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Dylan Grice Deconstructs The "Perpetual Ponzi Machine" Of Global Finance, Sees Gold At $10,000 In A World Of Dishonesty

Tyler Durden's picture


Everyone, especially various textbook "schools" of postmodernist Keynesianism which (in addition to apparently never having actually been in the real world) believe there is such a thing as a free lunch as long as a reserve currency can issue infinite debt, and stubbornly fail to see the creeping currency devaluation which ultimately represents itself in hyperinflation, should read the following note from SocGen's Dylan Grice who explains pretty much... everything, including why in world starved for honesty, gold is the benchmark, and is now worth $10,000.

Key extracts from: The market for honesty: is $10,000 gold fair value? (highlights ours)

Last week, the Swiss National Bank (SNB) pledged to buy ‚unlimited? amounts of foreign exchange to prevent the Swiss franc from further appreciating. In other words, it is willing to print 'unlimited? quantities of Swiss Francs, tolerating an 'unlimited' debasement of its currency. Why would the Swiss of all people, one of the world’s few remaining 'sound money' proponents make such a commitment? Because unlike its main ‘competitors’ in the market for currency (the major central banks), which are either debasing with abandon or looking as though they’re about to, Switzerland had been rewarded for its rectitude with an uncomfortable share of the world’s flight capital and a painful currency overvaluation. So the SNB has given up trying to be honest in a dishonest world.

So let me explain why I believe printing money to be a fundamentally dishonest endeavour. Think about how it works. When the central bank, at zero cost, increases the monetary base by 1%, where does that money go? Answer: into the market for government bonds. Since printing the money to buy government bonds costs nothing, government revenues are obtained ostensibly for free. Of course, it buys those bonds in the secondary market rather than from the government directly, and the pretense of an arm’s length transaction between government and central bank is thus maintained, with all parties claiming a separation of monetary and fiscal policy. But it’s only a pretense.

By issuing bonds to itself the government seems to have miraculously raised revenue without burdening anyone else. This is probably why the mechanism is universally adopted throughout the world’s financial system. Yet free money does not, and cannot, exist. Since there can be no such thing as a government, or anyone else for that matter, raising revenue "at no cost" simple logic tells us that someone, somewhere has to pay.

But who? This is where the subtle dishonesty resides, because the answer is that no-one knows. If the money printing creates inflation in the product market, the consumers in that product market will pay. If the money printing creates inflation in asset markets, the purchaser of the more elevated asset price pays. Of course, if the printed money ends up in asset markets even less is known about who ultimately pays for the government’s ‘free lunch’, because in this case the money printing sets off its own dynamic via the perpetual Ponzi machine that is the global financial system. The ‘free lunch’ providers will be the late entrants into whatever asset-bubble or investment fad the money printing inflates.

The point is we can’t know who will pay, only that someone will pay. Thus the government has raised revenues without even knowing upon whom the burden falls, let alone telling them. Compare this to raising explicit ‘honest’ taxes, which are at least transparent. We know who levied the sales tax or the income tax, when it was levied, when it is payable, and how much has to be paid. The burden of this money printing, in contrast, seeps silently into the  economy, falling indiscriminately but indubitably on unseen, unknowing victims.

The economic hardships this clandestine tax operation imposes are real and keenly felt. But because no one knows from where it comes the enemy is unseen. Thus, during great inflations, societies turn on themselves with each faction blaming another for its malaise: the third century inflation crisis in ancient Rome coincided with Diocletian’s infamous persecution of the Christians; the medieval European debasements coincided with surging witchcraft trials; the extreme Central European hyperinflations following WW1 saw whole societies blaming their Jewish communities. More recently, the aftermath of the historically modest asset inflations in the tech market and the US real estate market have seen society turn on "fat-cat CEOs" and "greedy bankers" respectively.

By now, some of you might feel this all to be irrelevant. Surely, you might be thinking, the plain fact is that there is no inflation. I disagree. To see why, think about what inflation is in the light of the above thinking. I know economists define it as changes in the price of a basket of consumer goods, the CPI. But why should that be the definitive measure, given that it’s only one of the many possible destinations in money’s Brownian journey from the printing presses? Why ignore other destinations, such as asset markets? Isn’t asset price inflation (or bubbles as they are more commonly known) more distortionary and economically inefficient than product price inflation?

I believe economists focus so firmly on product prices in their analysis of inflation not because of any judgment over the relative importance of one type of inflation over the other, but simply because CPI-type measures of inflation are easier to see. In doing so, they resemble the fabled driver who lost his keys one evening and was found looking for them under a streetlamp. When asked by his wife why he was looking there when he’d probably lost them further back, he replied “Because here it’s easier to see.”

We know that revenue cannot be raised for one person without costing someone else. We know that money printing generates revenue for the public sector. So we also know that money printing must be a tax. We know that the magnitude of that tax – the inflation rate – can be reliably measured by the increase in the rate of base money growth. Since we don’t know which markets new money will end up in or even when, we know we can’t reliably count on measures of inflation in those markets to tell us what the ‚inflation rate? is. Thus, the only reliable measure of inflation is the expansion of the monetary base. So to those who say there is no inflation, I give you the following chart.

 By now, the more polite economists among those still reading may be thinking something like: “What utter drivel you are full of Grice! When there is a recession/depression on and the pressure faced by an economy is deflation, which can become self-fulfilling, the only correct thing to do is to create inflation to protect jobs.”

To this I would reply that every right thinking person wants to see job creation. Those advocating the creation of inflation, or fiscal stimulus are doing so because that’s what the system of logic known as ‘theoretical macroeconomics’ teaches. Yet this system of logic with its deeply flawed epistemological foundations is what brought us here in the first place! The macroeconomic body of knowledge represents no such thing – a cacophony of faiths would be more accurate. The instruments and gauges it recommends policy makers rely on – CPI, trend growth, output gaps, NAIRUs, budget deficits, debt/GDP – are subject to such wide conceptual ambiguity, not to mention estimation error, as to render them utterly meaningless. The fact is the captains of our ship have no reliable gauges. They have no understanding of what a yank of this lever, or a push on that button will ultimately achieve. They just think they do. Intoxicated by trumped up notions of what they know and understand, the drunk driving of macroeconomists is what led us to where we are today.

Of course, this begs the question of why we continue to listen to them. I believe it’s for the same reason that Quintus Cicero thought his famous brother was such a successful politician two millennia ago: people prefer a false promise to a flat refusal.

Believe it or not, for all this talk of honesty and dishonesty I’m not actually passing any judgment on the ethics of this state of affairs. The simple fact is that as a species we’re liars. One of the most famous recent experiments was carried out by Robert Feldman who recorded students talking to strangers for ten minutes, and then asked the students to watch the recordings again, making notes of the number of lies they told. Fully 60% owned up to lying at least once, with an average of 2.9 lies (to be precise) told per person. As a species, our capacity for conceptual thought makes us better at it than other animals, but other animals do it too. When a Kildeer’s nest is threatened, it feigns a broken wing to lure its predator away. There are firm evolutionary foundations for the tendency towards untruth. However, societies work on trust too, and there are equally firm evolutionary foundations for honesty. I know honest economists, honest investors, honest journalists, even … deep breath … honest bankers. Indeed, there is a demand for honesty. There is a demand for honest brokers, fund managers, lawyers, dentists, doctors, plumbers etc. And there is a demand for honest currency.

That demand has overwhelmed the Swiss. But their actions merely narrow the universe of honest destinations for flight capital with which gold has historically competed. For gold has no export sector, no pop-economists to be swayed by, and no populists to pander to. Gold might be a mere lump of dense, useless shiny metal, but it’s one which crackpot central bankers can’t print. Indeed, benchmarked against the printing of The Ben Bernak, the price of gold at which the US dollar would be fully gold-backed is now $10,000. You might think such a ‘price target’ is far-fetched (and I might agree with you). But bear in mind that the last time honesty was perceived to be so scarce – in the 1970s gold mania – the dollar was over-backed by gold (see chart below). If it happened then, why not again?


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Wed, 09/14/2011 - 09:58 | 1668244 gojam
gojam's picture

'When people stop believing in Gold, they don't believe in nothing -- they believe in anything'

 Almost but not quite - C K Chesterton

Wed, 09/14/2011 - 10:01 | 1668257 markmotive
markmotive's picture

S&P 500 to Gold ratio has a long way to go. To get to past historical peak, gold would need to hit $7275 or the S&P 500 fall to 290. Take your freakin pick!

Wed, 09/14/2011 - 10:18 | 1668327 X.inf.capt
X.inf.capt's picture

silver can hit 10,000 and i still woundnt dare sell. ALL I WOULD GET IN EXCHANGE FOR IT IS WORTHLESS PAPER.

no, thank you!

Wed, 09/14/2011 - 10:28 | 1668386 PaperWillBurn
PaperWillBurn's picture

Is there nothing else in this world? Silver and paper

Wed, 09/14/2011 - 11:55 | 1668794 eisley79
eisley79's picture

there is something else to realize though, Gold doesnt have to "rise" to 10,000 dollars while everything else stays the same.

The banksters would be just fine with gold at 10,000 but only when a loaf of bread is over 100 dollars.....

Can gold reach 10,000 in the system, before the system itself fails and hyperinflation raises all boats....

Wed, 09/14/2011 - 13:43 | 1669345 mkkby
mkkby's picture

Guys, I can see a bull trend like anyone else.  But are you saying gold is the magical bull market that never ends?

C'mon, get real.  TPTB will never allow a gold standard.  It would make them pay for all their wars and vote buying.  They can't live with that.  The next reserve currency will be something else that can be manipulated.  Probably digitally "backed" in some phoney way.  They know it will break, but so what -- they get to have their world dominance for another 100 years.

I like PM's, but no more than any other commodity.  And mark my words, you better get the fuck out before goldman decides it's time to end the party.  They aren't like JP Morge.  They know how to axe a market.

Wed, 09/14/2011 - 16:40 | 1670229 Crisismode
Crisismode's picture

Gold was around for thousands of years before the squid came in existence.


And it will be around for thousands of years after the squid has decayed into dust.

Mon, 10/03/2011 - 02:24 | 1732364 Mr.Sono
Mr.Sono's picture

yeah and the whole world will just bend over and take? Iam sure Chinese will sell there resources for digital money backed by hugs and kisses.

Wed, 09/14/2011 - 10:29 | 1668391 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

come on thats bullshit

hold the paper for as little time as possible then buy up farmland, guns, brothels etc etc

its just a metal; some people really get carried away...

Wed, 09/14/2011 - 10:48 | 1668487 SheepDog-One
SheepDog-One's picture

Ooo! I want to own a brothel!

Nah seriously though I'd love to have ranch land....beef critters is where its at!

Half of it to grow corn and barley for feed....chickens, cattle, and plenty of leftovers.

Fuck the New World Order.

Wed, 09/14/2011 - 10:58 | 1668538 LoneStarHog
LoneStarHog's picture

Your bovine had better not fart or the EPA will shut you down. You are smart to stay away from that EPA-declared pollutant HAY!

Wed, 09/14/2011 - 11:01 | 1668554 SheepDog-One
SheepDog-One's picture

Well either do that or starve...I have no idea how people figure theyll 'play it safe and under the radar' in FEMA/DHS USA police state. Yea youve got it all figured out Im sure, ust go along and theyll throw a baloney sandwich to your family...all is well.

Wed, 09/14/2011 - 11:05 | 1668573 X.inf.capt
X.inf.capt's picture

hey, MAX, you gotta point there!

a brothel...hmmmm

Wed, 09/14/2011 - 11:05 | 1668569 LoneStarHog
LoneStarHog's picture

This is an example of SARCASM, dumbshits! Does no one actually follow contemporary news?

Wed, 09/14/2011 - 11:57 | 1668801 SheepDog-One
SheepDog-One's picture

Yea I know.

Wed, 09/14/2011 - 11:04 | 1668567 High Plains Drifter
High Plains Drifter's picture

have you gone out there and checked the cesium 137 levels in your pastures lately.  just sayin......

Wed, 09/14/2011 - 14:01 | 1669446 JOYFUL
JOYFUL's picture

too true my man! Back in March I got real serious about my indoor barley fodder program, right about the time KANADA 'pulled' it's monitoring systems and banned all episodes of "the Simpsons" featuring Homer and the plant.  (Bet you think I made that up huh: think agin!)

hectare of feed in 300sq feet, with a fraction of the water useage, that's sweet.  I've only let the critters back out to pasture in the last month, and that probably only cause they've lulled me back to sleep.  Gave up trying to figure out the $600 navy surplus detector I bought, specially after finding out it don't even read the real bad stuff -strontium 90 Whatever!

Price of a slice of pastrami is gonna soon make Kobe beef look a Walmart special... but don't go out an trade your hard won gold profits for acreage yet folks...we got a whole lot of bad guys to take down in the vertically integrated Monsanto driven GMO-fertilizer-ethanol-pharmaceutical-feedlot-CME & armaments monopolist gang out there at the DoubleBush Clinton spread, fore a cowboy can get a drive in an make a fair days' wage agin. Like the good ol days!



Wed, 09/14/2011 - 14:28 | 1669613 Troll Magnet
Troll Magnet's picture

I would never ever want to own a brothel. But I wouldn't mind a Summer internship at a bunny ranch near Vegas.

Wed, 09/14/2011 - 11:23 | 1668654 Little John
Little John's picture

don't forget tools.  PMs store wealth - Guns protect wealth - Tools create wealth.

Mon, 10/03/2011 - 02:27 | 1732366 Mr.Sono
Mr.Sono's picture

metal will buy you bullets, pay for brothels, and for food when you run out of those things.

Wed, 09/14/2011 - 11:10 | 1668597 GFKjunior
GFKjunior's picture

I totally agree but if silver reached 10g's even I would sell a couple oz's to pay off the last of my student loans. 

Wed, 09/14/2011 - 11:21 | 1668643 X.inf.capt
X.inf.capt's picture

if it gets that high, junior, youll just have sweep money off ground to pay off the loan.....

NO JOKE, in germany circa 1923 they would burn bundles of money to heat a house.

you couldnt BUY firewood with money, it was so worthless

Wed, 09/14/2011 - 11:31 | 1668704 tmosley
tmosley's picture

Don't bet on that.  Silver has risen ten fold in the last decade, while prices are only up some 33%.  Even Shadowstats numbers show they less than tripled.

Further, there is a unique supply/demand problem for silver.  An industrial panic resulting from revalations of fraud in futures exchanges could easily take silver to those levels, even while gold was only $5000 or so, and keep it there for some months until demand collapsed (ie in a panic, users buy up what they need for the next X years all at once off of the open market rather than buying futures, skyrocketing prices, but once they have filled their needs for the immediate future, they stop buying and prices level off or collapse).

Wed, 09/14/2011 - 12:36 | 1668974 passwordis
passwordis's picture

 So what are you going to do with your gold? Save it for your kids? Barter with it? Wait for the next new currency to arrive?  Stare at it? Hope the actual physical will be used as money? 

 The whole point to buying gold is to preserve wealth. At this point in the game it's also an investment.  If you want to buy a home, food,a car or some land.. how do you presume to do so without selling?    The paper you need to make transactions will not be worthless.. it (or whatever replaces it) will still buy things.   The point is, if gold is at $10,000.. (or pick a number you like) At that point  Gold did it's job..  At some point you will need to sell in order to see the process through.


Gold is just a commodity... Money is just a commodity.  Land is a commodity. Energy is a commodity. You can't buy a new car with land or energy.  You trade the commodity for whatever currency is in circulation.

 The idea that you will be trading Gold for worthless paper is wrong--- unless of coarse the dollar actually goes to zero but I think a new currency or revalued (devalued) dollar will work it's way in before the dollar collapses.  In any event.. the medium of exchange is unlikely to be gold and silver any time soon so if you hope to extract the wealth you preserved (or earned) through the ownership of gold and silver.. you will have to trade it in.

 Example, I've been buying and holding for the last 8 years... I recently ran into a bind and sold some physical in order to buy a vehicle.  The vehicle paid for itself.  This is what I plan to do the rest of my life.   If at some point the price of silver goes to a few hundred. I'll likely sell half of what I have, move out of the country buy some land and build a house.



Mon, 10/03/2011 - 02:35 | 1732368 Mr.Sono
Mr.Sono's picture

when dollar goes to 0, you won't be able to trade your digital or paper money for the new medium of exchange since it will be worthless. Mean while you will be able to trade your gold for the next medium of exchange.  gold never goes to 0 unless its the end of the civilization. then where you go you don't need money.

Wed, 09/14/2011 - 10:03 | 1668262 A.W.E.S.O.M.-O 4000
A.W.E.S.O.M.-O 4000's picture

What's that saying? "When you buy commodities you're selling human ingenuity?"


Fuck that shit. I'll take Kruggerands any day of the week.

Wed, 09/14/2011 - 10:35 | 1668425 tmosley
tmosley's picture

When you buy PM's, you are selling current human ingenuity, and buying future human ingenuity.  

Wed, 09/14/2011 - 11:05 | 1668571 High Plains Drifter
High Plains Drifter's picture

i hope you are right. 

Wed, 09/14/2011 - 11:38 | 1668731 LawsofPhysics
LawsofPhysics's picture

Precisely, beside the spot price at my dealer is all that really matters.  All paper is burning, period.

Wed, 09/14/2011 - 10:21 | 1668337 rsi1
rsi1's picture

If it were convertible, the price would be around $4119 per ounce, Take currency in circulation 1.041 TR / 8133 tonnes of Gold reportedly held by the US

Wed, 09/14/2011 - 12:01 | 1668818 Citxmech
Citxmech's picture

I don't see where the author states whether he is using M1, M2, or M3.  Also, you wouldn't divide USDs by world gold stocks - wouldn't it be more accurate to take the US's percentage of world gold stocks as determined by the USD's percentage of world fiat value then derive the amount of gold that would be allocated in USDs?

Wed, 09/14/2011 - 11:01 | 1668549 Bring the Gold
Bring the Gold's picture

I find it fascinating how he throws out that current anger at Bankers and CEO's (you know powerbrokers and decision makers) is somehow comparable to persecution of Christians in 300 AD or the burning of witches in the Middle Ages.

Hmm, one of these scapegoats is not like the others...

Wed, 09/14/2011 - 11:46 | 1668762 NotApplicable
NotApplicable's picture

Well, not all CEOs and bankers are the same. Some are zealots in the cult of Corporatism, while others are just trying to run their businesses, and get caught up in the systemic corruption of others.

Regardless, a lynch mob does not have the resources to differentiate between the two.

Wed, 09/14/2011 - 14:02 | 1669447 Bring the Gold
Bring the Gold's picture

I agree they are not all the same, but as the author lumped them together so did I. I believe that my generalization was a bit more accurate. That is to say CEO's and Bankers share a wee bit more of the responsibility for current happenings then did witches in 1300's Spain. 

There are CEO's who are doing us all a great service by organizing work to create useful products that enrich civilization. Likewise there are some (rarer) bankers who are trying to loan out capital for productive purposes. That said, no two groups in the privat sector have a greater share of responsbility for current happenings in America than Bankers and CEO's. I would put politicians at the forefront especially the multi-decade career politicians as far as responsibility goes. Tha said, in the private sector it is clearly bankers and CEO's.

Wed, 09/14/2011 - 16:41 | 1670244 Banjo
Banjo's picture

"Well, not all CEOs and bankers are the same."


Not all unionists are the same

Not all communists are the same

Not all republicans are the same

Not all democrats are the same

Not all dictators are the same

Not all rapists are the same

Not all murderers are the same


This (boo hoo poor honest CEO and banker just trying to make an honest living) is a straw man agrument. Who's purpose is to give an escape hatch to some CEOs and bankers therby any CEOs. Once any CEO or banker is potentially exempt as a "nice" or "ok" guy just trying to make an "honest" living they will all squeeze through the same hole.

The religion of neverending growth, profits and capitalism that these CEOs and bankers worship is what has to be dismantled. Afterwards these CEOs and bankers can go home re-train and do something useful anything from becoming a doctor, pressing steel to picking up trash.

Mainly capitalism as practised over the past 500 years, with the MASS exploitation of people has to be changed, more along the lines of JW Smiths. Economic Democracy.

I do think that given our vast intelligence, technology and creativity we will end up at war because YOU cannot take your hand out of the capitalist greed monkey trap.

Thu, 09/15/2011 - 10:04 | 1673104 passwordis
passwordis's picture

 You and Micheal Moore don't understand capitalism. Capitalism is economic freedom.  It puts the power to create into the hands of the people and creates a non-centrally planned free competitive market .

Capitalism is a beautiful thing.  Capitalism is the local dinner and flooring store which are owned by your neighbors.

 Corporations do not practice capitalism. Corporations by definition are fictitious in nature.  Corporation are given legal privilege designed to protect itself and destroy the opposition ( you and me and capitalism)


Wed, 09/14/2011 - 11:49 | 1668772 citta vritti
citta vritti's picture

and Monty Python's take on how to know if your banker is a witch:

Wed, 09/14/2011 - 11:12 | 1668602 RafterManFMJ
RafterManFMJ's picture



We believe in nothing, Lebowski. Nothing. And tomorrow we come back and we cut off your chonson.

Wed, 09/14/2011 - 12:38 | 1668971 Jalaluddin
Jalaluddin's picture

The Fed doesn't believe in gold - it believes in concentrating (real) capital in the hands of its masters to the extent that WWIII can proceed smoothly (yes, "smoothly", from the point view of the psychotics promoting the new world disorder).

From the psychotic's point of view his position is raised by lowering others' position. Since position is very dependent on interaction, the psychotic sabotages interaction by spreading lies, and promoting dysfunctional behavior and a dysfunctional economic system.

The problem for the psychotic is when there is a measure outside of his system of phantasy:

gold vs the amerazoo (not the ben Bernak please!)

the Shariah vs manmade laws

Look at their febrile attempts to scupper gold.

Look at their attempts to paint God and morals out of the scenery - try erecting a Christmas tree even in your own garden in the USA - I am a Muslim living in Malaysia and I reckon I can put one in the front garden without being locked up or harassed (the neighbors, who are Buddhist or Christian might think it a lttle strange). With no clear moral (including monetary) foundation you are slaves.

You need to believe in something solid, and in fact something absolute, then there will be peace.



Wed, 09/14/2011 - 14:32 | 1669632 JOYFUL
JOYFUL's picture

your reference to shariah laws is goin scare the living um, "daylights" out of 99.5% of the population here, but I gotta testify, as a Christian dude living in a world of false opposites and oppositions, with a daily side dish of  mind-wrenching psyops,  I support your right to say WTF you wish, long as you support mine to do the same.  You are absolutely right about the God-Gold & morals connection...and an increasing number of us know exactly who "they" are:  if you commit to put up your Christmas tree in Malaysia, I'll make the right gesture with one of my sheep come November, and God Willing, we'll all jist start to get along again, Christian, Muslim and whatever other persuasion in the equation. 

Junkers to that idea...WE KNOW WHO YOU ARE!

Wed, 09/14/2011 - 21:30 | 1671427 Jalaluddin
Jalaluddin's picture

Do you mean the guy hiding behind his real name?

The one one who posts under his real name at ?

The one on Skype with the username jalaluddin_morris ?

The one who used to work at the Malaysian Armed Forces Academy?

All of the above?

The cognitive dissonance arises because you will not admit that the disease is worse than the cure.


Wed, 09/14/2011 - 21:49 | 1671474 Jalaluddin
Jalaluddin's picture

There, there - no need to capitalize.

You should have seen the whole thread on (about)facebook that magically disappeared the last time I received the "know who you are" treatment. Being a neat and tidy guy and anticipating the thread's imminent removal I kept a copy, and I am willing to send you a copy of the thread minus the magic sentence.

Dr. J (the man with all the moves :) )

Wed, 09/14/2011 - 09:59 | 1668248 GeneMarchbanks
GeneMarchbanks's picture

Once again same mistake: MEASURING GOLD IN DOLLAR TERMS. Tiss tiss tiss...

Wed, 09/14/2011 - 10:07 | 1668285 IBelieveInMagic
IBelieveInMagic's picture

As I see it, the price of PMs rises if the market believes that there is discord between powerful countries (countries that could break ranks and go to a real asset based currency and make it stick unlike Libya) and there is possibility of group of like minded countries continuing to accumulate PMs to ultimately introduce a hard currency. But, if everyone agrees to hold their noses and continue to play along with the fiat games, wouldn't PMs become sidelined?

The fact that even after taking out Libya (and curtailed it's Gold demand), the fact that Gold has continued to climb suggests to me that there is continued scope for breakdown among the powerful countries...

Wed, 09/14/2011 - 21:37 | 1671441 Jalaluddin
Jalaluddin's picture

More likely powerful countries which would like to join a new Bretton Woods type scam, rather than cease trade in promissory notes.

Wed, 09/14/2011 - 10:14 | 1668313 Cole Younger
Cole Younger's picture

There will come a time when measuring dollars against PM's will be a archaic practice. 

Wed, 09/14/2011 - 10:03 | 1668249 JW n FL
JW n FL's picture



Indeed, benchmarked against the printing of The Ben Bernak, the price of gold at which the US dollar would be fully gold-backed is now $10,000.

You might think such a ‘price target’ is far-fetched (and I might agree with you).

But bear in mind that the last time honesty was perceived to be so scarce – in the 1970s gold mania – the dollar was over-backed by gold (see chart below). If it happened then, why not again?

Don't ask why, ask why NOT!

Wed, 09/14/2011 - 10:07 | 1668281 LawsofPhysics
LawsofPhysics's picture

Precisely, the answer to the question of why the "dollar isn't there a move to revalue the dollar againast gold or some physical asset" is far more sinister.

Wed, 09/14/2011 - 10:18 | 1668326 Caviar Emptor
Caviar Emptor's picture

It could. It's happening in slo mo

Wed, 09/14/2011 - 10:27 | 1668380 espirit
espirit's picture

Concur. A loaf of bread may also cost $10,000 fiatsco.

Wed, 09/14/2011 - 10:50 | 1668500 SheepDog-One
SheepDog-One's picture

AND you also need to fight off assless chap biker fags with football pads with feathers all over them swinging machettes to GET to that $10,000 loaf of bread to exchange 1 oz of gold for!

Wed, 09/14/2011 - 11:23 | 1668655 Shitters_Full
Shitters_Full's picture

Nope.  We'll settle it in Thunderdome.  Two men enter, one loaf leaves.

Wed, 09/14/2011 - 12:06 | 1668831 pods
pods's picture

If a loaf of bread hits $10k FRNs you wont have to worry about protecting your bread from the hordes.

All the bakers will have been eaten a long time ago.


Wed, 09/14/2011 - 12:14 | 1668868 Bananamerican
Bananamerican's picture


Wed, 09/14/2011 - 10:24 | 1668343 B9K9
B9K9's picture

Everyone, especially various textbook "schools" of postmodernist Keynes, which  believe there is such a thing as a free lunch as long as a reserve currency can issue infinite debt.

Again, it needs to be repeated that MMT is merely a cover story. That is, no one, nowhere, at any time, in any position, actually believes in the efficacy of any of these programs. If readers of generic above average intelligence @ ZH have figured it out, trust me, the very same people who designed, engineered & manage(d) the system recognized the end-game long, long ago. Upon realization that we are well & truly hosed, they concocted a diversion to allow them, under color of authority, to use the full extent of all legal mechanisms at their disposal in which to extract remaining wealth.

As to dollar revaluation, I keep telling you bitches it's gonna be a goodwill entry aka 'going concern'. As a grand gesture to MtM, where asset values are literally invented, what better benchmark than US military control of ME oil supplies? As to gold, you better hide it well; neighbors & other snitches will gladly rat you out for an extra month's allotment of food. Yeah, that's right, along with price controls (to offset hyper-inflation), we're gonna get rationing as well.

Don't like it? Then vote the bastards out ... LOL

Wed, 09/14/2011 - 11:01 | 1668550 AnAnonymous
AnAnonymous's picture

That is, no one, nowhere, at any time, in any position, actually believes in the efficacy of any of these programs. If readers of generic above average intelligence @ ZH have figured it out, trust me, the very same people who designed, engineered & manage(d) the system recognized the end-game long, long ago. Upon realization that we are well & truly hosed, they concocted a diversion to allow them, under color of authority, to use the full extent of all legal mechanisms at their disposal in which to extract remaining wealth.

Right. That is a cause of tension between US citizens base and their elite.

The base is getting scared by the approaching outcome and want to pull out the plug as they are already loaded while the US elite see they can keep loading up and want to keep the game going for a while as they want more.

Think of a heist with henchmen wanting to run away because their bags and car are full while the boss wants to stay and keep looting because his 25 ton truck is not fully loaded yet.

Wed, 09/14/2011 - 11:06 | 1668577 Bring the Gold
Bring the Gold's picture

Vote which bastards out? Unless you are talking 3rd party or the ultra rare decent Repub or Dem eg Ron Paul, I don't see how voting out Repubs to replace with Dems or vice versa is going to solve anything at all.

Wed, 09/14/2011 - 11:49 | 1668773 NotApplicable
NotApplicable's picture

You missed the LOL after the vote comment.

Wed, 09/14/2011 - 13:56 | 1669417 Bring the Gold
Bring the Gold's picture

I didn't take it as a sign of sarcasm or tongue in cheekery, rather a sort of "vote them out, DUH!". Maybe I misread.

Wed, 09/14/2011 - 12:41 | 1668990 passwordis
passwordis's picture


 So what you are saying is you believe the markets are rigged but the elections are not?  As long as the media is in the hands of the goes the elections.

Wed, 09/14/2011 - 14:28 | 1669614 William113
William113's picture

"fat-cat CEOs" and "greedy bankers" = Jewish community. You can't vote them out because like the "fat-cat CEOs" and "greedy bankers"  They run everything just look at who voted in a Republican in Ny just because he supports Israel.

Wed, 09/14/2011 - 10:49 | 1668496 bankruptcylawyer
bankruptcylawyer's picture

If it happened then , why not,....not.....again?


double negative.....whhhhaaaaaaaaatttT????!!!


Wed, 09/14/2011 - 10:02 | 1668255 Josh Randall
Josh Randall's picture

Silver to Gold price ratio to align more closely too -- The Morgue meanwhile is having a tough 3rd Quarter - could it be the stock to spot price squeeze they are in ? Fun times ahead for those on the sideline with shiney tradition in their posession

Wed, 09/14/2011 - 11:07 | 1668332 thunderchief
thunderchief's picture

JPM is perpetually short silver and perpetually in the red on their shorts.  New support is around 40, give or take a few dollars.  That makes their short positions red as a used tampon in the toilet.

Gata and every other PM organization, including Eric Sprott, should go to their headquarters in person and throw in the bullshit flag.  Tell them to get in control of this horrible fetish.  Put their short postitions in some off shore company in the Caymens and let it implode. 

They are like a pedifile blaiming the boy they just raped for their problems in the Silver market.  Just asking the police for one more close encounter with their victim. 

Their Silver short position has gone beyond bad business.  It has become perverted, and they need help.   Who cares from who. 

Just go get help Blythe/JPM.

Just get the hell out of the silver market you sick bastards!

Wed, 09/14/2011 - 10:03 | 1668261 kato
kato's picture

interesting perspective. Thanks.

Wed, 09/14/2011 - 10:03 | 1668263 falak pema
falak pema's picture

Perpetual ponzis are like perpetual self priming machines, against the laws of nature and science. Just as perpetual rises of Gold...beware the economic Ides of March..for all would be Oligarchs turned uber-alles stand alone dictators.

Wed, 09/14/2011 - 10:18 | 1668328 Snidley Whipsnae
Snidley Whipsnae's picture

Gold isn't 'rising'... Fiat currencies are falling... Please explain what is to stop them falling?

Wed, 09/14/2011 - 10:25 | 1668357 Michael Victory
Michael Victory's picture

tru dat.

keep stacking the phiz.

The Pan Asain Exchange stacks the phiz.

and now according to Stella, an Australian Physical Bullion Exchange will too.

The race to the bottom is on.. 10K here we come.

Wed, 09/14/2011 - 10:49 | 1668495 Motley Fool
Motley Fool's picture

thanks for the link. :)

Wed, 09/14/2011 - 11:10 | 1668596 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Exactly Snidley.  The FRN has lost 1 percentage point in purchasing power for each of the last 98 years.  Even a banker would recognize that as a trend:)

Wed, 09/14/2011 - 11:52 | 1668785 xtop23
xtop23's picture

Reaching the value of 0 would do that nicely

Wed, 09/14/2011 - 10:04 | 1668265 Eagle Keeper
Eagle Keeper's picture

What happened to silver? 

What might happen to silver?

Wed, 09/14/2011 - 10:12 | 1668303 Long-John-Silver
Long-John-Silver's picture

Silver has a solid $40 floor. One morning you'll wake up and find it took out $50 during Asian trading.

Wed, 09/14/2011 - 10:37 | 1668436 tmosley
tmosley's picture

Didn't it trade below $40 a day or two ago?

When you are talking about paper, NOTHING is solid.

Wed, 09/14/2011 - 11:12 | 1668605 Hugh_Jorgan
Hugh_Jorgan's picture

Exactly, we still have to think about what it will take (and how long) to finally split the BS paper ETF pricing from physical metals. Once that happens the price of physical Gold and silver will go stratospheric.

Wed, 09/14/2011 - 11:12 | 1668601 Hugh_Jorgan
Hugh_Jorgan's picture


Wed, 09/14/2011 - 15:03 | 1669773 IQ 145
IQ 145's picture

I guess this is an okay place to repeat this post; I bought Dec. Silver on the Comex this morning at $40.915; Obviously, I believe it has support at $40; it'll be interesting, I'm sure.

Wed, 09/14/2011 - 10:16 | 1668310 snowball777
snowball777's picture

16:1 ratio: $625/toz

Current ratio (47.5:1): $210/toz

Fair price target: $100/toz (under Dylan's Gold 10k hypothesis only, obviously)


Wed, 09/14/2011 - 10:39 | 1668443 pupton
pupton's picture

Snowball are you saying that you believe silver will only hit $100 if gold hits $10,000?    That would be a 100:1 ratio.  Why would you think silver would fall out of favor relative to gold?  Thanks for your perspective.

Wed, 09/14/2011 - 11:27 | 1668688 snowball777
snowball777's picture

Oh, I dunno. ;)

Wed, 09/14/2011 - 10:04 | 1668267 LawsofPhysics
LawsofPhysics's picture

No shit, preaching to the choir.  There is a very real cost for creating capital.  Common fucking sense.  Either the banking and financial class forgot this fundamental rule or they are intent on making sure everyone is an indentured servant to excessive usury.  Oh wait, nevermind...

Wed, 09/14/2011 - 10:43 | 1668464 Ponzi Unit
Ponzi Unit's picture

"...they are intent on making sure everyone is an indentured servant to excessive usury. "


+1        You have it, LawsofPhysics. 

Wed, 09/14/2011 - 11:39 | 1668736 lynnybee
lynnybee's picture

"...they are intent on making sure everyone is an indentured servant to excessive usury. "    

yup, that is the plan, was the plan, always has been the plan.     walk away, people, stop paying the creditors who lured you into debt with cheap interest rates, walk away from the government that outsourced people's jobs & start fending for yourselves as best you can, because that is what is coming anyway.        extricate yourself from the system & use the money that would have gone to usery creditors to purchase silver & gold.      you have the power right now to save yourselves from the disaster that is coming our way .     we were all targeted to take on more & more debt , that is what makes me so mad.     i'm older, i knew better, no way in hell i'm paying anyone interest because i'm so damn cheap.    

Wed, 09/14/2011 - 11:03 | 1668563 SheepDog-One
SheepDog-One's picture

Not me.

Wed, 09/14/2011 - 10:04 | 1668268 pelican
pelican's picture

10,000 gold = 50,000 dow = nonsense.  However, the future is uncertain and death is always near.

Wed, 09/14/2011 - 10:09 | 1668289 LawsofPhysics
LawsofPhysics's picture

Err, precisely how do you arrive at this conclusion?  Equity holders are a rather small percentage of the population and include the financial and banking class, they would love a DOW of 50,000.  If your statement was true they would have made this happen a long time ago.

Wed, 09/14/2011 - 11:06 | 1668553 pelican
pelican's picture

My point was that we will not see 10,000 any time soon.  I remember winners like Jim Cramer running around saying the Dow would reach 50,000 and Harold Camping saying the end of the world is here.  Simply wishful thinking. 

My second point is that no one truly knows the future.  A black swan could fly over and leave a crap on your head.

Wed, 09/14/2011 - 11:16 | 1668622 Hugh_Jorgan
Hugh_Jorgan's picture

The problem is that your hyperbole renders your idea untenable:

"any prediction that can only muster a could" in no way justifies a statement like "10,000 gold = 50,000 dow = nonsense"

Wed, 09/14/2011 - 21:27 | 1671419 JW n FL
JW n FL's picture



$2,500 Gold equals 12,500 DOW??

DOW 6,000 ='s $25,000 Gold.. and real sense, common sense.. which is not so Common! it would seem.

Break out of the box.. Break out of YOUR! BOX!! You are a SLAVE! to Yourself! in your own mind.

who is hslping who when China buys U.S. Treasuries with a Renminbi that is 1,200%+++ Leveraged? Us or Them?


Wed, 09/14/2011 - 11:43 | 1668749 LawsofPhysics
LawsofPhysics's picture

You may not know the future, but you can educate yourself on facts.  The fact is that the economic expansion of the past 100 years was due to cheap energy sources and huge returns (capital and energy required to deliver minus capital and energy recovered from selling and using said energy source) on delivering that enegy, which drive the markets.  Those days are over for the "forseeable" future.

Wed, 09/14/2011 - 12:22 | 1668903 pelican
pelican's picture

Facts?  Black Swans piss on those too.

Wed, 09/14/2011 - 12:39 | 1668980 Cliff Claven Cheers
Cliff Claven Cheers's picture

Thanks for not making this an echo chamber.


Wed, 09/14/2011 - 13:52 | 1669392 mkkby
mkkby's picture

LawOf -- What you just stated is an opinion, not a fact.  Correlation is not causation.  FAIL!

Wed, 09/14/2011 - 10:44 | 1668470 Ponzi Unit
Ponzi Unit's picture

a lame pelican?

Wed, 09/14/2011 - 15:09 | 1669815 IQ 145
IQ 145's picture

I'm afraid so. A lame pelican who pretends to know black swans.

Wed, 09/14/2011 - 10:52 | 1668513 SheepDog-One
SheepDog-One's picture

Yea I agree pelican, $10,000 gold, USD worth 1/10th of 1 cent, oil $1,500 a barrel, gas $75, DOW 100,000......OK so what?? People imagine theyll walk around trading their coins in a leather bag for goods and services? Dream on!

Wed, 09/14/2011 - 10:05 | 1668275 hungarianboy
hungarianboy's picture

I think 10.000 Drachma's he ment. For now Gold still has difficulties.

Wed, 09/14/2011 - 10:15 | 1668319 snowball777
snowball777's picture

Paper Au do.

Wed, 09/14/2011 - 11:42 | 1668715 GoinFawr
GoinFawr's picture

379,182 forint/Au oz napot, nem?

Wed, 09/14/2011 - 10:06 | 1668277 orca
orca's picture

Alhtough I agree with his price target, why should we listen to somebody who works for SocGen?

Wed, 09/14/2011 - 10:38 | 1668441 gmrpeabody
gmrpeabody's picture

More importantly..., why did I have to read thru 50% of the remarks before someone asked that question?


Wed, 09/14/2011 - 15:11 | 1669831 IQ 145
IQ 145's picture

It's always a good idea to "listen to", or consider carefully, the thoughts of someone who takes the time to think clearly and analyse things in terms of known facts. I doubt if it matters who his employer is.

Wed, 09/14/2011 - 16:48 | 1670270 snakeboat
snakeboat's picture

I still don't see how he continues spouting his seemingly anti-bank commentary without getting himself fired.  I appreciate his ideas, but am skeptical due to that fact.

Wed, 09/14/2011 - 10:06 | 1668279 Pampalona
Pampalona's picture

If Perry or Romney wins in 2012, and repubs also get both houses, how would the price of gold likely be affected by the policies they would persue?

Wed, 09/14/2011 - 10:16 | 1668320 Long-John-Silver
Long-John-Silver's picture

Nothing would happen. They are both puppets. This is the reason Ron Paul can not be allowed to be elected. He is not and never will be a puppet.

Wed, 09/14/2011 - 10:31 | 1668398 GeorgeHayduke
GeorgeHayduke's picture

Let's look at history. In 2000 we got G.W. Bush and a Republican house and senate, and Supreme Court for that matter considering their ruling on the election. Bush the Lesser then had 6 years of a Republican house and senate, which was veto-proof some of those years, yet we did not reach the Nirvana I hear so many Republicans talk about. We had incredible incompetence (911 with perhaps a let it happen attitude), 2 bankrupting wars, and the continuation of bubble economics which had moved to housing, complete with all of the fraud it brought.

So, if the Republican's chosen huckster wins the presidency and they win all of Congress again, I'd guess we will get more wars, more belligerent talk, money moved toward their favorite programs and insiders and more of the same, just different.

It should be readily apparent to anyone paying attention that going back and forth between corporate-owned Dems and Repubs does nothing to fix anything. They are the same party with very slight differences on how to achieve their goals. That is all.

Wed, 09/14/2011 - 10:46 | 1668479 Ponzi Unit
Ponzi Unit's picture

Cackling puppeteers run both parties. As George Carlin said, elections are held to give you the illusion you have a choice. You don't.

Wed, 09/14/2011 - 12:00 | 1668574 SheepDog-One
SheepDog-One's picture

Exactly, George Carlin boils it down to pure bullion- 'Politics and elections are designed to give you the illusion you have a do NOT have any choice!' You are not part of the club, you are to consume debt and feed the banking machine.

Wed, 09/14/2011 - 17:15 | 1670365 ATM
ATM's picture

Even if said Republikins should win the next US election and end up comtrolling both houses that does absolutely nothing to solve the already unpayable debt problem the US faces. They can embarc on their own Austerity Program but that is political suicide and they will be out of affice as fast as they got in.

Like it or not the issue is one of political and economic substance and in that fight economics loses. Wild emotion and political power will trump actual math. That's how we got to where we are now and we will end like every other soveriegn who turned to the printing press because the solution is always the same - print to destruction and and point fingers. Grice is exactly right on that one.

The dollar will be worth nothing. Gold will be $10,000/oz at some point and much more than that too. At some point gold will not be traded for paper dollars at all. Everyone will have all sorts of money but you won't be able to buy anything with it. That's a fact unless of course you are naive enough to beleive this time is different.....

Wed, 09/14/2011 - 10:47 | 1668485 AnAnonymous
AnAnonymous's picture

US citizens deny the most obvious.

US politicians have not changed their manners, they have kept behaving the same since the dawn of the US.

What is changing? The US is based on an expansion scheme, a Ponzi scheme and the world conditions are less and less supporting to that scheme.

Simple as that.

US politicians are not more dishonest than the FF who disembled their way to power on the back of truth, justice and liberty.

The conditions are such that US citizens have grown more sensitive to their politicians' ways. As the Ponzi is crumbling, so is the capacity to bribe the US citizens.

US politicians are losing this, US citizens are slipping more and more on the wrong side of the deal.

That is why they are growing angrier. Republicans in the house will help their gang, the republican voters. With the Ponzi falling into pieces, the number of republicans they can support is plummeting too.

US citizens who think themselves as Republicans through and through might get disappointed in that they wont get their share of loot because the loot is not enough to be shared with them.

Wed, 09/14/2011 - 11:05 | 1668575 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

"US politicians are not more dishonest than the FF (founding fathers) who disembled their way to power on the back of truth, justice and liberty."


I profoundly disagree sir!

Wed, 09/14/2011 - 11:13 | 1668608 GeorgeHayduke
GeorgeHayduke's picture

Excellent point. The era of Colonial Capitalism is grinding to a halt and our politicians do n ot know how to operate in any other manner.

I also completely agree with you that there are going to be some irate people of both parties in the near future as their "cut" of the Ponzi pie is diminished and eventually disappears. My guess is we might start hearing all kinds of insider info about shady things and people going on behind the scenes as these folks are left high and dry and seeking revenge. Or, we might see lots of these folks doing incredible things like committing suicide with 6 shots to the back of their own head.

The main key most people refuse to understand is there is no going back to "the good old days" of the economy as we knew it. We must build a new system.

Wed, 09/14/2011 - 11:03 | 1668564 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

In the long run, none.  Just different puppets on the same stage.

Wed, 09/14/2011 - 10:08 | 1668282 CvlDobd
CvlDobd's picture

JJC is close to breaking some long term moving averages on the daily chart and the weekly is at its breakout price and fibonacci fan support. Can we talk about shorting JJC and the possibility of profitting not only from the decline of copper but the default of Barclays on some of its ETNs? Just thinking out loud.

Wed, 09/14/2011 - 10:09 | 1668290 Oh regional Indian
Oh regional Indian's picture

If we are indeed coming into a hard currency phase in global finance, then this latest dollar surge might well be the last. With a gold surge to follow.

But probably in a backdrop of all kinds of unrest, not a money market full of tranparency and authentic price discovery.

$10,000 gold = Anarchy or something close to it anyways. Bankers have launched world wars based on smaller threats to their hedgie-money! 


America's Natural Gifts

Wed, 09/14/2011 - 10:52 | 1668510 Ponzi Unit
Ponzi Unit's picture

Or, what if insiders are ready to come forward with stashes of Yamashita's gold at the crucial moment when gold is monetized? Who knows how much is out there and who is holding it? On that I will side with Grice -- we make models, but they are mere guesses. Control-freak super-elites may have lost rudder control at this stage. More questions than answers, if we are, ahem, "honest" with ourselves.

Wed, 09/14/2011 - 11:19 | 1668636 Oh regional Indian
Oh regional Indian's picture

True Ponzi.

I'd articulated such thoughts in october last year, that there is a surprise to do with gold. And not Silver.

Here: An opportunity and a Golden Warning

We have not seen anything yet.


Wed, 09/14/2011 - 11:06 | 1668578 High Plains Drifter
High Plains Drifter's picture

what kind of world would it be, with 10,000 gold?  

Wed, 09/14/2011 - 11:17 | 1668623 Oh regional Indian
Oh regional Indian's picture

Is that a serious or rhetorical quesiton HPD? 

Start with where Oil goes in that scenario. Then work your way to stranded populations and broken supply chains.

Then to the heavy hand of Government Help.

Very downhill, very fast in most aspects of our lives.


Wed, 09/14/2011 - 11:52 | 1668786 High Plains Drifter
High Plains Drifter's picture

scarey , no.....?  i think sometimes we throw numbers around and don't stop to understand or reflect on the ramifcations of these numbers....i as a gold bug would hold my wealth. but for many.......not so much..........anytime my holdings improve, it is at someone else's expense unfortunately. i cannot change that. i watch as my nation and my culture  dies and nobody does a damn thing about it..........the young people are spoiled and out of touch with reality. it is very difficult to reach them.  i am not sure if they ever can be reached. we have soldiers who question why they continue to fight wars that never end, all based upon lies. yet they continue on.  during the debt crisis when the debt ceiling was being argued about, the only question these mercenaries asked was if their checks would be late. such is the world hpd lives in now. it sickens me to no end. if these men and women do things only for money, can it  not be said that they will come here and do the same to us ad they are doing to others?  i believe they will. i hope people realize that in a world of 10000 gold, these soldiers will be here going around , kicking down doors and searching for what is considered contraband and anything else of value.......among other things, this will be in the world of 10,000 gold.....and you know why they will do it? because it is for amerika and our liberty and our rights and for patritism and ..........and ............and .............because it is their job.....

Wed, 09/14/2011 - 11:19 | 1668635 Hugh_Jorgan
Hugh_Jorgan's picture

One where those who leave their homes, do so in numbers and heavily armed. Not a good scene.

Wed, 09/14/2011 - 10:10 | 1668293 Troy Ounce
Troy Ounce's picture



Can I believe the price finding mechanism of gold?

Who the f%ck is in charge of this?

Wed, 09/14/2011 - 10:10 | 1668294 Belarus
Belarus's picture

It's ridiculous I know....but right now the only conviction seems to be selling paper PM's. Everything else is nervousely hedged or straddled for only who knows what is to come....

Wed, 09/14/2011 - 10:11 | 1668295 jkings1
jkings1's picture

Bob Chapman sees gold at $20,000. seems outlandish at first, but with the way things are going, nothing will surprise me.

Wed, 09/14/2011 - 11:08 | 1668591 High Plains Drifter
High Plains Drifter's picture

that is another one of those letter writers talking to us from a undisclosed location in latin america, located deep within the bowels of a nondescript building...... bob says we have to go fight and die for liberty. thanks bob....

Wed, 09/14/2011 - 10:11 | 1668298 Cdad
Cdad's picture


The fascist network replays Larry Fink's comments from this morning, BUT EDITS HIS COMMENTS ABOUT MAKING IT TOO EXPENSIVE TO OWN CASH..."make them invest."

Fascism...covering up the corruption in the US banking edit at a time.

Wed, 09/14/2011 - 10:27 | 1668378 SheepDog-One
SheepDog-One's picture

Yellow journalism that Stalin would have wept tears of proud joy for! 

YES lets take the interview, sterilize it, and reply it with any 'troublesome' parts taken out!

CNBC should be taken out back and get a bullet in the dome.

Wed, 09/14/2011 - 10:13 | 1668308 Sequitur
Sequitur's picture

Assume increasing M2. The increased printing is nothing compared to all the bad debt issued by banks being levered up 20x-40x. Some estimates conclude we're at a whopping 60 to 1 leverage worldwide. So what's going on now is implosion of the credit bubble, deleveraging, deflation. You can see it in your neighboorhood -- falling home prices, more foreclosures. And I think we'll see deflation in the stock market, possibly get cut in half. But I simply don't see hyperinflation, nor $10k gold. If a few hedge funds sell, or central banks raise rates, you'll see AU move violently off the highs.

Wed, 09/14/2011 - 10:35 | 1668419 SheepDog-One
SheepDog-One's picture

Sequitur right....when I hear '$10,000' gold' calls, I wonder 'Gee, what does a country where 1 oz gold coin = $10,000 "LOLars" LOOK like'?

Similar to Road Warrior?

Wed, 09/14/2011 - 11:24 | 1668660 Hugh_Jorgan
Hugh_Jorgan's picture

I think it depends on how long it stays there. If we see prices that high for a few days like the spike in gold in 1980's it might not be RWT. However, if it bounces around that price for very long I think that you might not want to leave your house without body armor and an assaut rifle or two.

Wed, 09/14/2011 - 11:25 | 1668670 chubbar
chubbar's picture

SDO, Why? I'm trying to understand what mechanism would cause Anarchy in the US if Gold were revalued to say $20,000?

Only the holders of gold would really be affected. Gold isn't used in many industrial processes so nothing you buy should be affected except gold jewelry.

If you had said Oil at 500 or corn at $1,000 a bushel then I would agree with your statement. Not sure why a gold revaluation changes anything at all other than for the holders of gold. If nations could zero out their debt by a transfer of gold I would think that would be a stabilizing event, not a destabilizing one. What am I missing?

Wed, 09/14/2011 - 12:04 | 1668822 SheepDog-One
SheepDog-One's picture

So youre saying in a world where gold is $20,000 per oz coin, everything else is just the same? Of course I said oil and food and everything else would also be COMPLETELY out of reach, in this comment body!

And where is the place people will go when gas is $75 a gallon and food is being rationed to trade $20,000 coins? I dont know of any store taking gold and silver for groceries even today, but after economic currency collapse, they will?

I dont think so!

Wed, 09/14/2011 - 14:03 | 1669452 chubbar
chubbar's picture

I guess that explains the discrepancy in thoughts. I was talking about a world where we all wake up to find a bank holiday and a few days later the CBs have announced they will buy your gold for $20,000. Why would this cause gas and food to go up? By what mechanism?

Not that many folks hold gold as a percentage of wealth and it isn't widely used in industry so I'm trying to understand why, absent very high inflation that is the cause of all prices going up with those attendant troubles (which I agree with you about), a deliberate and sudden revaluation of gold would cause anarchy? That is the scenario I'm talking about, not the one you envision.

BTW, I'm not arguing here, just trying to understand something I may have missed.


Wed, 09/14/2011 - 13:08 | 1669131 Cliff Claven Cheers
Cliff Claven Cheers's picture

Sequitur, my thoughts as well.

Tyler, any charts or stats showing how much money has been destroyed to compare with the Feds balance sheet?

Wed, 09/14/2011 - 10:36 | 1668422 Tortuga
Tortuga's picture

What ever the prognostications: doom, gloom, early stages of crisis, Obamanomics is successful, etc, we, the USA (suvivors), will survive and prosper, eventually, because we are, who we are. GBA and RICO all banksters and their prostitue politicians. 

Wed, 09/14/2011 - 10:36 | 1668430 PaperWillBurn
PaperWillBurn's picture

If instead of the current 1 out of every 100 people own 1oz or more of physical gold, 5 out of every 100 people decide..hey it might be a good idea to own an oz of gold..we will have $10,000. Seems crazy, right? I mean..that's got to be a bubble


Numbers were puled out of my ass

Wed, 09/14/2011 - 10:42 | 1668458 Bastiat
Bastiat's picture

Central banks raise rates?  How will the US pay higher interest?

Hyper-inflation is a matter of loss of confidence in currency--not a function of a hot economy.  Was Weimar Germany an overheated economy?

How will a collapsing income statement and balance sheet for the US restore confidence in the US FRN?


Wed, 09/14/2011 - 10:48 | 1668490 tmosley
tmosley's picture

By forcing a default in an unpayable debt.  Raise the interest rate higher than the real rate of inflation (which will emerge on the street with a default as foreigners get piss scared and dump their dollars).  US citizens, seeing an exceptionally high interest rate will put their dollars in the bank rather than trying to get rid of them.  

Basically, a default caused by a MAJOR rate rise will bring existing inflation to prices, and then kill it.  Much better than having the sword of Damocles hanging over the head of the dollar until the string breaks "unexpectedly".

But then, there are so many dollars abroad, and so little faith in them at home even now that it may well spiral into hyperinflation, no matter how high the interest rate is.

Wed, 09/14/2011 - 10:57 | 1668536 Bastiat
Bastiat's picture

Basically, a default caused by a MAJOR rate rise will bring existing inflation to prices, and then kill it.

Whose default?  A default by the UST is the end of the FRN regime.

Wed, 09/14/2011 - 11:16 | 1668619 tmosley
tmosley's picture

Why?  Lots of countries have defaulted without having hyperinflation.  Unless if by "regime" you mean its status as a reserve currency, then you are probably correct.  But that does not mean the currency will go to zero.  It simply menas much of the currency held abraod will return to our shores.  If it is accompanied by very high interest rates, the flow will be slowed, and any incoming money will be taken up by Americans and put into the bank, stopping that hyperinflationary wave from hitting prices.

Wed, 09/14/2011 - 11:00 | 1668544 Ponzi Unit
Ponzi Unit's picture

Which may be why our masters will hold on to the levers until the last possible moment, printing all the while. At that point, perhaps they will find a way to blame imaginary terrorists and then we get restoration of aggregate demand via bigtime war.

Wed, 09/14/2011 - 11:07 | 1668585 SheepDog-One
SheepDog-One's picture

AHA! We have a winna! 

Wed, 09/14/2011 - 11:47 | 1668767 DirtMerchant
DirtMerchant's picture

interesting point, as long as they mark to unicorn anus, M2 is controllable, but if they mark to reality...M2 dives, just how much skittles is actually out there? -25% M2? or more?

Once again reality rears its ugly head....

Wed, 09/14/2011 - 10:14 | 1668312 Snidley Whipsnae
Snidley Whipsnae's picture

Grice... Congrats... You hit it outta the park!

Wed, 09/14/2011 - 15:28 | 1669910 IQ 145
IQ 145's picture

Yes. It's essentially perfect.

Wed, 09/14/2011 - 10:15 | 1668317 Chrikus van der...
Chrikus van der Rockhuizen's picture

physical bitchez

Wed, 09/14/2011 - 10:17 | 1668324 Long-John-Silver
Long-John-Silver's picture

Beans, Bullets, and Bullion.

Wed, 09/14/2011 - 10:23 | 1668351 Caviar Emptor
Caviar Emptor's picture

Heavy Metal 

Wed, 09/14/2011 - 10:28 | 1668382 SheepDog-One
SheepDog-One's picture

Base metals, lead, copper, etc.

Wed, 09/14/2011 - 10:29 | 1668392 Caviar Emptor
Caviar Emptor's picture

Perfect. And Heavy. For the month of ZEPtember

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