realize the above, and throw off the usurpers by any means necessary.

Sun, 03/25/2012 - 22:24 | 2289799 Al Gorerhythm
Al Gorerhythm's picture

Tradition.

Sun, 03/25/2012 - 19:41 | 2289368 Conrad Murray
Conrad Murray's picture

All I see is sissies in magazines smiling
Whatever happened to wildin out and bein violent?
Whatever happened to catchin a good-ol' fashioned passionate ass-whoopin
and gettin your shoes, coat, and your hat tooken?

Ben and Barry are stealing your wealth and future, and that of your children. They are domestic enemies. Shit or get off the pot, slave.

https://en.wikipedia.org/wiki/Whiskey_Rebellion

Sun, 03/25/2012 - 20:13 | 2289422 slewie the pi-rat
slewie the pi-rat's picture

+1 +L0L4 = "tooken" 

amazing! 

annotatedBrodsky2, BiCheZ!

Sun, 03/25/2012 - 19:46 | 2289380 LetThemEatRand
LetThemEatRand's picture

I believe that the United States went bankrupt when it abandoned the Gold Standard.  

Sun, 03/25/2012 - 19:53 | 2289394 Stax Edwards
Stax Edwards's picture

Sadly, this is the one of the defining characteristics of the Obama administrations definition of "Right Wing Extremist" if you were not already aware.  Google it, I am not joking.

Sun, 03/25/2012 - 20:36 | 2289454 Hansel
Hansel's picture

+1 DuckDuckGo!

Sun, 03/25/2012 - 21:27 | 2289580 Paul Atreides
Paul Atreides's picture

^ this

Removed chrome and stopped using google last week.

Sun, 03/25/2012 - 21:31 | 2289592 LetThemEatRand
LetThemEatRand's picture

Note that Google is a private corporation.  Those who wish to blame government for all that is evil, need look no further than Google to see that the problem goes much deeper.  And that the solution is much more complicated than getting rid of government.

Sun, 03/25/2012 - 21:56 | 2289700 rufusbird
rufusbird's picture

Concentrated Wealth...

Mon, 03/26/2012 - 00:05 | 2289980 Think for yourself
Think for yourself's picture

In theory, I blame ideology and egoic consciousness, or rather unconsciousness. In practice, I blame corporations. Governments are corporations, too.

Sun, 03/25/2012 - 21:54 | 2289690 cowdiddly
cowdiddly's picture

Yep remove google chrome, Removed my google merchant acct, and google from my computer and put them into the dustbin of history along with facebook.

Mon, 03/26/2012 - 00:19 | 2290001 StychoKiller
StychoKiller's picture

All right, I'm seein' something here...where's the DHS toll-free number?  You shouldn't mind if we drop a dime on you to yer Big Brother, being so supportive and all... :>D

Sun, 03/25/2012 - 19:52 | 2289390 SIOP
SIOP's picture

What scares me is simply another Executive Order 6102, why couldn't they simply do that again if gold becomes too much of a threat to our fiat currency? They are obviously trying to discredit the value of gold, if that doesn't work then they simply illegalize it.They've done it before, why not again?

Sun, 03/25/2012 - 20:18 | 2289429 Jendrzejczyk
Jendrzejczyk's picture

Stand your ground.

(no hijack intended)

Sun, 03/25/2012 - 20:31 | 2289449 Clint Liquor
Clint Liquor's picture

They've done it before, why not again?

When FDR confiscated Gold, it was coins in circulation.

Today, less than 2% of the American People own Bullion. Simply, it would be messy and not worth the effort.

Sun, 03/25/2012 - 21:00 | 2289511 Talleyrand
Talleyrand's picture

Messy, indeed.

Sun, 03/25/2012 - 21:28 | 2289584 Paul Atreides
Paul Atreides's picture

From my cold dead hands

Mon, 03/26/2012 - 00:21 | 2290004 StychoKiller
StychoKiller's picture

Holders of PMs include Brass, Copper and Lead in that mix...(along with high-speed delivery systems)

Mon, 03/26/2012 - 07:43 | 2290286 Marc_W
Marc_W's picture

Seems likely.  If enough people dumped their fiat into PMs the whole ponzi would collapse in on itself.  But they still have the confiscation trick up their sleeve.  And I believe they would indeed play it.

 

They will go to any length to maintain their global fiat system.  Any length.  I believe that before they'd let their New World Order come to an end they would start a nuclear world war that would engulf the globe.

 

Few of you seem to understand how the mind's of tyrants work.  They'd rather leave scorched Earth than see the global empire that their family line is supposed to lord over for eternity disappear.  And many of the current elites are 2nd or 3rd generation members of the NWO ruling class, so don't expect them to give up their legacy easily.

Mon, 03/26/2012 - 10:54 | 2290934 i_fly_me
i_fly_me's picture

What you describe cannot come to pass.  They will continue to save the system in nominal terms (by printing money) until they have destroyed it in real terms at which point they will have bankrupted themselves into impotence.  By the time it becomes relevant to them, they will not be able to confiscate gold.  The system to which Paul and Lee refer in the article, a floating-price , free-market gold referenced system, will be the inevitable result of the collapse of the dollar and the subsequent collapse of various fractionalized paper-gold markets.  Gold confiscation requires a fiat currency system people will accept and they will have already 'shot their wad' (so to speak) on that score and will have been forced to return to a gold-referenced currency.  In that paradigm, governments will not be able to tax, confiscate, or otherwise control access to or the price of gold.  Any government fettering will quickly result in gold flowing out of that treasury and into less oppressive government treasuries.  It would happen so quickly that they would never even get the policy in place before seeing dramatic shrinkage of their gold hoard.  The reason Bernanke and the rest of the socialist central planners fear a gold-standard is precisely because they wouldn't be able to control it ... or cement themselves in power through unlimited deficit spending for that matter.

Sun, 04/15/2012 - 16:33 | 2347087 MeelionDollerBogus
MeelionDollerBogus's picture

did 6102 even expire? Do any of them expire?

Sun, 03/25/2012 - 19:53 | 2289392 nmewn
nmewn's picture

Bernanke...the expedient accountant.

Sun, 03/25/2012 - 19:54 | 2289395 disabledvet
disabledvet's picture

what is a trillion dollars exactly?

Sun, 03/25/2012 - 20:03 | 2289405 Clint Liquor
Clint Liquor's picture

A Trillion is a Million, Million.

Perspective:

 The 2011 US Federal deficit was approximately $1.5 Trillion. There are 1.5 Million people in Idaho. Therefore, every man, woman and child in Idaho could be Millionaires with what the US Govt overspent last year.

Sun, 03/25/2012 - 22:10 | 2289743 dwdollar
dwdollar's picture

Or 5k for every man woman and child. That's 20k for a family of four. A frugal family could live off that in many parts of the country. Of course, if that money actually went to the proletariat and not the bankers and other elite, inflation would be well north of 10%.

Mon, 03/26/2012 - 00:01 | 2289972 boogerbently
boogerbently's picture

.....will that be mailed to me in Boise???

Mon, 03/26/2012 - 00:01 | 2289973 boogerbently
boogerbently's picture

.....will that be mailed to me in Boise???

Mon, 03/26/2012 - 05:12 | 2290171 DrStrangelove
DrStrangelove's picture

exactly 1,000,000,000,000.00 USD

or one trillion mcdoubles (plus tax)

 

buy MCD???

 

 

 

 

 

 

 

 

 

 

 

http://www.breakthewrist.net/

Mon, 03/26/2012 - 07:42 | 2290283 Henry Hub
Henry Hub's picture

***what is a trillion dollars exactly?***

Here's a visual representation of a million, a billion and a trillion dollars

http://www.pagetutor.com/trillion/index.html

Sun, 03/25/2012 - 20:15 | 2289425 pslater
pslater's picture

Unquestionably one of the most informative posts EVER on ZH.  Mr. Brodsky debunks central banking and govt manipulation of gold with elegance, facts, and panache.  Perhaps Mr. Bernanke should try 'facts' for a change.  If BB is considered a 'scholar', Mr. Brodsky is the professor.

Bravo, Mr. Brodsky.

Sun, 03/25/2012 - 22:21 | 2289782 jeffgroove102
jeffgroove102's picture

Would be interesting if the two had a debate, but I am sure the bernank and his handlers could not allow that, haha. Kinda reminds me of the person from mises whom wanted to debate Paul Krugman, and donate proceeds to charity or something like that, but never got a response or at least none that I am aware of. Pulitzer prize winner my ass, haha, but lets not forget the obamessiah is also a peace prize winner as well, thus in our modern world, left is actually right, and up is actually down, if you can make this connection, then you too can be rich and famous.

Sun, 03/25/2012 - 20:21 | 2289433 Taint Boil
Taint Boil's picture

 

 

..... while those who rely on mainstream media for the news ....

Here is a perfect example of how MSM make you stupid - once again - I give you Fox News

Funny link #2 Fox News Makes You Stupid

Mon, 03/26/2012 - 00:24 | 2290006 StychoKiller
StychoKiller's picture

WHY are you watchin' an Id10t box?

Sun, 03/25/2012 - 20:27 | 2289440 Jendrzejczyk
Jendrzejczyk's picture

Bernanke admitted gold was money on Friday(?) and I can't find it! My google-fu is weak. Eurozone crisis testimony with Timmy during the question and answer period.

(Paraphrased question) " If Eurozone goes to hell, how will the ECB repay us?"

(Paraphrased answer) " They got gold"

Help me find it.

Sun, 03/25/2012 - 20:30 | 2289445 knukles
knukles's picture

Who's "They"?
Critical dimension, Ben, critical.
Because if it's held in the City, it ain't gonna make it's way back here unless in the form of Wolfram Salteds or paper.

Sun, 03/25/2012 - 21:04 | 2289520 Jendrzejczyk
Jendrzejczyk's picture

"They" = the Guarantor of the currency swaps,

You're right Knuckles, we'll never see anything but the bill for their losses.

 

 


Sun, 03/25/2012 - 20:43 | 2289465 Michael Victory
Michael Victory's picture

gold is tradition.

carry on the tradition.

for kicks..

the price of an ounce of gold.

Sun, 03/25/2012 - 20:50 | 2289486 BudFox2012
BudFox2012's picture

I couldn't finish reading this whole article.  I'm in the process of pulling out one of my gold fillings to make sure it doesn't have tungsten in it. 

Mon, 03/26/2012 - 01:32 | 2290071 Freddie
Freddie's picture

Winning! 

Sun, 03/25/2012 - 20:51 | 2289491 fonzannoon
fonzannoon's picture

Whats this all about?

Royal Dutch Shell is struggling to pay off $1 billion that it owes Iran for crude oil because European Union and U.S. financial sanctions now make it almost impossible to process payments, industry sources said.

Sun, 03/25/2012 - 21:24 | 2289563 Paul Atreides
Paul Atreides's picture

Was going to post an image here, can't seem to get the img tag to work is it not allowed?

Mon, 03/26/2012 - 00:26 | 2290010 StychoKiller
StychoKiller's picture

You have to be a contributor to do that.  Just put the hyper-link in yer comment instead.

Sun, 03/25/2012 - 20:54 | 2289495 holdbuysell
holdbuysell's picture

I posted earlier on a sequence of events. I'd like to be clearer on what those sequence of events are, as I believe this last step is significant. Connecting the dots isn't too hard after that.

1)       2009: In an official government investigation on what went wrong in 2008, the Fed was quoted as blaming the blogosphere for the 2008 collapse

http://www.zerohedge.com/article/declassified-testimony-bernanke-blames-blogosphere-itemizing-disastrous-consequences-his-act

2)       2011: Solicited contractors to help it develop capability to listen in to the ‘Fed sentiment’ in the blogosphere

http://www.zerohedge.com/news/here-comes-fiattackwatch-bernanke-goes-watergate-prepares-eavesdrop-everything-mentioning-fed

3)       2012: Created a Twitter account

http://www.zerohedge.com/news/fed-comes-twitter-will-us-debt-be-limited-140-zeroes

4)       2012: Began a campaign to educate students in k-12 on how the Federal Reserve is constitutional

http://www.zerohedge.com/news/fed-take-propaganda-schoolroom-will-teach-k-8-12-students-about-constitutionality-fed

5)       2012: Last week appears to have begun a campaign to discredit gold at the university level (this ZH article and QBAMCO's report)

Sun, 03/25/2012 - 21:11 | 2289538 Jendrzejczyk
Jendrzejczyk's picture

It really is an all-out assault, isn't it

Sun, 03/25/2012 - 21:56 | 2289701 Freebird
Freebird's picture

Then they fight you...

Sun, 03/25/2012 - 21:00 | 2289513 Ned Zeppelin
Ned Zeppelin's picture

Gold has one function: to serve as an objective, fungible and unfluctuating store of value in a sea of relativistic fiat currencies.  So it is true that you can't eat, it, it doesn't pay dividends, etc.  - so skip the smug dismissals  - we understand that. What it does not do, is pose a risk of a loss of value.  The price placed on that value may change (since you are talking about the value of that which you would trade for gold).  The other fungible store of value is oil.

Sun, 04/15/2012 - 11:09 | 2346499 MeelionDollerBogus
MeelionDollerBogus's picture

I think you're forgetting gold's other functions.

It works for fillings - I have 4 - it works for circuits (we all have tons), it works for shielding satellites (which we all benefit from today).

Sun, 03/25/2012 - 21:04 | 2289522 Downtoolong
Downtoolong's picture

financial firms are not among the top three sources of advertising dollars for legacy media for nothing.

And therein lies the deception. They are like Phantoms of their own dark opera.

Sun, 03/25/2012 - 21:06 | 2289524 kekekekekekeke
kekekekekekeke's picture

My mom just told me that we mine gold so that aliens can eat it, maybe Bernanke should try that line next.

Sun, 03/25/2012 - 21:18 | 2289558 WmMcK
WmMcK's picture

I heard it instead has something to do with reflecting radiation, but could be mistaken.

Sun, 03/25/2012 - 22:11 | 2289750 kekekekekekeke
kekekekekekeke's picture

tell me more...

 

this is what she was talking about http://www.bibliotecapleyades.net/sumer_anunnaki/anunnaki/anu_40.htm STARVE THE ANUNNAKI BOYCOTT GOLD

Mon, 03/26/2012 - 00:31 | 2290015 slewie the pi-rat
slewie the pi-rat's picture

ty4 the link, say hi2 yer mom, and did you do anything special on your trip?

Sun, 03/25/2012 - 21:09 | 2289533 q99x2
q99x2's picture

Doesn't Bernanke do anything for a living. Where does he get time to hang out in colleges? Something doesn't seem right.

Sun, 03/25/2012 - 21:13 | 2289542 Paul Atreides
Paul Atreides's picture

Federal Reserve Twitter Stress Test = FAIL

Sun, 03/25/2012 - 21:14 | 2289545 nathan1234
nathan1234's picture

It's time that We their People discredited Bernanke.

And while we go about doing this we also need to discredit and discard the US Federal Reserve Banking System

Any suggestions on how to go about this?

 

Sun, 03/25/2012 - 22:50 | 2289761 Freebird
Freebird's picture

In the first instance please send your resume to meremortalsagainstatotalitarianstate@cia.net but suggest first you may wish to take the online test at domesticterroristprofile@google.com

Sun, 03/25/2012 - 21:22 | 2289567 Absalon
Absalon's picture

So if you all believe so strongly in gold and the collapse of fiat currencies - go buy physical gold, shares in gold miners and/or exchange traded receipts for gold (issued by the Canadian Mint and publicly traded on Toronto.)

Sun, 03/25/2012 - 21:30 | 2289590 Paul Atreides
Paul Atreides's picture

I would like to subscribe to your newsletter.

Sun, 03/25/2012 - 22:36 | 2289775 Al Gorerhythm
Al Gorerhythm's picture

Been there, done that. What you gotten?

Sun, 03/25/2012 - 21:50 | 2289662 Blagio
Blagio's picture

http://www.youtube.com/watch?v=INmqvibv4UU

 

You only need to watch the first minute to understand BB is a liar!

Sun, 03/25/2012 - 21:56 | 2289698 Bagbalm
Bagbalm's picture

Ben is explaining why gold has no value so you are not upset when the government demands it all.

Sun, 03/25/2012 - 21:57 | 2289702 Rockmann
Rockmann's picture

Maybe the discrediting of gold has started with article about tungsten filled gold bars. No one seems to know where the gold bars originated to protect the dealer? Maybe there is something more sinister in the story.. A false flag of sorts for gold?

Sun, 03/25/2012 - 22:37 | 2289792 Al Gorerhythm
Al Gorerhythm's picture

There must be some pretty cluey folk out there who can drill out a bar, slip tungsten in from the end and recap it without the tell-tail marks of all the tampering, welding, pour-marks disruptions etc. Real goldsmiths! 

Unlesssss...........

Sun, 03/25/2012 - 22:50 | 2289831 essence
essence's picture

No ........... I see few addressing the most pertinent issues about Gold/a Gold standard implementation.

Oh, the author did here at one point in the article, (starting at rebuttal to slide 22), and certainly FOFOA does, Jim Sinclair does ... but the main stream media, most ZH posters, Jim Grant, the Fed, carl (hates gold with a passion) D ... fail to address the issue of:

SHOULD GOLD BE FREE FLOATING?, used for (or as a reference point) to International exchanges (i.e. as world reserve currency or as a important component of a basket), available as a 'sanctuary' for storing wealth so as to protect savers from politicians attempts to buy votes via unfunded promises, and national fiat currencies retained by respective countries. National currencies robustness reflecting the ability of a country in regards to its balance of payments situation.

These the issues that should be debated, on Zerohedge and in the Main Stream.

 

 

Sun, 03/25/2012 - 22:54 | 2289852 RazorForex
RazorForex's picture

That SOB Bernanke is really getting desperate. Gold is looking bullish again, the 1630 level seems to be holding as support. I say buy gold and crush those banksters.

Gold Price Chart Analysis

http://razorsforex.blogspot.com/2012/03/is-gold-about-to-go-bullish-gold...

Sun, 03/25/2012 - 23:13 | 2289889 Fred Hayek
Fred Hayek's picture

The problem is that they actually have some gold. Oh, sure, it's got claims on it a hundred times over. But they've got some. They don't really have any silver.

Sun, 03/25/2012 - 23:17 | 2289886 Fred Hayek
Fred Hayek's picture

As you noted, Gandhi said, "First they ignore you, then they laugh at you, then they fight you, then you win.” So, we've just passed from step 2 of 4 to step three of four. Ben Bernanke will soon be surrendering the subcontinent.

Sun, 03/25/2012 - 23:26 | 2289908 mr. mirbach
mr. mirbach's picture

I can hardly wait for the Brodsky rebuttal to the Chairsatan's second propoganda lecture!

BRAVO!

Mon, 03/26/2012 - 00:10 | 2289992 Dr. No
Dr. No's picture

If bernanke wants to dicredit gold, put his money where his mouth is: strike all the FEDs gold into 1 oz coins and sell them to the public...

Mon, 03/26/2012 - 00:19 | 2290002 caconhma
caconhma's picture

The Federal Reserve Banking system is just another form of a centrally planned and/or managed economy.

Any central planning system has one vital mission it does not like to mention: it is to protect, defend, and to enrich the ruling elite at expense of the rest of a society.

Benny boy proudly mentioned that the FED prevented many failed banks to go bankrupt. Therefore, the FED was aggressively promoting & rewarding fraud, thief, and incompetence. Well, it is not a good way to promote and maintain a healthy economy or a stable political environment!

Consequently, any central planning economy is destiny to collapse since it is inherently promoting special ruling elite interests at the expense/detriment of the entire society.

Mon, 03/26/2012 - 00:36 | 2290024 StychoKiller
StychoKiller's picture

[quote]

One should constantly remember that no solution to the financial crisis has been installed, nothing fixed, no big banks liquidated, no end to monetary inflation, no end to outsized USGovt deficits, no end to secretive subterranean support of stocks and bonds, no revival of the housing market, no discharge of big bank home inventory, no return of US industry from Asia, no interruption to the endless costly wars, no end to money laundering of narco funds to Wall Street banks, no end to the propaganda obediently pumped out by the US press & media networks, and no change of Goldman Sachs running the USGovt finance ministry.  Expect no change in anything that you believe in.  Expect no change to the 0% policy (ZIRP) with no change to the heavy monetary inflation (QE), as the path to ruin is set, and the policy of Inflate to Infinity cannot be stopped.  Gold will not stop until it surpasses at least $5000 to $7000 in price.  Silver will not stop until it surpasses at least $150 to $200 in price.  Such forecasts invite mockery, but in two years they will seem prescient.

[/quote]

Mon, 03/26/2012 - 03:21 | 2290130 Sudden Debt
Sudden Debt's picture

Why doesn't anybody ever ask him : BEN, IF YOU HATE GOLD SO MUCH, WHY DOESN'T THE FED JUST SELL IT ALL RIGHT NOW?!

Mon, 03/26/2012 - 05:06 | 2290166 nathan1234
nathan1234's picture

For the Love of God

and for the detriment of the manipulating crooks.

Stop buying paper gold and paper silver.

Buy only physical and keep it with you. Not in any bank vault.

You can kiss your money goodbye when you buy paper gold and paper silver or if you keep your precious metals in wrong custody.

 

http://www.financialsense.com/contributors/cris-sheridan/silver-manipula...

Mon, 03/26/2012 - 06:49 | 2290233 honestann
honestann's picture

for the love of self, of honesty, of liberty, of justice, of individualism.

If god existed, he would be in favor of the federal reserve, for god would be the ultimate authoritarian.

So get silver and get gold, but most of all, get real.

Mon, 03/26/2012 - 07:58 | 2290306 Sathington Willougby
Mon, 03/26/2012 - 08:11 | 2290321 mogul rider
mogul rider's picture

As a physical gold and silver holder I am stunned by some people's stupidity. It is not an investment,it is a trade.However, it may be used to bribe the Obama concentration camp guards at some point.

For the most part, it always has been nothing but a trade. Those pumpers pumping the gold standard are what Martin Armstrong the dumbest sacks of shit this side of the mississipi.

Do you honestly believe you can control the cartel and politicians with gold? They have taken most of it from you in the last year as you yap about conspiracies and deceptions. They will not let a gold standard happen. The hold ALL THE CARDS - you hold none.

$1900 to $1580 is not an investment, it is a fucking massacre for the average leveraged to the nuts bagholders.

DO not listen to the losers around here. They have had their heads handed to them and are essentially idiots who got caught long.

Will gold price come back?

Who cares. Trade it either way. Will I sell my physical? nope it was handed down through 4 generations. It is simply a brick in the safety deposit box.

 

Will I sell my shares and ETF's

 

Hell yes

 

 

Mon, 03/26/2012 - 17:44 | 2292512 Lost Wages
Lost Wages's picture

In Soviet Russia, gold discredits us!

Sun, 04/15/2012 - 09:01 | 2346364 MeelionDollerBogus
MeelionDollerBogus's picture

Wow, what a load of horseshit in those slides. The 1920's was a period of propserity? No, it was a credit bubble where people gambled on everything & were acting out every last lack of inhibition... repressed from earlier & credit to spend. If it was real prosperity there'd be real savings to carry THROUGH a depression, not cause one. The Fed Reserve is so full of itself.

Gold standard isn't good enough because people will redeem paper money for gold?

Problem solved - use coins, not paper money.

Do NOT follow this link or you will be banned from the site!