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Economic Alert: If You’re Not Worried Yet…You Should Be

Tyler Durden's picture


Submitted by Brandon Smith from Alt-Market

Economic Alert: If You’re Not Worried Yet…You Should Be


For the past four years I have been covering the progression of the global economic crisis with an emphasis on the debilitating effects it has had on the American financial system.  Only once before have I ever issued an economic alert, and this was at the onset of the very first credit downgrade in U.S. history by S&P.  I do not take the word “alert” lightly.  Since 2008 we have seen a cycle of events that have severely weakened our country’s foundation, but each event has then been followed by a lull, sometimes 4 to 6 months at a stretch, which seems to disarm the public, drawing them back into apathy and complacency.  The calm moments before each passing storm give Americans a false sense of hope that our capsized fiscal vessel will somehow right itself if we just hold on a little longer...

I don’t have to tell most people within the Liberty Movement that this is not going to happen.  Unfortunately, there are many out there who do not share our awareness of the situation.   Debt implosions and currency devaluation NEVER simply “fade away”; they are always followed by extreme social and political strife that tends to sully the doorsteps of almost every individual and family.  The notion that we can coast through such a tempest unscathed is an insane idea, filled with a dangerous potential for sour regrets.

There are some people who also believe that the private Federal Reserve with the Treasury in tow has the ability to prolong the worst symptoms of the collapse indefinitely, or at least, until they have long since kicked the bucket and don’t have to worry about it anymore (the ‘pay-it forward to our grandkids’ crowd) .  I can say with 100% certainty that most of us will live to see the climax of the breakdown, and that this breakdown is about to enter a more precarious state before the end of this year.  You can only stretch a sun-boiled rubber band so far before it snaps completely, and America’s financial elasticity has long been melted away.

A pummeling hailstorm of news items and international developments have made the first half of 2012 almost impossible to track and analyze.  The frequency at which negative information has surfaced is almost dizzying.  However, a pattern and a recognizable motion are beginning to take shape, and, I believe, a loose timeline is beginning to form. 

At the end of January, I covered the incredible nosedive of the Baltic Dry Index (a measure of global shipping rates that signals a fall in global demand) to historic lows.  I pointed out the tendency of stocks and the general economy to crash around 8 months (sometimes a little longer) after the BDI makes such a dramatic downturn.  Mainstream analysts, of course, attributed the fall to an “overproduction of ships”, which is the same exact excuse they used when the BDI collapsed back in 2008 just before the derivatives bubble burst.  It would seem that the cable TV talking heads were wrong yet again, as the international market facade quickly evaporates right in line with the BDI’s almost prophetic knack for calling an economic derailment in advance.

Here are some of the most important reasons why every American should be prepared for much harder days, especially before the end of 2012:

The European Union Is Officially Dead In The Water

Stick a fork in er’, the EU is done!  We are talking about full scale dismantlement, likely followed by a reformation of core nations and multiple collapse scenarios of peripheral countries.  The writing is all over the wall in the wake of the latest election results in Greece and France, where, as alternative researchers have been predicting for some time, the battle between the government spending crowd and proponents of austerity has reached a fever pitch. 

The Greeks and the French are royally pissed over draconian cuts in public programs and the destruction of pensions which have been a mainstay of their economies for quite some time.  They are also furious over being sold off like collateral to the IMF and World Bank.  Rightly so.  Like the American taxpayer, the taxpayers of floundering EU nations are wrongly being held responsible for the financial mismanagement and fraud of their governments and global banks which have remained untouched and unpunished for their trespasses.  The problem is, the voters of both countries are signing on to the socialist/quasi-communist bandwagon in response.  In Greece, the Left Coalition Party, a splinter group of the traditional communist party, has now taken a primary position of power:

In France, voters have elected socialist Francois Hollande (a Bilderberg attendee), whose latest promise is to spend France into recovery through his “pro-growth agenda”:

I have no doubt that the elections of the EU are as manipulated by elitists as they are here in the U.S., and I’m sure false paradigms abound.  Have Europeans forgotten that it was overt government spending that set them on the path to calamity in the first place?  Or, are they like Americans; just desperate for any change in the ranks of leadership?  One would think that they would take note of the problems here in our country and realize that electing a socialist to replace another socialist is no way out of economic hardship.

Former officials like Nicolas Sarkozy may have claimed to be distanced from the socialist ideal, but, as with all globalist puppets, their actions did not match their rhetoric, and they have always supported policies of centralization and big government.  The French and the Greeks have essentially replaced closet collectivists with outspoken collectivists, and will see NO relief from the crisis in the Euro-zone as a result of the political reordering.  In fact, the stage has now been set for a volatile chain of dominos.  Germany, which is the only economy left holding the EU together, has been unyielding on austerity cuts.  A conflict between France and Germany is now inevitable.  Neither will compromise their position, and I can see no other eventual result than a reexamination and perhaps abandonment of the EU charter. 

How does this affect America?  Being that international banks and corporations have forced our countries into interdependency through the engineered chicanery of globalization, any collapse in Europe is going to strike hard around the world, but the worst will hit the U.S. and China.  Which is probably why China is disengaging trade away from the U.S. and the EU and focusing on other developing nations:

If you thought the Greek rollercoaster was a pain in the neck for investment markets, just wait until the whole of the EU is in a shambles! 

Spain is next in line, with a 25% official unemployment rate and a massive black market economy forming.  As I have been saying for years now, when governments disrupt the financial survival of the people, they WILL form their own alternatives, including black markets and barter markets.  It is about survival.  The Spanish government does not care much for these alternatives, though, and has now banned cash transaction over 2500 euros in a futile attempt to squeeze taxes out of the populace through digitally tracked payment methods:

Another major concern for Americans is the fact that Europeans are inching towards an abandonment of the dollar.  Francois Hollande has openly called for an end to the dollar’s world reserve status, and with a majority backing of the French people, he could easily make this happen, at least where France is concerned.  All it takes is for a few key countries to publically and completely drop the Greenback and the dollar’s reputation as a safe haven investment will be quashed.  This could very well happen before 2012 is over.

QE3 Is The End

Here is the bottom line; U.S. growth is a theater of shadows.  There has been no progress, no recovery, only the misrepresentation of statistics.  Millions of Americans have fallen off unemployment rolls because they have been jobless for too long, which lowers the unemployment rate, but does not change the fact that they are still without work.  Durable goods orders are dropping like an avalanche.  U.S. credit has been lowered yet again by rating agency Egan-Jones.  With China making bilateral trade deals in numerous countries on the condition that the dollar be dropped as the primary purchasing mechanism, and with the EU turning to economic mulch, the currency’s safety is nonexistent.  Traditional investors who cling to the idea that a falling Euro spells dollar strength will be sorely disappointed when the currency is suddenly being rejected in international currency markets.

The Federal Reserve has already stated that any signs of “relapse” into recession (the recession that we never left) will be met with all options on the table, including QE3:

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.  QE3 will be the straw that broke the camel.  How exactly this will play out socially and politically, I do not know (I could take a good guess though).  But, the technical results are predictable.  The Fed will respond to the lack of treasury purchases by ramping up fiat printing in order to cover the ever increasing costs of the government machine.  The Greenback will immediately lose a large portion of its value, at least in terms of imported goods, causing inflation in prices.  Oil and energy prices will skyrocket if OPEC follows suit (which they will, though the Saudis may still honor dollars for a time).  Doing any traditional business will become nearly impossible, and price inflation will dominate the lives and the minds of average unprepared citizens.            

The amount of time that it will take for these difficulties to unfold is also not clear.  We are operating in uncharted territory, and dealing with a collapse scenario on a truly planetary scale.  My best advice is to assume that the avalanche will move fast.

While markets in our country have seen only mild disruptions so far this year, their solidity is predicated on a host of props and costume pieces, any one of which could pull the rug out from under America’s suspension of disbelief if it strays but a little from the illusion.  As long as the dollar holds, stocks can be infused with bailout juice through major banks.  So can major companies and even desperate state governments on the verge of bankruptcy.  The Dow will remain relatively friendly, and day traders and the public will remain happy.  As soon as the dollar comes into question, all bets are off…

Does This Mean Doom, Or Just Another Bad Day?

The real beginning of today’s collapse is tied to the events of 2008.  The pace of it has been deceptive, but also, in a way, it is a gift.  Over the past four years, I have personally seen the awakening of thousands of people that may have never had the chance if the system had gone into full spectrum breakdown right away.  The question now is, how much longer can the U.S. wobble along on one wheel?  In my view, and from the evidence I see in markets at the moment, not much longer. 

It is hard to set aside any expectations that the next leg down will be easy to digest for the populace.  The reality of our predicament is starting to hit home.  All the tax return checks have been spent.  The credit cards have been maxed.  The new cars have been sold off and traded in for ghetto-mobiles.  The good jobs have been replaced with Taco Bell slavery.  A trip to see The Avengers is now the family vacation.  And, the distractions of reality TV just aren’t buttering our bread anymore.  It’s the little things at first that really signal the financial mood of a society, as well as reveal the more vital and looming issues just over the horizon.

All indicators suggest that this year will be unlike any other before.  In 2008, we saw the first trigger events for the collapse.  In 2008/2009, we saw the creation of the bailout culture, setting the stage for inflation and dollar disintegration.  In 2010, we saw the first bilateral trade deal cutting out the dollar between China and Russia, which is now the template for trade deals all over the globe.  In 2011, we saw the first downgrade of the U.S. credit rating and the crisis in the EU become epidemic.  In 2012, I see not just another difficulty to add to the mountain, but a culmination of all these detriments to produce something entirely new; a vast and subversive realignment forcing many of us to take a more aggressive stance in the fight for an economically and socially free America.

Financial disasters have always been a convenient catalyst for a host of even more frightening obstacles, including civil unrest, and blatant totalitarianism.  This is the cusp.  It is one of those moments that people of later generations read about in awe, and sometimes horror.  The “doom” is not in the event, but in the response.  What we make of the days approaching determines the darkness that they cast upon the future.  It is a test.  It is not something to be dreaded.  It is something to be seized upon, and dealt with, as great men and women before us have done.  At the very least, we know that it is coming.  That, in itself, could well seal our success…


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Tue, 05/08/2012 - 08:52 | 2406003 fonzannoon
fonzannoon's picture

There's the gold smash down everyone was waiting for. 1585 by lunch?

Tue, 05/08/2012 - 08:56 | 2406012 maxmad
maxmad's picture

Dollar will be all but dead by the end of 2012!  China is short the dollar preparing for the collaps!

Tue, 05/08/2012 - 09:16 | 2406089 LawsofPhysics
LawsofPhysics's picture

If you are correct then I personally cannot wait to recieve gold in exchange for my next shipment of soybeans to China!  Pssst-everyone is shorting everyone's currency because they know all central banks are manipulating the shit out of them.  Wake the fuck up already.

Tue, 05/08/2012 - 09:34 | 2406167 hedgeless_horseman
hedgeless_horseman's picture



I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.

In exchange for what? 









Tue, 05/08/2012 - 09:36 | 2406177 fonzannoon
fonzannoon's picture

I love the argument that because something has not been created yet means there is no possible alternative.

Tue, 05/08/2012 - 09:38 | 2406186 mophead
mophead's picture

Mo QE bitchithz

Tue, 05/08/2012 - 09:49 | 2406241 SilverTree
SilverTree's picture

Silver is on sale today.

Tue, 05/08/2012 - 09:51 | 2406258 Clueless Economist
Clueless Economist's picture

Pshaw..I will be worried when Jimbo Cramer is worried.

He was crowing last night that things are looking great because the Panera Bread and Chipolte's near his home in Short Hills NJ were PACKED!!!


Tue, 05/08/2012 - 09:56 | 2406281 pacu44
pacu44's picture

BOOOOYAHHHH CRAMER did say the pigs were ready for slaughter !

Tue, 05/08/2012 - 10:21 | 2406409 whstlblwr
whstlblwr's picture

Ron Paul Subcommittee to Examine Proposals to Reform or Abolish Federal Reserve

on CSPAN now.

Tue, 05/08/2012 - 10:29 | 2406461 Money 4 Nothing
Money 4 Nothing's picture

LOL! Good luck with that Political Kabuki theater! great entertainment though.

Tue, 05/08/2012 - 10:29 | 2406469 Popo
Popo's picture

"War is coming, Ned"

Tue, 05/08/2012 - 11:22 | 2406716 Xkwisetly Paneful
Xkwisetly Paneful's picture

War is always coming and has always been coming since dirt turned brown and decimating every military in the world won't change that.


How can anyone around here not be worried?

No fear, 26 pieces will be posted today to scare you if you are not already worried.

Largely from the same myopic POV and largely regurgitating the same crap over and over and over again. If you are already worried and insecure you have come to the right site for your daily affirmation.

Tue, 05/08/2012 - 11:25 | 2406730 francis_sawyer
francis_sawyer's picture

Maybe we could all just agree to have a "Dancing With the Stars" International Olympics, winner take all, to decide who goes home with all the loot...

Tue, 05/08/2012 - 11:52 | 2406843 redpill
redpill's picture

"The “doom” is not in the event, but in the response."

This is a critical concept in the coming turmoil, and perhaps the least understood.

Tue, 05/08/2012 - 12:20 | 2406974 francis_sawyer
francis_sawyer's picture

I thought the 'doom' was in the Balabushka...


Tue, 05/08/2012 - 12:32 | 2407018 chunga
chunga's picture

Redpill, yesterday I predicted SEC would sue BAC...I meant to say indict.


Tue, 05/08/2012 - 11:27 | 2406736 Popo
Popo's picture

That "myopic POV" seems to be empirically supported by history.

Tue, 05/08/2012 - 11:29 | 2406754 Xkwisetly Paneful
Xkwisetly Paneful's picture

and the sun is immature.

Tue, 05/08/2012 - 11:34 | 2406775 Xkwisetly Paneful
Xkwisetly Paneful's picture

Empirical history shows that the world floods into US bonds and dollars when things get dire,

to the point that at the worst times, they pay the US federal goverment to hold their fiat via negative yields.

Anything to the contrary is not empirical history it is ancient history.

and want to go to the endgame, it always ends in rioting and violence regardless of the amount of government intervention.  But the sun is still immature so who cares?


Tue, 05/08/2012 - 12:22 | 2406970 akak
akak's picture

All you need to add to your babbled inanities is the repeated phrase of "US Citizenism", and your identity here will then be fully obvious.

Tue, 05/08/2012 - 14:11 | 2407464 TheFourthStooge-ing
TheFourthStooge-ing's picture



Tue, 05/08/2012 - 12:23 | 2406981 Killtruck
Killtruck's picture

"Anything to the contrary is not empirical history it is ancient history."

Clearly nothing can be learned from ancient history, because this time it's different. It's so useless in fact, that we really only keep it around out of a sense of tradition.

Tue, 05/08/2012 - 13:52 | 2407371 matrix2012
matrix2012's picture


-deleted - unreadable due to indentation :-(


Tue, 05/08/2012 - 11:59 | 2406881 IToldYouSo
IToldYouSo's picture

also supported by numbers too

Tue, 05/08/2012 - 09:59 | 2406306 WatchingIgnorance
WatchingIgnorance's picture

Its cool. While he is celebrating, I am stealing his shit first.

Tue, 05/08/2012 - 11:23 | 2406723 dogbreath
dogbreath's picture

he didn't see the 2 for 1 kids eat free sign.

Tue, 05/08/2012 - 13:14 | 2407184 Rikky
Rikky's picture

i live close to cramer and frequent the panera and chipotle's he does.  short hills and the immediate surrounding towns are upper middle class think family income north of $200k.  they live in their own little bubble around here and don't understand what's going on in 90% of the rest of the country.

Tue, 05/08/2012 - 10:01 | 2406319 WatchingIgnorance
WatchingIgnorance's picture

Good reply. People also don't realize that you don't need fiat currency. I can make something you need and exchange it for something I need.

Barter bitchez!!

Tue, 05/08/2012 - 10:14 | 2406380 LawsofPhysics
LawsofPhysics's picture

Cannot wait to see companies like goldman sucks and GM bartering, it will be epic.

Tue, 05/08/2012 - 10:31 | 2406475 fonzannoon
fonzannoon's picture

Goldman has warehouses full of commodities. They will have no problem bartering.

Tue, 05/08/2012 - 10:53 | 2406589 LawsofPhysics
LawsofPhysics's picture

Bashhhhha ha hahha ha ha ha!!!!!   Sure they do.  Let me know how that works out for you when you try to take delivery!! (just like MF-Global clients)


Tue, 05/08/2012 - 13:31 | 2407263 CPL
CPL's picture

They have the slimmest line of JIT goods on the planet.  Most of those parts that come from the auto industry are from a company called Axel (, even then, they build parts on order.


so unless someone wants a block of a universe saturated with a recycling and scavenging business, I don't see the large corp making it very far.



Tue, 05/08/2012 - 12:25 | 2406986 natty light
natty light's picture

You can't print whiskey.

Tue, 05/08/2012 - 10:17 | 2406399 LawsofPhysics
LawsofPhysics's picture

Unless your "alternative" is backed by something fucking real, no-one will give a shit.  Thanks for showing additional support for the gold/commodity standard.  Oh, that isn't what you meant?  LOL!

Let me guess, your "bit coin" will save us all?  Fuck you, I produce real commodities, now give me something fucking real in exchange if you want to live.

Tue, 05/08/2012 - 18:32 | 2408423 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

hate to be the one to break the news for you, but bitcoin, based only in supply & demand and the laws of mathematics, has been for 2012 more expensive/valuable than all other currencies in the globe.  All of them.  Make that what you wish.

Tue, 05/08/2012 - 12:27 | 2406996 sunaJ
sunaJ's picture

Remember the "Amero" conspiracy following NAFTA  (American dollar union with Canada, U.S., and Mexico)?  Now we are speculating that the dollar may not be  intact by the end of the year.  What a world.  The forthcoming alternatives will be black market, barter, silver, gold and whatever central planning tries to impose.  It will be chaos.   Strap yourself in, boys!

Tue, 05/08/2012 - 09:39 | 2406182 francis_sawyer
francis_sawyer's picture

I see what you did there...


The odd thing is is that Hugh (You should start panicking) Hendry was now, just the other day, talking about being dollar bullish...

So I guess HE thinks...

Tue, 05/08/2012 - 09:38 | 2406189 Badabing
Badabing's picture

hey HH i'm someone.

In 1933 they (the Fed) printed more dollars than gold, and they (the Fed) said we where experiencing a gold shortage! A fucking GOLD SHORTAGE? We don’t consume gold; all the gold ever mined is still here.

What we where experiencing was a dollar surplus.

Today is no different too many dollars and not enough products. This will not end well. They can use the markets to suppress the price of everything and make the dollar look strong but they can’t make food or oil or gold.

The world is awash in fiat and everyone has dibbs on a limited supply of the real stuff that keeps the world going. What the fuck gives them (THE FED) the right to starve people?


Tue, 05/08/2012 - 09:42 | 2406199 hedgeless_horseman
hedgeless_horseman's picture



Ok, be someone and answer the question...

"...foreign nations to drop the dollar as the world reserve."

In exchange for what?

Tue, 05/08/2012 - 09:44 | 2406221 GeneMarchbanks
GeneMarchbanks's picture

You must break free of Hegelian dialectics.

Tue, 05/08/2012 - 09:59 | 2406251 hedgeless_horseman
hedgeless_horseman's picture



Bullshit.  Let us hear some thesis statements on this question. 

The RMB?  Back it up.

Some new BRICS currency, on Brandon's timeline? 

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.

It was a good movie, and Jane was hot despite being a commie pinko, but the imminent demise of King Dollar continues to be greatly exagerated. 

The world leadership is all on the petrol dollars.  Good luck ending that racket.

Tue, 05/08/2012 - 10:14 | 2406335 Paul Atreides
Paul Atreides's picture

1. Provide US dollars to the increasingly desperate IMF for more voting rights, just like the BRICS just agreed to do.

2. Setup bilateral currency deals with my largest trading partners with quarterly or yearly deficits to be paid in gold*.

3. Exchange US Dollars for tangible assets on the market ie: Oil, Gold, Silver, Corn, Grain, Copper, Steel, Manufactured goods etc...

4. Steadily sell my position to UST and US paper.

5. Purchase US Military hardware with worthless US dollars to beef up my defences.

6. Urge my countrymen to start saving in precious metals and have my Treasury by up as much gold and silver as possible.

7. Play along with the western MSM/US foreign policy and just when the SHTF I would deport/eliminate all the Rothschild Zionist banking scum that infiltrated my country, banks, media and government.

*Gold will become the mechanism for final settlement, the new reserve currency. With bilateral trade agreements you only need enough to cover the deficit with gold NOT all trade.


Tue, 05/08/2012 - 10:22 | 2406417 LawsofPhysics
LawsofPhysics's picture

You are correct sir.  The dollar will be replaced and a gold/commodity standard will replace it.  Arguing that the dollar will lose reserve status is pointless unless you have something fucking real to replace it.

Tue, 05/08/2012 - 11:22 | 2406698 Popo
Popo's picture

Right, because you believe the dollar is backed by nothing.   It's just vapor, right?

It's a popular belief but in order to believe it, you have to believe that markets just "haven't figured it out yet".  And when they "get it",  the USD will all fall apart.

That belief, in turn, is predicated on the belief that markets are dumb, inefficient and misguided  -- And that you're "right" and the majority is "wrong".   And that indeed could be the case.

Or you could take the position that the dollar is backed by oil.  Which in turn is backed by the petrodollar.  Which in turn is backed by the biggest military in the history of the world, with bases strategically located throughout the oil producing centers of the world,  and active military engagements controlling production and supply.   Demand for dollars is indeed synthetic -- but it's there nonetheless.

Yes -- the US is fraying at the edges.  Yes, the US is in very deep shit economically.   Yes, the banking system is deeply insolvent.  But power -- militarily speaking -- is still power.  And America is not suffering a post-Soviet style power-slump.   Quite the opposite.    America is still unchallenged despite the rhetoric of a rising China,  who last time anyone checked still doesn't have the capacity to globally project air power (at all).

It's politically incorrect to say it, but it's the truth:   America is a military empire.   And it is the military that backs her currency through military and geopolitical control of energy resources.   Until the military is threatened, there will not be a replacement to the dollar.

Will that day come?   Yes.  Of course it will.  No empire lasts forever, and America is being stupid -- so they will eventually lose.   But betting against the house, when the house is armed to the teeth is generally considered a bad move.


Tue, 05/08/2012 - 11:26 | 2406729 LawsofPhysics
LawsofPhysics's picture

Popo, I served my country.  Did you?

America will remain a military power so long as you are willing to sacrafice yourself or your children for the "leaders" you vote for.  Why don't you go think about that for a while.  Lot's of people talk about America's military, yet they didn't serve or don't know shit about how it works.

Take the creed of the Marines for example (Unit, Corp, God, and Country).  Notice that "Country" is the last priority on the list.  It is that way for a reason.  A military coup is a very real possibility that most paper-pushers and the average stupid American think will never happen.  Better think again.

Tue, 05/08/2012 - 11:32 | 2406746 Popo
Popo's picture

Are we all American here on the Internet?   News to me!   I am, however quite familiar with the US military.

And I agree with you about a military coup potential in the US.   Historically speaking, that would not be outside the realm of possibility if things got ugly.

Tue, 05/08/2012 - 11:55 | 2406869 Hugh_Jorgan
Hugh_Jorgan's picture

"It was a good movie, and Jane was hot despite being a commie pinko, but the imminentdemise of King Dollar continues to be greatly exagerated. 

The world leadership is all on the petrol dollars.  Good luck ending that racket."


I agree but I think you missed a salient point; Brandon asserts that QE3 will be triggered by EU chaos which I think is valid. However, I think it is important to point out that the Euro-Collapse will likely be the very reason that investors will flee TO the USD in the short term, therefore no dropping the USD as reserve currency. It won't be until the USA finally (and fully) reveals the extent of its rotten core of concentrated ignorance, debt and economic malaise, that anyone will be able to realistically try to look at a new reserve currency.

Tue, 05/08/2012 - 11:30 | 2406758 centerline
centerline's picture

I think that the most direct comparison one can make to the former USSR is that we (US) are more likely going to rot/rust from the inside out than find ourselves out gunned.  The threat to the military you talk about very well could be socio-economic in nature.



Tue, 05/08/2012 - 11:41 | 2406807 blunderdog
blunderdog's picture

This just isn't right, though:

  Until the military is threatened, there will not be a replacement to the dollar.

The US military is the most powerful on Earth, and there's no meaningful threat from GUNS.  But "the military" can fall to pieces in a matter of months if the money flows are severely impacted.  The cause of the disruptions isn't at all relevant.  There needn't be any "threat" for it to collapse. 

Can't expect to maintain esprit de corps amongst a bunch of the underclass who aren't being paid.

Tue, 05/08/2012 - 11:50 | 2406852 Xkwisetly Paneful
Xkwisetly Paneful's picture

THe good thing is once the military is done the US debt problems are over,

just like how decimating the militaries of Greece, Portugal, Spain, the UK and too many others to count cured the Euro debt woes.


Tue, 05/08/2012 - 12:15 | 2406959 blunderdog
blunderdog's picture

You really don't make much sense, dude.  What's your native language?

Tue, 05/08/2012 - 12:26 | 2406991 akak
akak's picture


You really don't make much sense, dude. What's your native language?

Apparently, flatulence.

Tue, 05/08/2012 - 13:16 | 2407190 DaveyJones
DaveyJones's picture

and unfortunately not the silent ones

Tue, 05/08/2012 - 18:09 | 2408368 matrix2012
matrix2012's picture

"and unfortunately not the silent ones"

DJ, very well said... ALOL !!!

Tue, 05/08/2012 - 12:24 | 2406984 LawsofPhysics
LawsofPhysics's picture

Not quite.  At the end of the day, the Military does not care about "money flows".  Trust me, the military takes what they need/want.  I think what you meant to say was that the military can fall in a matter of months if the supply lines are cut.

Tue, 05/08/2012 - 12:47 | 2407063 blunderdog
blunderdog's picture

No, that's not at all what I mean.  My perspective seems to be about inverse to yours. 

"The military" as an institution IN THEORY doesn't care about money flows.  IN PRACTICE the reason people join the military is for MONEY.

The Federal government has the theoretical ability to continue cutting checks to everyone forever.  IN PRACTICE things go wrong with some electronic funds infrastructure somewhere and they're shut down, same as anyone else. 

Are you suggesting that all the 20 year olds are going to keep obeying orders after a few weeks or months of not seeing their paychecks?  How about the middle-aged NCOs, the real glue of the system?  The officers?

Let's even say they do--let's say the actual servicemen will be 100% completely loyal to the country despite a bit of uncertainty. 

What about all the "vital support functions" that are performed by private contractors for triple the salaries of the combat units?  You think the KBR truck drivers are going to keep hauling supplies based on promises from the Treasury and/or Obama that they'll get their money soon?

This empire ends when the electronic money network breaks.

If SUPPLY LINES break, the individual units will take what they need.  It's easy to find food, water, and shelter when you're a well-organized band of professional killers.  They'd probably even maintain a fair degree of patriotic loyalty in the face of such hardships.  But they have to believe they'll be paid--them's the rules.

Tue, 05/08/2012 - 12:11 | 2406886 DaveyJones
DaveyJones's picture

much of what you say is truth and most of history and human nature support your logic. History also shows us that in the latter part of its life, an empire's military becomes an accellerating liability as costs rise, colonies resist, and competitors strategize and build. Everything happens a lot faster these days. This may also be the new experiment on a lot of grounds - the speed of international economies and their computers, the difficulty in keeping secrets, the dependency and decline of fossil fuels, the sheer size of the rest of the world, the percentage of its participation - in both consumption and production and finally, the rate that 7 billion others are catching up and moving beyond our creaking, arrogant edifice. Time will tell.     

Tue, 05/08/2012 - 12:56 | 2407108 JimBowie1958
JimBowie1958's picture

Or you could take the position that the dollar is backed by oil.  Which in turn is backed by the petrodollar.  Which in turn is backed by the biggest military in the history of the world, with bases strategically located throughout the oil producing centers of the world,  and active military engagements controlling production and supply.

So the development of new energy generation technology would hurt the US dollar, no??

Muon fusion, thorium fusion, nickel-hydrogen fusion, and 'bubble fusion' all are showing promise. If even one breaks out into the markets (Goldman Sachs is backing some of the bubble fusion stuff), then the demand for oil drops and t  hen what happens to the USD?

Tue, 05/08/2012 - 11:00 | 2406608 NorthPole
NorthPole's picture

And where do you see a politician anywhere in the western world - heck! - anywhere in the world capable of doing that? You are dreaming. I dont deny that contrary to popular opinion there are some politicians that appear to understand whats going on, but they stand no chance go survive long enough to implement your plan.

I hope the system will collapse by itself, under the weight of its own hubris and debt. Just help it a little bit - get rid of fiat, pay as little taxes as you can, stop feeding it.

Tue, 05/08/2012 - 12:08 | 2406615 DaveyJones
DaveyJones's picture

I suspect this scenario

(with added chaos, theft and violence)

Tue, 05/08/2012 - 13:10 | 2407173 Matt
Matt's picture

Excellent, especially #2; you don't need to buy everything with gold, you just need it to resolve trade imbalances. (Looking at the international trade level post-USD Hegemony)

Countries would also need to be able to use tarrifs to prevent their citizens from importing too much from one specific country, to prevent the nation from running out of gold.

Tue, 05/08/2012 - 11:03 | 2406452 GeneMarchbanks
GeneMarchbanks's picture

Simple. Microcosm:


With a likelihood of SDRs and a BWII type event in between. The long term trends are in place.

Tue, 05/08/2012 - 09:53 | 2406265 Badabing
Badabing's picture

Ok, be someone and answer the question...

"...foreign nations to drop the dollar as the world reserve."

In exchange for what?


Tue, 05/08/2012 - 10:04 | 2406320 hedgeless_horseman
hedgeless_horseman's picture



Chaos is certainly a viable option, especially when brought on by world war, with rampant nationalism that results in a return to local currencies, reduced global trade, and little need for a reserve currency.

Replacing the dollar with NOTHING is indeed a possibility.

Tue, 05/08/2012 - 10:15 | 2406387 Badabing
Badabing's picture

Too much TV for Me Get Smart Kaos for chaos my bad LOL

Tue, 05/08/2012 - 11:32 | 2406770 Transformer
Transformer's picture

"...foreign nations to drop the dollar as the world reserve."

In exchange for what?


Could it be any more obvious?

1.  What do all nations already have as part of their reserves, and they all agree is most valuable?

2.  What was the standard reserve currency before the dollar?

3.  What new reserve currency would cause the most turmoil in the US and Europe?

4.  What new reserve currency is already beginning to be utilized in ME/Asia?

Gold, of course,  And it would hit the US and Europe the hardest, because Fort Knox is empty, and Europe has entrusted their gold to New York/London bankers to store it for them.  LOL!!  Part of this whole game, that hardly anyone talks about, is the Elites/NWO need to destroy the West, as it is the world source of Democratic ideas and freedom.  They must do this, in order to achieve total control of the world.  They will fail, of course.  But it sure will make a mess of things.

Tue, 05/08/2012 - 11:40 | 2406805 Xkwisetly Paneful
Xkwisetly Paneful's picture

Tons and tons and tons of dropping going on.

Are you people so oblivous?

Seems almost impossible!

The dollar is nearly as relevant as it was 40yrs ago despite the creation of the EURO.

There is no other viable standard bearer, else money would not have flowed into the US at titanic proportions at the height of this panic back in DEC 2008. 

Or we can just ignore reality and play pretend.



Tue, 05/08/2012 - 12:13 | 2406943 putaipan
putaipan's picture

pre-2008 frn's bitches!

Tue, 05/08/2012 - 11:05 | 2406577 NorthPole
NorthPole's picture

It does not have to be a sudden crash. I am also of the opinion that the dollar will linger on for decades still. Its demise however is already underway. Just 10 years ago 70% of world CB reserves were kept in dollars or dollar-denominated assets; last year that figure stood at 60%. In another 5 years we can very well see it drop to 50%, and when it drops a bit further, it will be concievable to anyone (including Krugman) that there is a real alternative, whatever it may be - the BRIC central bank fiat, gold or simply nothing (why there has to be a world reserve currency again?)

Tue, 05/08/2012 - 13:21 | 2407221 Matt
Matt's picture

"how did you go bankrupt?"

"two ways: slowly at first, and then suddenly"

Moving off of USD as a reserve will likely be a rapidly accelerating phenomenon, rather than a gradual, linear slide.

Tue, 05/08/2012 - 11:05 | 2406642 goldsaver
goldsaver's picture


In exchange for what?


Yuans. There, question answered.

Tue, 05/08/2012 - 11:58 | 2406878 Milestones
Milestones's picture

Only when the Yaun decouples from the $$. Watch the Yuan drop 33% minimum          Milestones

Tue, 05/08/2012 - 12:21 | 2406978 TGR
TGR's picture

Yuans and Yaun in back-to-back posts.



Tue, 05/08/2012 - 12:15 | 2406958 putaipan
putaipan's picture

little head dead prez fictional reserve paper bitches ! get ya some.

Tue, 05/08/2012 - 09:41 | 2406203 francis_sawyer
francis_sawyer's picture

Not to give TPTB any ideas, but if they came out with a propaganda campaign to inform the world that all the previous gold mined in the world had been melted down to produce FRN's, the idiot people would probably fall for it...

Tue, 05/08/2012 - 09:47 | 2406237 Sweet Chicken
Sweet Chicken's picture

+1 Brilliant! lol

Tue, 05/08/2012 - 10:17 | 2406398 francis_sawyer
francis_sawyer's picture

Hey, u never kno... They gobbled up the 9/11 ruse like it was free popcorn chicken day at Popeyes...

Tue, 05/08/2012 - 11:41 | 2406809 krispkritter
krispkritter's picture

Free popcorn chicken at Popeyes! Oh goody, I'm headed there right now...

Tue, 05/08/2012 - 09:52 | 2406261 5880
5880's picture

the fed issued bonds to counteract the gold (liquidity) imported from europe

big mistake

I have no idea what you're saying. the inflation of 33 came AFTER the huge deflation creating a normalized rate. Gold was crushed before it rallied. something not many here understand

Tue, 05/08/2012 - 11:07 | 2406327 Badabing
Badabing's picture

It’s simple people wanted gold for FRN’s and they (THE FED) didn’t have enough gold for the amount of paper shit they (THE FED) printed.

 “Gold was crushed before it rallied.”

Are we talking about the same 1933? Gold didn’t rally at all it was fixed at $20 an oz and after a decade of dust settled it was FIXED at $44.22




Tue, 05/08/2012 - 11:05 | 2406641 toady
toady's picture

I agree that gold/silver will get crushed, along with everything else.

I would rather have gold/silver on the other side of the crash than FRNs, although I'm sure I'll still have some FRNs to wipe with...

The trick right now is to time your purchase to get the lowest price, but before FRNs are worthless.

'Never try to time the market'....

Better a month early than a second too late!

Tue, 05/08/2012 - 12:04 | 2406900 Milestones
Milestones's picture

Better a month early than a second too late!

Exactly the opposite the planting of crops; especially when planting produce/garden crops.            Milestones

Tue, 05/08/2012 - 10:01 | 2406314 centerline
centerline's picture

Precisely.  We benefit from the demise of other currencies because there just isn't a viable alternative that does not impair nations even further.  Dying Euro will imply king dollar, not a run from it.  Of course, that comes with some other nasty problems.  But that is another subject alltogether.


Tue, 05/08/2012 - 10:12 | 2406374 Jake88
Jake88's picture

Good point.  Perhaps there won't be a global currency right away. There's no law.

Tue, 05/08/2012 - 10:49 | 2406418 Widowmaker
Widowmaker's picture

QE never stopped.

Savers and risk averse are being plundered with ZIRP.  Do you need a messenger to tell you inflation is eating your lunch so failure-finance Inc. gets the fat calves?


Tue, 05/08/2012 - 12:30 | 2406997 MrPoopypants
MrPoopypants's picture


There have already been bilateral trade agreements that preclude dollar usage - Russia and China for example.  The dollars that Russia and China might have used for trade with each other, instead enter a smaller dollar-based market.  This weakens the dollar as a reserve currency both in terms of its purchasing power and in terms of its prestige, since it claims a smaller portion of world trade.

I doubt we will see an outright dollar collapse, but we will see more and more bilateral, trilateral, and regional trading agreements that rely on some other medium of exchange.  As the dollar slowly becomes marginalized in this way - as has already been happening - I expect to see the introduction of another reserve currency to operate in parallel with the USD as it is gradually phased out of the system.  This is a job for the IMF, the BIS, and other architects & engineers of the global financial order, who have repeatedly made known their desire for the replacement of the USD.

QE3 will accelerate this process, and that is precisely the point.

Tue, 05/08/2012 - 13:46 | 2407353 thursday0451
thursday0451's picture

There won't BE a world reserve currency after this.

Globalism will fall apart. 

There will be trade/financial/currency regionalism.

There will be no clear financial world hegemon. Simply because one hegemon is on his way down does not mean that another is on his way up.

China will be strong... but mostly in East Asia. American states will likely conduct inter-state trade in Dollars, and maybe the Canadians and Mexicans will accept Dollars as well, but expect local currencies to start popping up, or at least local black/grey markets to step in, all over the place. Same story for Europe, the Euro may still be used for inter-state trade purposes but expect local currencies to make comebacks. South America seems to see the writing on the wall... they've never liked globalism anyway. Same with the Mid East.

Tue, 05/08/2012 - 14:00 | 2407425 PivotalTrades
PivotalTrades's picture

metal cetificates

representing some portion of a gold/siver/copper ingot 

Tue, 05/08/2012 - 21:33 | 2408737 LongBalls
LongBalls's picture

SDR's. Look em' up. Then here will come the cashless push. Get ready or get lube.

Tue, 05/08/2012 - 11:27 | 2406739 Xkwisetly Paneful
Xkwisetly Paneful's picture

HAHAHAHAH if he is right, something that never, ever happens around here!

Yea it's died 43times since 1974 and all the while it is still responsible for 65% or thereabouts of worldwide commerce.

Funny ain't it, it was 73% of thereabouts 40yrs ago before a thing called the EURO was invented to supposedly supplant it.


DEC 2008 when worldwide economic shit hit fan.

US treasuries yielded under transaction costs. They paid the US government to hold their fiat, how does that jive with your asinine prediction exactly?  the dollar will be the last fiat standing unless we completely suspend disbelief.


Tue, 05/08/2012 - 12:44 | 2407016 akak
akak's picture

Blinkered and conventionalistic, conformist, pro-status-quo idiots like you never seem to grasp that there is a GIANT difference between the actual US dollar --- whose purchasing power is constantly and steadily eroding --- and the artificial, arbitrary, contrived and divorced-from-reality currency daytraders' tool of the US Dollar Index.  The US dollar is already dying, and has been dying for decades, and that includes its reserve currency status, all your furious and hysterical denials to the contrary.

Tue, 05/08/2012 - 15:21 | 2407770 DaveyJones
DaveyJones's picture

well said

Tue, 05/08/2012 - 13:35 | 2407299 Matt
Matt's picture

The Euro was ill-conceived; they should have used Euros in addition to national currencies, rather than in-place of, or they could have restricted deficit spending from the get-go. Now, I doubt there is any way to keep the Euro in its current form.

The difference is that in 2008, it was a sudden unexpected panic out of the blue for anyone who wasn't connecting the dots from LTCM to Bear Stearns to Lehman and AIG. Now, they've had 4 years to prepare for the next big event.

When Euro goes down, there will probably be another rush back into USD and UST for one last big rally. However, I don't think that'll last long, as the money will flow back out into other assets. 

Tue, 05/08/2012 - 09:44 | 2406215 1100-TACTICAL-12
1100-TACTICAL-12's picture

Is silver a buy here or is there more beatdown to come?

Tue, 05/08/2012 - 10:22 | 2406416 kridkrid
kridkrid's picture


Tue, 05/08/2012 - 10:24 | 2406431 Widowmaker
Widowmaker's picture

Silver (and gold) is the next generational transfer of wealth.

If you are young (under 50) do not buy, if old, buy for the above reason.

Tue, 05/08/2012 - 10:35 | 2406497 IrritableBowels
IrritableBowels's picture


Tue, 05/08/2012 - 10:49 | 2406576 Killtruck
Killtruck's picture

Also - if you enjoy eating, buy. If you do not like eating, do not buy.

WTF kind of advice are you giving?

Tue, 05/08/2012 - 11:16 | 2406675 Widowmaker
Widowmaker's picture

Generational play cycling the PM's. 

Munger is right, metals are fear, nothing productive whatsoever (except buttons and closet fear). 

The generational "push" is over 50's (prepping for retirement) cash out of bullshit paper and accumulate PM's. Upon their demise it goes to the next of kin - leaving the fraud finance cartel out.

The young need employment, not PM's - so holding PM's is not prudent for a long duration, not to mention other risks like theft, misplacement, irate girlfriends, etc.   Sell. 

PM's come at the end of the generational cycle and held short term.

This won't be the last time you hear about this.  Who the fuck do you think is buying PM's?  25%+ unemployed??

Tue, 05/08/2012 - 11:47 | 2406838 blunderdog
blunderdog's picture

How does selling my gold get me a job, though?

Tue, 05/08/2012 - 12:11 | 2406933 dark pools of soros
dark pools of soros's picture

Gold is a store of wealth nothing more..   if you are poor you have no wealth to protect.    But even if you are poor, you would be a fool to not have at least 1oz of gold and a handful of silver so you can keep your wits in the storm a coming



Tue, 05/08/2012 - 12:19 | 2406971 blunderdog
blunderdog's picture

Can you answer for WidowMaker, or are you as puzzled by him as I am?

Tue, 05/08/2012 - 12:47 | 2407061 Killtruck
Killtruck's picture

I see. So you don't see PM's as a store of wealth/converted human labor, but rather fear? Nothing productive? Is that why we so rarely use silver in industry?

True, the young need employment, but in times of crisis a store of wealth allows those young to maintain capital when there is no employment to be had. As far as irate girlfriends, there's always a risk with any store of value. I'd personally prefer the risk of an irate girlfriend as opposed to a desperate bernanke. Age has very little to do with this whole thing though. The real matter we're talking about is that if there's a shitstorm coming, you should find out which way the wind is blowing and try not to get any on you.

In my mind, if you're over 50, you should be buying PM's to cash out of the paper assets so the Fed doesn't print away your life's labor, and everyone who is currently employed that wants to be saving but is getting nothing in interest on savings should be "saving" in PMs instead. I agree with you that everything is cyclical and PM's are not prudent for a long duration (as far as profits are related), but the reasons PMs were good for the Romans are the same reasons PMs are good for us today.

Tue, 05/08/2012 - 12:48 | 2407064 LawsofPhysics
LawsofPhysics's picture

Contradict yourself much.  How about this.  You are young, have a job and want to be your own bank in the future.  Why not by all the gold and silver you can right now and all the way down during the short deflationary spiral?  Regardless of the "fiat du jour", you will be well positioned.

Never knew a PM holder who starved, that is for sure.  Morevover, I hear all this talk that gold is no good for the "long duration".

Seems to have held up for a few thousand years, is that not long enough for everyone?

Tue, 05/08/2012 - 12:54 | 2407102 Golden monkey
Golden monkey's picture

Right. Smart money is buying PM's.

Most employed don't, however. Foolish dumbs are everywhere now.


Tue, 05/08/2012 - 10:39 | 2406528 qmhedging
qmhedging's picture

It's rumored that china will have some serious clashes with Philippine for some islands on south china sea very soon

Tue, 05/08/2012 - 11:10 | 2406674 toady
toady's picture

Huh... the US was there for a LONG time... you would think they would've stole all the natural resources back then...

You think there's oil under there?

Tue, 05/08/2012 - 12:13 | 2406948 Cast Iron Skillet
Cast Iron Skillet's picture

sounds like a very balanced conflict ...

Tue, 05/08/2012 - 13:49 | 2407370 Matt
Matt's picture

The Phillipines probably has a better Navy. Is China close enough to these islands they can use land based air fields, or will they be relying on their one aircraft carrier?

Tue, 05/08/2012 - 10:44 | 2406554 AGuy
AGuy's picture

LOL! You could not be more wrong. You see China is holding a lot of US Money (cash and bonds). Its not going to dump and take a huge loss, much like a investor who lost money on a stock isn't going to sell it at zero, but at the best market price they can get. China, is going to slowly convert its US money into tangible assets, a process that began in 2007-2008 and continues today.

The EU collapse or breakup of the Union will buy the US dollar some time as the world focuses on its options to avoid the EU carnage. Already the price of Oil is falling under the pending breakup of the EU.

QE3 will not break the dollar. Its going to take much more time than the writer of this article claims.  Its likely that the US dollar will survive at least four more years, as the collapse of the EU will happen over a couple of years. Over the next two years we will see the PIIGS leave the Euro, whille the strong northern EU nations stand firm. Eventually the northern EU will choose to abandoned the Euro, probably through a currency diversification (pehaps countries are permitted dual currencies). The US dollar will strengthen against the Euro. Its the classic game of "I don't need to be faster than the lion, I just need to be faster than the person running next to me", which the Euro is the person running next to the US dollar.

Also consider that QE programs in other nations have gone on for very long times. Japan has done it for over 20 years, Even the Zimbawe dollar manage to survive a long peroid of QE before it collapsed. At the very worse the US dollar will experience high inflation for an extended period, lossing between 5% and 12% per inflation. The US gov't will go on printing money to keep its doors open for years during this period.

Also consider that come 2013, tax rates go up. This will likely be disinflationary for a period as consumers cut back spending in order to pay their higher tax rate.

Tue, 05/08/2012 - 11:11 | 2406673 LawsofPhysics
LawsofPhysics's picture

Pssst, everyone has been selling U.S. paper moron.  The Fed is the only buyer.  

So you contend that China is not manipulating their currency?  FAIL.

Moreover, if you are correct I still get to recieve gold in exchange for my soybeans, fine with me.

Tue, 05/08/2012 - 18:06 | 2408356 AGuy
AGuy's picture

"Pssst, everyone has been selling U.S. paper"

Yes but not dumping idiot. Selling slowly to avoid sending the dollar over the cliff. They been netsellers of the dollar since 2009 and its still hanging in. Psst, they are starting to sell and dump Euros and they will be selling Euros faster than the dollar since gonna fail first.

"So you contend that China is not manipulating their currency?"

Which way are they manipulating their currency? Up or Down? You just help validate my point.

"The Fed is the only buyer." So what that does not mean the Dollar is going to collapse tommorow or before the end of the year. You really think the dollar is going to worth toilet paper by Jan 2013? I think not.






Tue, 05/08/2012 - 11:30 | 2406760 theTribster
theTribster's picture

I don't think so. The BRICS are likely to provide a Gold backed standard currency that they require everyone to use when pruchasing from them. Counttries will have to deposit Gold to get the currency and then make the trades with BRICS. It is a brilliant strategy as outlined in Currency Wars and its clear they are positioning to do this via all thier covert Gold purchases.

The management of this currency will likely be down outside of the BRICS themselves so everyone can feel comfortable using the currency. We've been stealing growth from ALL of these countries via currency manipulation for years but the last 4 years have been nothing more than rape! The dollar is walking dead, you are right that a flight to safety will occur as the Euro disintegrates - both to the USD and the YEN. This will be short-lived however, because QE III/IV is coming our way and that WILL be enough to kill whatever confidence is left in the dollar. Regardless though, the BRICS are on a mission and they will offer a better alternative (Gold backed or commodity basket backed) than the dollar. 

The days of US financial dominance are over as are the days of the dollar being "as good as gold"! Sticking with that paradigm will likely lead you to a very bad place, very soon. The next QE won't be a QE but a direct transfer of our retirement wealth into Gubmint binds, all 54 trillion worth! That's right, they'll steal that money under the guise of "Good for America and Good for you", this will be an easy sell to Americans after the stock market implosion - maybe they'll use the new floaters they've been talking about?

The actions of our Government over the last 4 (minimum) administrations has been nothing short of Treasonous, by all the branches and almost all the members. The only way to get our country back is to purge the system and start fresh, this is unlikely. The dollar demise was predictable, especially when you look at the actions of our officials over the last two decades. Corporatocracy is the new format, sort of fascism without the ruff edges (so far). Keep printing Ben, you are sealing your own destiny as well as the destiny of all your capitalist cronies.

Since Ben doesn't understand history he is totally unaware of his fate and how he has sealed it with the destruction of our economy and currency, thanks Benny....

Tue, 05/08/2012 - 12:31 | 2407011 LawsofPhysics
LawsofPhysics's picture

Right, so I will get gold or a gold-backed currency for my sorbeans.  Thanks for being so re-assuring.

Tue, 05/08/2012 - 18:11 | 2408369 AGuy
AGuy's picture

"he BRICS are likely to provide a Gold backed standard currency that they require everyone to use when pruchasing from them. Counttries will have to deposit Gold to get the currency and then make the trades with BRICS"

I think not. That would crush there export led economies. They need to continue to diversify with a basket of currencies, but they won't demand gold since nobody A has enough gold, and B aren't likely to trade gold for oranges (Brazil), or plastic crap (Asia). If the BRICs wish to continue to export they will have to accept non-PM currencies.



Tue, 05/08/2012 - 12:20 | 2406977 LMAOLORI
LMAOLORI's picture

I disagree they still have Collateral to use (the American Taxpayers)


Hedge Funds Betting Against the Eurozone: Why You Should Worry


Obama's DOJ And Wall Street: Too Big For Jail

Tue, 05/08/2012 - 09:02 | 2406036 LawsofPhysics
LawsofPhysics's picture

Let's hope so.  I have been waiting for several years to add some more physical to the portfolio.

Tue, 05/08/2012 - 09:08 | 2406060 fonzannoon
fonzannoon's picture

Yeah it's funny that gold dropping huge gets some downvotes. Makes you wonder who the real bulls are and who the ones who just got in recently and can't handle the thought of a drop are.

Tue, 05/08/2012 - 09:40 | 2406195 fuu
fuu's picture

Bring out yer sales!

Tue, 05/08/2012 - 09:52 | 2406260 Manthong
Manthong's picture

VIX is telling you how real the flight from gold is.

Tue, 05/08/2012 - 09:45 | 2406224 Harlequin001
Harlequin001's picture

If gold goes down below 1600 I'll be selling half of my gold... and buying silver.

If it goes down below 1550 I'll be selling what's left of my gold, and all in silver, back in gold by 2000...

Should work out nicely...

Tue, 05/08/2012 - 09:08 | 2406063 ArkansasAngie
ArkansasAngie's picture

Gold is an inflation hedge ... it is not a deflation hedge.


Tue, 05/08/2012 - 09:19 | 2406100 Dr. Richard Head
Dr. Richard Head's picture

in/deflation-smation. Delfation in what?  Flat screen TVs, Home Values, cell phones, and new cars?  While I see see lower prices in goods one does not ned, I see see higher prices in goods everyone needs (food and energy).  That being said, the money supply has already been increased.

Tue, 05/08/2012 - 10:11 | 2406370 DosZap
DosZap's picture

in/deflation-smation. Delfation in what? Flat screen TVs, Home Values, cell phones, and new cars? While I see see lower prices in goods one does not ned, I see see higher prices in goods everyone needs (food and energy). That being said, the money supply has already been increased.

The way I see it we are in Stagflation(if you can get past the lies of the PTB).

Also, this is one of the main reasons for the American pandemic of FAT ass syndrome.............folks are having to eat cheap crap because real food is too damn expensive.

Tue, 05/08/2012 - 10:24 | 2406436 Dr. Richard Head
Dr. Richard Head's picture

Hence the constant GMO corn subsidies and corn ingredients in every piece of shit food out there.  Gotta feed the cattle corn I guess.  Get 'em nice and fat and juicy.

Tue, 05/08/2012 - 15:02 | 2407702 Matt
Matt's picture

I suspect it is more of a crony capitalism, Corn-lobby based problem then a price-based problem. Although eating KFC instead of home cooked food is a choice (also not price-based), actively avoiding High Fructose Corn Syrup and GMO products is fairly difficult.

Tue, 05/08/2012 - 11:43 | 2406816 Dumpster Fire
Dumpster Fire's picture

Cabbage is cheap and pretty filling.

Tue, 05/08/2012 - 09:22 | 2406116 Bastiat
Bastiat's picture

How about when "deflation" leads to loss of confidence in a currency?  Contracting economic activity means bigger deficits and this means more debt monetization; more debt monetization leads to increasing loss of confidence by foreign investors and requires more debt monetization.  Loss of confidence in the currency devalues it and leads to higher costs for imports.  The fact that the Fed prints trillions only to save governments and banks doesn't mean it is not inflationary.

Tue, 05/08/2012 - 09:28 | 2406134 WonderDawg
WonderDawg's picture

Yeah, but the trillions the Fed has printed, including what we don't know about, barely makes a ripple in the global shadow banking market. It's kept the credit bubble from deflating all at once, but when the air rushes out of the bubble by the hundreds of trillions, the Fed will be powerless to stop it.

Tue, 05/08/2012 - 09:28 | 2406142 Dr. Richard Head
Dr. Richard Head's picture

Powerless for 15 minutes only.  After that, Ben said he's got it in the bag.

Tue, 05/08/2012 - 11:15 | 2406692 justinius1969
justinius1969's picture

Bingo my man.. Debt deflation is unerway.. All those IOU's that will go PUFF..and no amount of fed printing will compensate ...consequence.. a massive shortage of the dollars, again.

Tue, 05/08/2012 - 09:25 | 2406122 WonderDawg
WonderDawg's picture

Exactly. I expect serious deflation prior to hyperinflation, so to me, gold getting hammered is just a great opportunity to phase in more buying. Especially after my recent boating mishap.

Tue, 05/08/2012 - 09:30 | 2406146 fonzannoon
fonzannoon's picture

I am going to invent a boat with a built in hole in it but the hole does not sink the boat. This way accidents can still happen but no boat repairs will be needed.

Tue, 05/08/2012 - 09:42 | 2406207 fuu
fuu's picture

I've been buying scuba gear off ebay and hiring Filipino immigrants to start scouting lakes in the US for booty.

Tue, 05/08/2012 - 09:55 | 2406283 Gully Foyle
Gully Foyle's picture


Did your moms take away your little rubber boat from bathies cause you kept slamming it into the lighthouse?

You got to be what fifteen? Who else uses "dawg" these days, except old loony tunes revivals of Deputy Dawg.

Tue, 05/08/2012 - 10:25 | 2406440 Ricky Bobby
Ricky Bobby's picture

I was wondering Gutty Fuge how much do you get paid for spewing all this disinformation, does it come with a pension and full health care benefits?

Tue, 05/08/2012 - 10:30 | 2406474 Floordawg
Floordawg's picture

Wow. I stand in awe, bathed in the glorious light of your contributive insight!

Please, let me join your exceptional club of "dawg" haters... It's really something we should all be worrying about.

Tue, 05/08/2012 - 14:56 | 2407665 WonderDawg
WonderDawg's picture

Dude. You're embarassing yourself.

Tue, 05/08/2012 - 10:06 | 2406345 LawsofPhysics
LawsofPhysics's picture

No, gold is a safe store of value because you never have problems turning it into the fiar du jour (well at least in a truly free market).

Tue, 05/08/2012 - 10:17 | 2406400 DosZap
DosZap's picture

Gold is an inflation hedge ... it is not a deflation hedge.

Epic Fail...................................its BOTH

Tue, 05/08/2012 - 11:23 | 2406724 jayman21
jayman21's picture


Try a hedge against manipulation and confidance with a fiat currency.  Look through history where you see inflation or deflation and then look a t a gold chart.  Did gold really go up/down where you thought it should?

If you have 6 free hours watch these short videos.  I am still a deer in the headlights thinking about the content.

When you are done, he has created a second video call the silvershield.  Still watching it, but I get the idea.

Tue, 05/08/2012 - 09:09 | 2406066 Stoploss
Stoploss's picture

You can always tell when HSBC is in da haiouse!!


No gold bashing yesterday, UK was closed.

Tue, 05/08/2012 - 09:38 | 2406187 Floordawg
Floordawg's picture

Bravo-Tango-Foxtrot-Delta... Over

Tue, 05/08/2012 - 10:07 | 2406342 hedgeless_horseman
hedgeless_horseman's picture



"Reeepeat. Over."

Tue, 05/08/2012 - 09:45 | 2406228 Gully Foyle
Gully Foyle's picture

Ok which one of you had an Al Gore pulled on him by Travolta?

John Travolta
Sued By Masseur
He Touched My Penis According to the lawsuit, Travolta saw the masseur's ad online, and scheduled an appointment for $200 an hour. The masseur did not know it was Travolta when the appointment was booked, but followed instructions and met up with a black Lexus SUV, which Travolta was driving. 

According to the suit, Travolta and the masseur, who says he saw Trojan condoms in the center console, drove to the Beverly Hills Hotel and went to Travolta's bungalow.

The suit claims Travolta stripped naked, appearing semi-erect. The masseur says he told Travolta to lay down on the table and the first hour went without incident. Then, according to legal docs, Travolta began rubbing the masseur's leg, touched his scrotum and the shaft of his penis. 

The masseur claims he told Travolta he did not have sex with his clients, but Travolta was undeterred, offering to do a "reverse massage," adding, "Come on dude, I'll jerk you off!!!"

The suit goes on to allege Travolta then masturbated and told the masseur he got to where he was "due to sexual favors he had performed when he was in his 'Welcome Back Kotter' days," adding "Hollywood is controlled by homosexual Jewish men who expect favors in return for sexual activity."

The masseur -- who is only listed as John Doe -- claims Travolta called him a loser, but then doubled the hourly rate and sent him on his way.

The suit seeks $2 million plus punitive damages. ( The Jew thing was the give away. Now who was it?)

Tue, 05/08/2012 - 10:43 | 2406553 _underscore
_underscore's picture

Really Sir, what are you doing on here posting these salacious & irrelevant stories? Genuine question.

Tue, 05/08/2012 - 11:56 | 2406877 krispkritter
krispkritter's picture

Guess he ran out of National Enquirer back issues and his Mom cut his internet access to 2 hours a day...

Tue, 05/08/2012 - 11:55 | 2406870 Buckaroo Banzai
Buckaroo Banzai's picture

It's a badly-kept secret in Hollywood that John Travolta enjoys gay sex.

Tue, 05/08/2012 - 11:57 | 2406873 francis_sawyer
francis_sawyer's picture

Up your nose with a rubber hose!

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