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Chris Martenson Interviews John Mauldin: "It's Time to Make the Hard Decisions"
Submitted by Chris Martenson
Back in the 1930's, Irving Fisher introduced a concept called the 'debt supercycle.' Simply put, it posits that when there is a buildup of too much debt within an economy, there reaches a point where there simply is no other available solution but to let it rewind.
We are at that point in our economy, as are most other major economies around the world, claims John Maudlin, author of the popular Thoughts from the Frontline newsletter and the recent bestselling book Endgame: The End of the Debt Supercycle and How It Changes Everything.
For the past several decades, excessive and increasing amounts of credit in the system have allowed us to live above our means as both individuals and nations. We've been able to have our cake and eat it, too. Now that the supercycle has ended and the inevitable de-leveraging cycle is staring us in the face, we will be forced to set priorities in a way that has been foreign to our society for over a generation.
On The Debt Supercycle
You can’t look to monetary policy for help (which will try to stimulate businesses to get more debt) because debt is the problem. If you are drunk and you need to cure yourself; another fifth of the whiskey is not the answer. So when debt becomes the problem, when it gets to be too much, more debt is not the issue. You've just simply got to work it off. There’s no easy way out of it. And, it takes years to work through it. It takes a long time, generally -- 60 to 70 years, in the US's case -- for these debt cycles to build up. It’s when you can no longer adequately service your debt and the market loses confidence in your ability to service the debt at a price that it finds adequate.
On the Slow-to-No-Growth Future
The problem is, there are only really two ways that you can deal with the debt. You can grow your way out of it, which is what you can do in normal business cycles. For most times in most places, we can grow our way out of debt problems, which is what the central bank is coming in and trying to do. The problem is, when you’re at the end of the debt supercycle, when you’re running up against your ability to borrow money, that liquidity no longer works.
As Fisher pointed out, the time to solve the debt bubble is before it becomes a bubble. He was wanting separation of commercial banks and lending. He wanted a much less fractional-reserve-based banking because he wanted the debt to keep from building up past levels that we saw in the 1920’s. He saw that as something that was so bad that it created the Depression.
So you can either repudiate the debt, you can default on it, you can monetize it, you can try to grow your way out of it; but you’re going have to deal with it. And there’s no easy way, when you’re at the end of the debt supercycle, when debt has become too much. Printing money doesn’t work.
Now, upon reflection and thinking about it, we’ve gone too far. And, this is where they are in Europe. Japan is getting very, very close to that moment. I keep saying, I think Japan is a bug in search of a windshield. I think they’re going to collapse. Quite frankly, the credit crisis that Japan is going to have is going to be far more serious than Greece. Japan makes a difference. They’re a big country. Greece is an ant hill.
We in the US can solve our problems, but not without paying a large price. We’re going to be locking in a slow-growth economy. It’s going to be very frustrating for politicians, because they are going to want to come in and sprinkle pixie dust on the economy and make something happen. And the reality is, we can’t. And, that’s a frustrating position. It’s five or six years of slow-growth economy.
On Confidence (or Lack Thereof) in Our Leadership
There's a great line that people do not accept change until they see the necessity, and they only see the necessity in moments of crisis.
Now, sadly, simultaneously we’re seeing that much of the developed world is going to have this crisis all at the same time, you know within three to four years of each other. That’s not good for world growth. It’s not good for globalization. We’re at a place where we have to make hard decisions.
And when you get politicians with a crisis, it’s hard to say what they’re going to do. When you read the stories of how decisions are made by politicians in the middle of a crisis, it’s not comforting. I mean, they’re picking up the phone to each other and saying, "What do you think we should do?" They are working it out as they go along. There’s no master plan here. There’s nobody with a playbook.
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Nikolai Kondrieteff published his first theory of super-cycles in 1923, ten years before Fisher. Fisher is just a knock-off artist, convinced only after the 1929 crash that Kondrieteff was right. So, like his kin, he stole the idea. But because it seems "American", we give Fisher the credit, not the Russian.
Hail Kondreiteff! Lot of great Russian scientists/minds the last 100 years. Time to consider Mars in several years, that will be fun Russo-American adventure.
It took in his words 60-70 years to build up this debt cycle and the price to pay for this at least in the written commentary is "It’s five or six years of slow-growth economy."
Shit, sign me up John that looks to me like an impossibility but I think it's a program we can all get behind since we have already had 4 years of slow no growth retrenchment we should be all fixed and ready to crank up some more debt supercyclenomics in a year or so.
In reality, the gov is preparing for much more than a slow growth period they are setting the table for an emergent 21st century police state,. You will be kept fed and inline while the elite continue to give orders throughout, this is their plan and if you open your eyes you can see the framework going up around you.
Your real choice is not between gold or silver, paper or physical it is between freedom and a cage with digital (for the most part) bars, those of you who resist the digital version will have a set of steel ones instead. I call top bunk..
Let's see .. from 100 percent debt to GDP, you just need to pay down 20 percent of the debt each year to pay it off in 5 years. So you just need to cut spending 80 percent and tax 40 percent of GDP for 5 years of austerity, and PRESTO! it's fixed.
Cal Coolidge did something along those lines in '21-'22. - Ned
I am alll for gallopng inflation, until I get my mortgage paid off in depreciated dollars. After that, let the deflationary shit storm hit with full intensity. If you have gold,it will be confiscated. "Thank you for the free storage service, we will take it now."
Get out of debt. Learn to take responsibility for your own health. Find a skilled productive job providing a service that everyone will need. (Like farming) Have some trust in a Power Greater Than yourself. Brace yourself, because everything is going to change with violent rapidity.
Debt Jubilee with added stims for the solvent!!
http://www.debtdeflation.com/blogs/2012/01/03/the-debtwatch-manifesto/
I don't believe in the "gold confiscation" hypothesis.
In 1933 when gold was confiscated, almost everyone had some.
Today, it is almost exclusively in the hands of the rich and super-rich.
That is what makes all the difference.
WOT and maybe someone already pointed this out but Zero Hedge has been named by CNBC as one of the top ten financial blogs. No surprise here. Congratulations!
"top ten"...MY MAIN MAN!!...
You see, it pays off...one eye open, ear to the wind and an nostril open...AT ALL TIMES!!
This "padron 1964 anniversary" to YOU!!...M.M.M.
I bow low: We're not worthy! :Wayne'sWorld:
"And when you get politicians with a crisis, it’s hard to say what they’re going to do."
No, it is not hard to say what they will do. Build a gulag and pass draconian legislation.
Reminds me of HL Mencken -
Explanations exist; they have existed for all time; there is always a well-known solution to every human problem — neat, plausible, and wrong.
Government is a broker in pillage, and every election is a sort of advance auction sale of stolen goods.
Im surprised there is no mention of a Minsky Moment though Minsky wrote after Fisher. I'm figuring out in real time - no answer yet - on whether the Fed can abolish the 60-70 year credit cycle.
The only decision matrix required in context of envoking real change is:
Fed - Yes = continued death spiral of America, the dollar and its economic strength
Fed - No = path to recovery for real capitalism, price discovery, middle class power, and dollar as reserve currency
So lets say Ron Paul gets elected and abolishes the Fed. The US Treasury gets the ability to print money without creating a bond.
The United States continues to spend 40 percent more than they take in taxes, so the new Treasury Secretary has to print more money each year to make up the short fall.
How does this help "real capitalism, price discovery, middle class power, and dollar as reserve currency"?
So lets say Ron Paul gets elected and abolishes the Fed.....
There's ZERO chance of Ron Paul 'ending the Fed.' Hell, last December (2010) he was appointed to be the chair of the Fed Oversight Committee and he's done nothing.
In his first interview after being appointed, a Bloomberg anchor asked him, "So, are you finally going to 'end the Fed?'" His immediate response was, "Well, no... it's important that we don't over-react.....blah, blah, blah...."
"End the Fed" is just rhetoric, the shtick of his 30+ political career - nothing more. It'll never happen. Ever. If you want to survive Washington politics for 30+ years, you've got to have a shtick that separates you from all the other Washington charlatans. "End the Fed" happens to be his.
Max Fischer, Civis Mundi
You are so far into this corrupt financial paradigm that the central bank has created for the last 100 years that you can't even see any alternative. It's none of our faults though, we were born into it and it's all we know.
What you say though, "The US Treasury get the ability to print money without creating a bond" was the way it should have been from the beginning as mentioned in the Constitution. The currency should stand alone and be a debt extinguisher not a debt expander, because as it has been in the past, paper money REPRESENTED something of tangible value (silver, gold). A dollar bill should just be a reciept for something tangible, but today its nothing but a worthless piece of paper and is nothing but a tool to enable the rich to get richer at the commoner's expense.
You don't address the primary concern: even without debt-based currency, how do you prevent the federal government from running deficits? Even if Ron Paul becomes president, the budgets still have to be passed by Senate and Congress.
I'm beginning to wonder if the next person in the presidential hot-seat is merely being sent there to be a fall guy for the coming debt purge. If so, my inner-conspirist says it would be someone that [ Insert Powerful Interest, Group, etc. ] wouldn't mind taking the hit.
So it comes down to the current president or an outsider with a diametrically opposed stance doesn't it?
It would be the height of irony to 'let' Mr. Paul into the job (or prop up the current president), then making sure the debt shoes fall that have been held up for so long - if only to achieve two things, purge debt and blame it on whoever is elected, at the same time ensuring that person's career in politics is effectively cratered.
This is complete speculation and not backed by any real facts, but it has been bothering me. I like many others would like to see real change in direction of the U.S., but somehow I can't help thinking we're being suckered into a larger trap.
"I'm beginning to wonder if the next person in the presidential hot-seat is merely being sent there to be a fall guy for the coming debt purge."
I thought Obamma was going to officer on watch, but he cozied up to Wall Street pretty fast and sidestepped all the pressing issues. No reason to expexct the next incumbant will be any different, its a poison chalace either way.
I've had the same thought re the irony if RP is elected, just in time to take the blame for the crash (if it doesn't happen before the election). Our civil liberties are already in peril. If RP gets elected and takes the blame for the crash, his emphasis on smaller government and greater personal liberty will take a hit, as well. That would truly suck. It's a tricky situation.
Equations: Physics, Math, & Philosophy
The empire cannot live without equations, relative corruption, in the short term, and it cannot live with them in the long term. You are the integral.
The empire is a stage, and everyone on it is an actor. The majority gets lost in the recursion because it loses sight of the exit, intelligent progeny, in one form of groupthink or another, which are constants establishing the event horizons of empire History.
Order, explicit time, 0 = 0/0 = ((#) + (-same #))/0 sets up the dimensional fulcrum. Disorder, implicit time, 1/0 not = 2/0 sets up the quantum result.
Given the explicit centrifugal equation set, why does an implicit centrifuge develop? Why is the result a battery? Must the centrifuge be ubiquitous? The number of universes depends upon how you define/limit a universe, the unified field equation establishing the perception of order.
How heavy were the tables Jesus turned upon the heads of the tax farmers? There is stupid physical aggression and there is intelligent physical aggression (observe nature). Above all else, the empire fears the latter, for empire time is measured in its appearance, leaving passive aggressive masters over stupid aggressors.
Jesus as an effeminate male is the crux of the old empire’s mythology. Only an empire comes up with immaculate conception. Church is an explicit derivative. Religion as a private matter, protected by a constitution, is the integral. Jesus walked thousands of miles to argue against groupthink religion.
Jesus acted because the implicit burden in his heart was greater than any burden the empire could foist upon him, which is the lesson, the one and only way, to be a parent. The immaculate conception, crisis management, supply side economics, monetization, whatever you want to call it, is enslaving future children to the empire’s History.
The empire is not complicated beyond the misdirection. A vulture capitalist sits at a table in front of a line of apparently stupid kids waiting to have their thoughts taxed, which the bank monetizes further and further out into the future, capitalizing the resulting losses as retained earnings, upon the false assumption that an intelligent kid will ultimately lay the golden egg in line. Gravity has its uses.
Empires are not constrained by physical energy; they are constrained by lack of access to talent, created by the black hole of psychological black holes, which talent learns to skirt around. Economics is a function of effective timing, to create time. Efficient employment of time as the constraint, the shortest known path, is make-work. Organic growth on the margin creates retained earnings, not the other way around, try as the empire will to convince others, repeating its own History in the process, which is why its insecurity fosters accelerating agency cost and empire calcification.
On the integral side, empires distill talent pools. On the derivative side, they are like diapers auctioned by used car salesmen, with a captive audience in a coliseum built for the occasion. Employ the universe in a symbiotic relationship to enable “artificial” intelligence through virtual memory. If they don’t like the last speed, they certainly are not going to like the next one.
Let me get this right Mr. Santorum, Church is tax-exempt, first in line to receive county tax foreclosures with no competition, and enables State regulation of marriage through Family Law, and I am supposed to take separation of Church and State, the legal interpretation of any judge, or the opinion of any US President, emerging from this liars convention, seriously, or expect a messiah to save me from the resulting socialism and tyranny that inevitably results? That would be pretty damn stupid.
Of course the majority of so registered voters liked Clinton, Newt worked hand in hand with him, Romney made a killing, and Obama works for Goldman. Why would anyone expect potential to appear in a black hole of black holes, unless they were socially programmed to do so?
Yea, controlling the pot market and building a new football stadium will save San Diego, like issuing debt to itself for the largest boondoggle in State history will save California, Buffet, and Soros from themselves. Good luck with that. Gutting Public Education is a no-brainer.
If you net it out, God is the father, who impregnates Mary, the mother, and they have a white, effeminate son, with dad nowhere in the feedback loop. Look around. The Bible is fertilizer for corporate behavior, but, if you scratch through the surface and dig a little, to see what is not explicitly stated, you will find everything you wanted to know about physics. Then, as now, learning math was implicitly outlawed, replaced by a soap opera for Proctor & Gamble to exploit.
The Old covers the investment half-cycle, and the New covers the consumption half-cycle.
"Thousands of Mitt Romneys allied with huge pension funds representing colleges, unions and the like, plus a rising cadre of institutional money managers, to force corporate America to reboot. In the 1980s almost half of major US corporations got take-over offers."
How's that roll over working out for you?
meds?
Yup, he's missed a few doses.
When the student is ready, the teacher will appear...
Don't blame him for your unability to grok his specific way of abstracting the problem. He's actually very deep, pointing at things in a way that well-constructed, cartesian sentences cannot.
You see, the roots of the current condition - of which most of us know the manifestations, though we might squabble over the causes - go so deep that it tends towards the innefable. To discuss it clearly would require a transcendent language, and short of it we must speak in parables and abstractions that logically do not hold water yet convey a meaning deeper than thought.
The empire, which I view as a bloated metropolis whose infrastructure and veins is a conceptual framework that reality must conform to, was very insightfully painted in his post. Hard to speak naturally about such an abstract meta-concept which pervades our lives (matrix would be another proper label) without referring to it through poetic images.
lost me at NaN.
I find this statement rather nebulous:
It seems to me that if some people are living above their means then some people are living below their means. In my view, the debt cycle was all about theft of wealth from savers and transfer to borrowers.
true, if you consider that the "savers" are primarily those countries with whom we are running trade deficits. therefore, i would say "theft of wealth from those who have produced more than they consume to those who produce less than they consume". for instance, we have taken excess productive capacity from asia in exchange for a future promise to repay the amount taken with the repayment consisting of our excess production in the future (of which there will be none) or our assets (of which many are being purchased by asians). of course we are also stealing the excess by inflating away the value of our debt.
The statement you don't "Get" is pretty obvious. When the State "provides" the basics (food, health care, educaiton, housing allowance, refunds on "taxes" - lol) to voters, I mean, citizens, why save? We've all heard, "I'm getting Social Security, Medicare and besides, I'll cut back."
It should be noted that many "poor""poor" have tvs, cell phones (2/3), cars, computers (over half), cable (2/3) and yet are "poor" enough to receive food stamps, health care and minimum tax credits. This is the flip side of buying a house, car or education you can't afford.
John Mauldin- the internet's leading cut and past economic guru - was a shoe salesman before his re birth - congrats John...
Yes, but what a shoe salesman John was. Hence, the perfect interview and editorial selection for ZH!
....And I was once a house painter.
Does my tradesman's background invalidate my ability to offer reasoned observation and analysis?
"So you can either repudiate the debt, you can default on it, you can monetize it, you can try to grow your way out of it; but you’re going have to deal with it. And there’s no easy way, when you’re at the end of the debt supercycle, when debt has become too much. Printing money doesn’t work."
It wasn't too many years ago that Mr. Mauldin, a bright guy, was forcasting that we would "muddle through" our financial problems. This interview is a tacit admission to the failure of that thought.
Now he leans to long term debt cycles (not a new concept) but fails to define the difference between debt and money, leading to erroneous statements and conclusions. Repudiation of debt IS a default. How can debt be "monetized" when there is no money to do so? We can't "grow our way out of it" for the same reason.
What we use as money are Federal Reserve Notes (a note IS DEBT), We can purchase things with debt as debt circulates as a medium of exchange, but debt is not money. Some comments:
1. Federal Reserve Notes are borrowed into existance with interest owed on each one.
2. The Fed does not "print money", they print DEBT!
3. Debt currency can only be retired through a bankruptcy of the debtor or by paying it off using MONEY.
4. Since our currency is debt, It cannot ever be used in the final analysis to retire debt.
5. Do we have any Money?
6. Yes, our COIN, even though they are counterfeit, as they are spent into existance by our government without interest owed.
7. Counterfeit coin, gold and silver coin are all money as there is no interest owed on any of them.
8. Gold and silver coin have been de-monetized in 31 US Code.
9. The "dollar" is not legally defined in 31 US Code, so how is it even "legal tender".
We are the victims of a giant 100 year long swindle that is at it's end point. Is it any wonder that "They" want our weapons?
+1
Are you telling me to buy more gold and silver?!!!!!!
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Yes Sir!
But everyone wants to continue spending, gambling, playing...debt or no debt....especially when they are spending, gambling and playing with OPM.
http://www.youtube.com/watch?v=iaLrFpLkzA4&feature=related\
Es ist NENA!
Let me tell you a dirty little secret.
You dont need to understand all those incomprehensible correlations between this and that to undestand our current situation from a financial point of view. You just need one. In order for our current economic model to work, GDP has to double every x years.
Now thats an exponential function. Let me show you some figures:
Now how can we double wealth in that insane rate? We cant but we can double debt at that insane rate.
http://en.wikipedia.org/wiki/Doubling_time
China has been growing it's economy by around 9 percent per year for some time, so it is possible.
It is also possible for a country to spend less than it takes in taxes, and use the left over to pay down the debt; Canada did thru the 1990s - early 2000s: from WSJ:
"Ottawa responded with deep cuts in government spending: 10% in nominal terms in just two years. The economy reacted quickly, and within five years the economy had been transformed. Between 1997 and 2007, Canadian GDP grew an average of 3.3% a year, outpacing the other G-7 economies. Business investment grew by 5.4% a year, and employment grew by 2.1% a year. The number of welfare recipients halved. The national debt fell to 29% of GDP in 2008-09 from 68% in 1995-96." http://online.wsj.com/article/SB10001424052970204409004577156463828589248.html
You are one step behind, cant see beyond that, I think. That was all possible because it was not so far down the doubling period that started in the 70s (not so long ago given that with .25 cents you could have bought the same thing you buy today with 2$. Thats inflation. You cant just create money out of thin air forever. And Economy should be discussed along with Energy, because we consume lots of energy now, to enable the consumerism. We are in the phase of replacing a fiat global currency with something else. We will never go back to before 2008, '90s or '00s.(or the times from Mad Max)
I guess I see a bigger picture or am I wrong?
Didn't read any of the above comments but have to say that just becasue it is time to make tough decisions does not mean they will. They won't. They don't have the will or the moral intergity to do it. Only Ron Paul does and he will not be elected and even if he was he'd have a revolt in the Republican party and wouldn't get anything passed in Congress to do away with all the Departments that he wants to do away with. Sad. But true.
Vat!
Butt dis might indicate dat mie favored lie is not zee trufth. Me vill not tolerate dis. Iam very pissed. At zis point I shall demand zat truth be zepended and labeled as dat vich is dissident!
There is a decided bullish cast to the comments (so far): a few years of hard times to 'cleanse the system' then growth will pick back up as if it is a natural state.
- Growth is a hoax, like Hitler Diaries.
- No industrial enterprise is self-supporting otherwise there would be no need for debt. Think about it.
- Industry is also a hoax, a Potemkin village erected to justify the issue of more and more debt.
- Debt cannot be gotten rid of without getting rid of industrialization. Right now, the debt is getting rid of itself (for a host of reasons, most relating to oil prices). Once it is gone what remains will be a decentralized craft economy, which existed in the centuries before the industrial revolution.
Question: can a craft or artisan economy support 7 billion humans, a billion machines, several billion livestock animals, all in a ruined environment with hundreds of leaking nuclear reactors, thousands of nuclear warheads, onrushing climate change and a management 'vacuum'?
Short Answer: No.
- No industrial enterprise is self-supporting otherwise there would be no need for debt. Think about it.
No industrial enterprise comes into existance without either saved capital or borrowed money. What do you mean, not self-supporting? Apple has cash on its balance sheets and no debt.
How / why do you think industry is tied to the existence of debt?
I doubt we are going back to a global craft economy. If it does happen, I bet the population will decline a fair bit until things reach an equilibrium.
Apple had the sweatshop slaves at Foxconn to thank for its balance sheet and lack of debt. Unfortunately the laborers iphones and ipads had resorted to suicide to the point they were forced to sign documents agreeing not to kill themselves.
'The Chinese are the finest capitalists on earth", quote from one of the CNBC bimbo's last year.
The suicide rate in Foxconn city is lower than the suicide rate for New York City, so it must be a better place to live and work, right?
bout the same i imagine............
Probably fewer muggings at Foxconn.
One of the great benefits of globalization is that you can have the benefits of slavery without having to be a nasty old slave owner.
@.." Apple has cash on its balance sheets and no debt." ..
.
the cash it has on its balance sheet is debt. just because
it is not their debt does not make it other than debt.
the extension of that credit turned into or otherwise termed
debt is the cause, partial, of the accumulation of said cash.
the greatness of any enterprise cannot be understood in any
isolated frame and every producer requires a consumer to rightly
term their efforts as productive. except the war machine. they
just bleed everyone of their humanity and goodness in service of
the status of the false gods, "leadership".
tomorrow
http://www.youtube.com/watch?v=Yop62wQH498
Instead of debt cycle, substitute Kondratiev winter, in which all of the debt excesses piled up over 60 or so years get purged. Last bottom, 1949.
Here is a simple way of getting rid of debt-
Allow defaults to wipe out banks-
Price the government debt to gold and print the money and pay it off-in gold-
The price of gold would likely be favorable to those who have some-
Here's what price it would have been back in 2010 to extinguish the Fed balance sheet with the reserves that are claimed-
http://www.acting-man.com/blog/media/2010/05/shadow-gold-price.png
America supposedly has 8,000 tons of gold, which is ~200 million ounces, at $2,000 per ounce thats ~$400 Billion versus $16 Trillion in debt. What are you going to do, pay people one ounce of gold for every $80,000 of US Treasuries and call it a day? That's one hell of a debt restructuring. Now America has no gold, now what?
America supposedly has 8,000 tons of gold, which is ~200 million ounces, at $2,000 per ounce thats ~$400 Billion versus $16 Trillion in debt
*********
Who said gold has to be $2000?
Why not 10,000 or 20,000 or whatever price and if America has no gold at the end-that would be a not bad thing-better than being 15 trillion in the hole-
Gold when it's used as a currency/medium of exchange (mostly) comes into a country through positive trade flows-
Prices/wages would be forced to adjust to whatever the money supply was and low prices attract trade and with no debt-we could then actually grow-
Not that i expect it will ever happen-
The price of gold is set in the market, why, do you propose that commodities should be priced by a government body instead?
If you try to use gold at $20,000, I will instead go and buy it on the market for $2,000 rather than pay your inflated price.
Tell me, why is it better to have nothing than to have a $16 trillion paper debt and 8,000 tons of gold?
The price of gold is set in the market, why, do you propose that commodities should be priced by a government body instead?
*******
Today it is set by the market-but it hasn't always been-it was set by government decree under gold standard and it's not like the world governments cannot get together and lock a price-they've done it before-several times-(Genoa) for example all adversly (dollar dilution) but it's obviously not impossibe and "if" that happened-you would not buy gold cheaper elsewhere-
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Tell me, why is it better to have nothing than to have a $16 trillion paper debt and 8,000 tons of gold?
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When you extinguish debt-your balance sheet moves to the positive-
Are you not better off with zero debt on your balance sheet and what money you do have will actually have real buying power?
Besides-it doesn't have to be zero gold held-
Gold is divisible-so how about pricing it at X and paying off debt-plus keeping enough to carry commerce and prices "must" adjust to whatever the money supply is-
As Von Mises proved-no supply of money is too small
So, how do you convince countries that have relatively small amounts of gold to sign up for this scheme to globally revalue gold much higher? What is the benefit to China, for example, to have gold valued much higher, when they have relatively so little? Right now, they benefit from gold's lower price, so they can accumulate more.
So, how do you convince countries that have relatively small amounts of gold to sign up for this scheme to globally revalue gold much higher?
What is the benefit to China, for example, to have gold valued much higher, when they have relatively so little? Right now, they benefit from gold's lower price, so they can accumulate more.
************
That is a simple one-
The first currency to lock to gold-will force all others to do the same because a gold backed currency would destroy "all" un-backed currency in a nano second-
All we need to do is look at what the CHF was doing-prior to the peg-
Traders/safe haven buyers could see that huge pile of Swiss gold-more gold per capita than anywhere in the world and knew it would/could be backed by the Swiss government's gold reserves-now-not so much-
It would be a matter of go gold or watch your currency hyper-inflate as everyone would sell it and head for the gold currency-
You're right-it isn't in China's interest today as they depend so much on inflation-but-when you've been grabbed by the balls-you instinctively follow-
If people are so demanding for a gold backed currency, why wouldn't they be buying up gold right now and driving all the other currencies to zero? I don't think there would be a mad rush for everyone to back their currencies with gold if one currency did it.
Besides, this would create some severe exchange rate issues. I mean, if USA has 8,000 tons of gold and China has 1,000 tons of gold, would this create a fixed exchange of 8:1 or would China suddenly have only 1:8 the wealth?
Or on the other hand, China could just take their $1 or $2 trillion in USD reserves and redeem them for a 1,000 tons of gold.
If people are so demanding for a gold backed currency, why wouldn't they be buying up gold right now and driving all the other currencies to zero?
***********
People don't need to buy gold to drive currencies to zero-they're doing just fine self destructing on their own and who even knows about gold anymore-all you need to do is look on an economic blog like this and see the negativity (misunderstanding) towards it-
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Besides, this would create some severe exchange rate issues. I mean, if USA has 8,000 tons of gold and China has 1,000 tons of gold, would this create a fixed exchange of 8:1 or would China suddenly have only 1:8 the wealth? Or on the other hand, China could just take their $1 or $2 trillion in USD reserves and redeem them for a 1,000 tons of gold-
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There would be "no" exchange rate difference for gold-
There would be a big goods and services "price" difference-
China could very well buy gold with their reserves-China could also buy gold with their trade surpluses-so could any other country and who said their wouldn't be initial distortions as most countries foolishly sold their gold-they need some pain inflicted for allowing it to happen-
Trade will correct those imbalances eventually as importers will always chase the cheapest prices and when they do that on gold standard-gold comes home as the trade balance will remain positive until a price equilibrium is reached-
Why price it to only break even at this time? Lets shoot for 1m USD per ounce and party on.
j_M has millions of readers and i have put up his links and his ideas, especially when his book came out last year
but now, i think he is behind the zH curve
it isn't that he's wrong about any of this, plus: he has the ear of tons of elite and near-elite (as do many others, unfortunately), and rightly so since he is no slouch at applying his tools to what is there for him to see
so he has a lot to offer, especially to the "muddle thru" crowd of can-kickers. and, altho i don't have a link, i believe he came out and repudiated his own apporoval of the bailouts, now that the "something" has had a chance to sink in
somebody kick my ass if that isn't right, ok? but as i recall, i saw that in one of his pieces a few months ago, and here he repudiates the efficacy of more liquidity qua liquidity, something i have surmized that the chairsatan has already grasped since last summer's QE2 wind-up, where the easing is of a different design
this, too, will lose 'energy' over time, but he has just announced a new delta-horizon, and this QE may not blow up the system quite as fast, but it is gonna cost a fortune to the people my age, with red, white and blue hair. already is
those of us who would give the wealth to our children rather than the pols and banksters can find little morsels of advice, right here, about how to do so and fortunately, one does not hafta write a book about PMs to go trade some FRNs for some nice coinage for the clan
at zer0 interest, for years, PMs make more sense than usual, even, and mrMarket seems to be agreeing w/ the last decade of common sense, recently
in 1971, the average price of gold was $40.62 and nixon took us off the standard about mid-year, so we're in an "orderly inflation" of vietNam war debt &tc, since then L0L!!!
whether one has a "master plan" or a "playbook" depends entirely on whether one understands the US Law regarding gold and silver coinage and the historic and "traditional" use of gold to extinguish debt before the entire planet went clinically insane about [money = debt]
may we have the envelope with the accounts in it, now, please...yes, the debts... and the gold...
and while we're at it, why hasn't the GAO been able to balance the Defense accounting?...hmmm...
...these accounts make no sense! there's nothing here but errors and dead-ends and paper gold that no one understands...
the entire fascist kleptocracy to which j_M preaches is devoid of fiduciary responsibilty, and those who are not are being taken down. imagine that! who could have known?
this is what we do, mrMauldin, and this is how we do it...
got money?
Jimmy Carter: Crisis of Confidence
http://www.youtube.com/watch?v=KCOd-qWZB_g&feature=related
.
timing is everything, huh?
there are ways out of this morass - it's not all gloom and doom
the saudi's have been asked to pony-up monies into the imf [dubai/2009 default?]. why?
the US has no energy program that would/ could greatly help our bottom line - there is a bill in congress, "The Natural Gas Bill" that would restart/ fuel the 21st century.
Natural Gas [lng/propane, etc.,] would/ should, power all vehicles that get around on "Tires" worldwide, period! the "BlueGold" is the new millennium fuel. there are conservative estimates of 200-300 years supply. currently "IPI" and "TAPI" will fuel/ service the emerging markets in SE Asia. russia/ turkmenistan benefits as does iran.
are we going to let china set the standard,... as the US multinationals manufacture these retrofitted/ permanently fitted vehicles in foreign lands, using their labor [under our nose?] ?
"BlueGold" is the future's fuel, whether some disagree or agree - time to move on and stop living in the fossil-fuel age. oil has it's many uses,... but as a primary source for fueling our transportation infrastructure it is a dinosaur! and america has more than enough. we actually could become an exporter,... how's that!
time to get off the pot, and get this country going in the right direction, one step at a time - you'd be surprised at how one innovation created a myriad more exponentially - and the jobs building out the infrastructure.
the only curse we have is "big oil" steamrolling this bill. it's america's future or their gain if they join in,... either/ or, i don't think they can lose.
the saud's will,... and perhaps their behind some nefarious deals with insiders in DC to make this not happen? think about it. saudi's to donate to the IMF for what? could the oligarchy have done a faustian bargain already promising to squash the US future of hope? caves and firewood/ candles/whale-oil/ kerosene/ fossil fuel/ lithium hy-brid batteries to the next great energy source - "BlueGold".
what-do-ya-say ZH?
thanks tyler
NatGas is a great enrgy for sure!
but i think congress writing a "new" law for about it is just fuking dumber than a bag of hammers, earle
these archetypal failures can just stop for a while ok? stop means stop. we'll still pay them to pose before the cameras and go on tv. jeez! i'm not proposing anything that radical!
LGN is very unstable if not stored properly. LNG is also more difficult to transfer. It's a great resource though! We have lots of it.
It kicks the shit out of any battery operated cars. That's for sure! The inherent ( lack of) density yields a bit less than traditional gasoline, but it is a cleaner resource, and lighter in the tank.
Good post as usual Slewie!
it lQQks like people are still reading these posts, so let me put up a coupla things i saw last week @ JSB's:
The Power Generator that Runs by Water
and:
FuFukushima: A Nuclear War without a War
I think the hydrogen cell is the future fuel.
hydrogen power consumes an equal amount of alternate energy consumption, at current technological models - eg. FCEL
Hydrogen is not a fuel.
Hydrogen cell is a type of energy storage, not an energy source. It's like saying " I Think Lead-acid batteries are the oil of the future". Ok, great, what energy are you going to use to split the hydrogen from water to refill your fuel cells?
Natural gas is mostly methane. Propane isn't typically a significant component.
Having said that, it's pretty clear that in terms of resources and infrastructure, methane is going to be the next big fuel. 200-300 years supply is clearly bullshit, the number assumes no (zero) growth, but if we are switching vehicles over to CNG or LNG there will obviously be growth, and even just 3% will cut the 300 years to a fraction.
Natural gas is as currently supplied, a fossil fuel, but doesn't have to be.
correct. methane is a principle component on NG
http://en.wikipedia.org/wiki/Natural_gas
http://en.wikipedia.org/wiki/Methane
http://en.wikipedia.org/wiki/Propane
Ps. I always reference 'wikipedia' for its concise summary of subject matter, rather than going into scientific details,...
thanks , css1971 - for elaborating - nothing wrong with constructive criticism - helps us all
I respectfully request someone explain why Ron Paul is a Republican.
just a guess.
a texas marriage of convenience as there is
no word other than "republican" that would
register in the political frame of the population
of his peers.
I would suggest Ron Paul is a Republican because:
1) his values are more in line with the Republican Party's original ideals
2) It's a two-party system, you have to be part of one or the other.
Otherwise he gets no air time. Paul will never be President, get over it.
John Mauldin, who called for gold to go back down to 1400 and silver to 21? Yeah, that John Mauldin. No thanks. He's been wrong more than he's been right with his technical calls.
The past is the past. Imagine if " Genghis Khan had " Twitter"?. " , all those drones are just " flying arrows' , directed by the " Eye in The Sky". Multi billion $ satellite systems.
Who needs a fleet of 400 F-35's, when you can crash a " hypersonic conventional warhead' into the ground. Anywhere on planet Earth in 45 minutes! I'll be shorting xau into February.
"It's Time to Make the Hard Decisions"
LOL, where's the remote?
Would "off planet GOLD" , devalue Fiat? Just having some fun. OR AM I? Boooo.
I enjoyed the thought provoking nature of this article.
Mauldin, old fuddy-dud that he is, is always pleasant to listen to and to read. He pleasantly obscures Globalism and Citizenry, Banker induced deficits with deficits that are the responsibility of voters, Politicians making decisions and politicians letting their contributors make the decisions. And, so on.
Unfortunately I have yet to hear him define exactly how to prosecute those running the show - those that commit the crimes that are destroying civilization - so that he can continue to live his life in la la land.
th e wh ite shoe boyz is des perate,
look close to home, the muni situation. they are stealing the
water and feces for financialization. energy too.
j.p. and jefferson co., alabama. the opening salvo.
next the air u used to breath freely.
it is a function of the fiat money system,
a mathematical necessity. they need u and the
energy in your feces. never
considered is u don't need them. so ....
f. u.. pay them.
next is they financialize light, u pay for light,
get it? no? yur kids pay for the light.
never mind.
follow the leader......
ignorance of the frame, outsourcing of the frame (mind commons
to be financialized)
of the context of your words be damned along with
your children, less is more. never mind ....
cheers
.
Elvis Costello - Pidgin English / Hand In Hand 1982
http://www.youtube.com/watch?v=F4DaDBiF_sw
...
"She'll be turning twenty seven as she draws her widow's pension
But he couldn't catch a common cold he couldn't get arrested
Too terrified to answer back
Too tired to have resisted
Many hands make light work
Shorthand makes life easy
When he's out on night work
Make sure no one sees me
It all ends up in a slanging match with body talk and bruises
A change is better than a rest
Silly beggars can't be choosers
One of a thousand pities you can't categorize
There are ten commandments of love
when wil you realize?
there are ten commandments of love.
there are ten commandments of love." ....
..
.
BUY SILVER NOW OR BE POOR LATER.
Yet you NEVER hear the MSM mention IMMIGRATION in regards to the jobs crisis. Millions of LEGAL immigrants come into the US each year, that does not include the Visa Lottery, CHAIN IMMIGRATION, REFUGEE & Asylum, TPS (Temporary Protective Status), and H1-B, H-2B, B-1, J-1, L-1 Visas
Making tough decision is to late. 15 trillion in debt is nothing that could ever be paid or paid down.
16.5 Cole! Yuk Yuk!
Why do I always have to read, "living beyond our means?"...how bout, society plays this messed up game called debt, that by it's nature, topples over upon itself. Take out the debt and perhaps the car won't cost $30K and the house won't cost $225. Living beyond our means is b.s. in of itself. We can build it, we can create it, if we can do it then why the hell is it beyond us? why do we allow banking institutions to destroy all the progress humanity has made? Is this progress not made w/o these institutions? Do we not have stealth planes, smart phones, and modern farming w/o the banking institutions? Living beyond our means number 2....I got one fucking life to live...this life is in a time when bankers can give out credit to anyone and there's not a damn thing I can do about it. So fuck it Ima get mine. I don't care if I go bankrupt. If i do....y'all can pay for it.
i think this is a heluva first post, Y_10
altho there is room for disagreement in what you write, this is strong, imo (paste): We can build it, we can create it, if we can do it then why the hell is it beyond us? why do we allow banking institutions to destroy all the progress humanity has made?
we don't need to use a bank to borrow & lend to each other; we do it all the time, don't we?
loan contracts do not require a bank or any other fictitious person to be part of the deal
as i think about what you have put up, i think it is especially applicable to commercialBanksters and centralBanksters, and altho my inner critic would prefer something like "destroy or steal all the wealth" rather than "progress"
this is a personal bias of mine: that we have been conditioned to believe we are "progressing" no matter what is actually happening around us
welcome to zH and whoever is junking the string is just a troll, it appears
I've read this guy since late 2006 and there's not a new damn thing he said here, and the same one-liners he's be sprouting for years. Just another arse who promoted Federal Reserve MMT-ism ... now he want's to sweep that under the carpet.
Tool - Schism: http://youtu.be/vHcD_Omy29A
He want's us to be economically pro-active? Based on what historical examples?
"It's time to make the hard decisions"...
AK or AR
Wow, our fraudulent debt, our fraudulent system, and the only way out is to 'pay it off' and make 'the tough choices'?
Looks like the banksters are looking for sado masochists again..
The answer is wiping away the fraud, changing the system that creates it, and making the right choices that include starting major wealth creating projects...power...water...space...machine tools...etc, etc.
The author of this is still caught up in imperial monetarism, and is looking for a solution that keeps imperial monetarism. We don't need imperial monetarism, and thus we don't need his constraining 'solution' (that isn't a solution).
'Tough choices' is code word for the people giving up and allowing the banksters to fuck you over more.
Impeach Obama
Glass-Steagall
American Credit System (not our British Imperial Monetary system...debt based)
Wealth Creating Projects (utilizing the American Credit System [Hamiltonian])
http://www.addictinginfo.org/2012/01/18/florida-republicans-introduce-bi...
Florida Republicans Introduce Bill That Would Keep Privatization A Secret From The People
January 18, 2012
By Stephen D. Foster Jr.
What if you woke up one morning and your government job was being eliminated by a corporation? What if you woke up to find that Wall Street now controlled Medicare, Social Security, and public education? What if you woke up to find that every single government service had been privatized overnight and that the prices for those services had skyrocketed because of corporate greed? Now imagine that the government kept this change a total secret. Well it looks like Florida is heading in that direction."" ....
.
..
more here displaying tyrany on the move....
.
http://www.setyoufreenews.com/2012/01/29/why-pipasopa-and-the-dns-are-a-...
Why PIPA/SOPA and the DNS are a Joke!
Police State World — 29 January 2012
Farm Wars
If you don’t think a global crime syndicate of psychopathic, paranoid, parasitic, perverted, bankster funded, corporate control freaks, along with numerous appointed administrative bureaucracies of pencil pushing, paper shuffling, tax consuming, non-productive 14th amendment corporate plantation slaves are in the process of destroying what is left of the united States of America, just look in the district of corporatism. (Mynewspage)