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On Europe, Inflation, And Gold.

Tyler Durden's picture



In this video Philipp Bagus, Assistant professor of Economics at Madrid’s Universidad Rey Juan Carlos and author of The Tragedy of the Euro, and Alasdair Macleod of the GoldMoney Foundation talk about the eurozone facing the problem that is characterised in the “tragedy of the commons” analogy. Bagus explains this phenomenon by way of an example of overfished and over-exploited oceans due to a lack of property rights on oceans. In Europe, governments run larger deficits than their “competitors” in order to externalise the costs to all users of the currency. Knowing these incentives, the Stability and Growth Pact was put in place as per the early 1990s Maastricht Treaty, capping budget deficits at 3% of GDP and the debt to GDP level at 60%. However there was no enforcement of these rules which is why there have already been more than 80 infringements to this stability pact without any repercussions.

They talk about possible solutions to the euro crisis. Bagus points out that there are basically three different ways to go about it. Firstly, governments could make drastic cuts in public spending and privatise public assets in order to balance their budgets. However, there will be – and is – strong political resistance to such proposals. Secondly, the eurozone could disintegrate, driven by a reluctance of German citizens to pay for other countries’ expenditures. And lastly, central banks and governments could decide to print their way out of the crisis, leading to high inflation.

Bagus says that as long as the incentive for running deficits exists there won’t be an increase in countries’ savings rates. Macleod points out that there is great institutional resistance to breaking up the euro. Bagus explains that the official opinion towards the euro is positive in Germany; however the sentiment on the streets looks quite different. But as long as there is no political party devoted to this issue this mood is not likely to gain traction at least as long as inflation remains moderate.

Amid the ongoing expansion of the money supply and persistent deficits, Bagus can’t see the dollar gaining in value over the medium to long term. He also says that ECB policies are a lot more pragmatic than the ones undertaken by the US Federal Reserve. Talking about sound money, Bagus explains different ways to go about its introduction. One way would be to back all the money in existence by gold, adjusting the price of gold accordingly. Another would be to take away legal tender laws and have competing currencies. However this would require the governments to impose dramatic reforms, which is partly why they will oppose such measures.


This interview was recorded on November 15 2011 in Madrid.


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Mon, 12/26/2011 - 17:53 | 2012244 hazek
hazek's picture

Gold bitches!

Mon, 12/26/2011 - 18:10 | 2012262 SAT 800
SAT 800's picture

"The tragedy of the Euro" is an excellent book; highly recommended. It's introduction was based on the blackmail of Germany to enable that country to re-unite. The prime instigators were a pair of life-long Socialists. They have now reached the point referenced by Maggie Thatcher; "The problem with Socialism is that you run out of other peoples money to spend."

Mon, 12/26/2011 - 18:45 | 2012306 strannick
strannick's picture

A gold standard is the last thing central banks would want. As it is, there is nothing controlling their idiotic academic powermongering schemes. 'Let me control a nation's currency, and I care not who makes its laws'.

If one presumes central banks and politicians want a fiscally responsible system, gold is the obvious answer. If one believes instead that they want power and control over the economy and citizens livelihoods, then the current system of chronic deficets will be continued.

Mon, 12/26/2011 - 18:54 | 2012317 GetZeeGold
GetZeeGold's picture


"Adjust the price of gold"




If I hear one more idiot state there isn't enough gold....blood is going to shoot from my eyes.

Mon, 12/26/2011 - 19:04 | 2012322 akak
akak's picture

Then I suggest you refrain from reading Jon Nadler, which would undoubtedly cause multiple and copious stigmata to spontaneously erupt over your body in response --- most likely accompanied by an involuntary and spasmotic release of your bowels. 

(Come to think of it, the latter much resembles everything ever written by Jon Nadler in the first place.)

Mon, 12/26/2011 - 19:56 | 2012397 Irelevant
Irelevant's picture

Another, in 1997: "You should not think they are dumb! Invest in gold mines, will you? Notice how quick the Australian CB hinted at taking "gold in the ground" if needed. This was said after their sale! The nature of the coming crisis will make the taking of investor property a piece of cake. You see, because gold is a commodity, you will be compensated at the commodity price of return + a fair profit, of course.".

Mon, 12/26/2011 - 20:06 | 2012403 GetZeeGold
GetZeeGold's picture


I was there in 97 when ANOTHER was making his posts. I did a rough calc on the true value of gold and about hacked a fir-ball.

People used to laugh at me for buying gold back then......they don't anymore. Math is your math?

Mon, 12/26/2011 - 20:36 | 2012436 Irelevant
Irelevant's picture

He wasn`t just one guy, thats for sure. The postings were probably written by some asians. However they tend to be accurate, when you look at how events unfolded!

GOLDEN CHEESEHEAD ( @ANOTHER SHOCKING POST! ) ID#431263: All paper gold will be worthless just like stocks and bonds! Am I right? If not please correct!

Mr. GCH, You may be more right than wanted to be. For some it is a long torturous wait to go without paper gains. For ones outside the west, it is not hard. Days pass easily as a thousand years of history give backing TO OUR investment. "For what I hold is not an empty promise. Nor is it a major thought of debt. I am now today, paid in full!".

Asian 100%

Mon, 12/26/2011 - 21:11 | 2012475 Irelevant
Irelevant's picture

Also from another:


One new day gold will begin a rise that will end it's use as a trading medium. This reevaluation will end a tradition in London. No gold house will make a market that has no sellers, official world gold trade will end for many years! And with it will go the last true value to trade for oil. Oil will skyrocket in all currencies. Those who have metal will learn it's value in oil. All things in life change, the world will not be the same.


All these were written during the asian crissis. Oct 31 1997:

THE MARKET TURMOIL: THE TRADING; Aftershocks From Asia Hit Wall St.

Also from another:

Many wait for the next great bull market in gold to begin before they buy. Why buy now and lose interest or stock market gains? They will miss the greatest investment ever to come in ones lifetime! The powers of this world have already begun this motion. People of simple thought have but to buy physical gold and make low as the financial wars begin! You see, gold was cornered this year. It is done. No Central Bank will sell it's 50, 100, 200 million ozs gold when 600 million is needed! I ask you, how can currency price gold? Indeed, no price will work! You think any form of "paper gold" will stand this fire? Can we do battle with lions? When oil will not take currency without gold the havenots will not sit still!

"When a thousand hungry lions fight over one scrap of food, small dogs should hide with whats in their belly".

He uses alot of quotes. He is just a messenger.

Mon, 12/26/2011 - 21:18 | 2012481 Irelevant
Irelevant's picture

Another: Mr. C.B.,
The future will look back at us with respect, as we knew not what was happening! A day will come, sir, when no paper dollar will pry gold from your hands! In that day, you will be too smart for such foolishnes

The world has changed and the gold market has changed with it. We are going back in time much further than many will accept. A time when men, such as I, will take what is yours! If you hold your value in a public way, it will be taxed or taken for the good of all. Such are the ways of extream times!

Only time will prove all things. - repeats this obsessively. Probably he was writing some posts, and had someone write others. Some have no quotes, others are all quotes.

Tue, 12/27/2011 - 02:13 | 2012739 Michael
Michael's picture

"TV Channels are in close relations with corporations and with the government."

Starts around 3:00. Really trashes the MSM pretty well. 

I found this ZH piece to be extremely intellectually entertaining. Its really brilliant, yet so simple, even a cave man can understand what the assistant professor has to say. The guy is brilliant.

Tue, 12/27/2011 - 03:07 | 2012774 Michael
Michael's picture

Lets spice things up;

Israel Caught Selling 69 US Patriot Missiles to Red China

I love this comment at Daily Paul;

Do you actually think that CBS, et all is going to tie Submitted by freedom express on Mon, 12/26/2011 - 22:35.

this to Israel? The Israeli's could shoot 20 Palestinians, bulldoze a whole villiage, and the MSM et all, will report how Hamas sent 6 'rockets'(oversized fireworks) at Israel. If these Patriot missiles were going to ROK, don't you think the people on the ship, even if they didn't know what was contained in containers, would know they were to be sent to the ROK? The real question which should be asked, if these are secret technology weapons, why the hell would they send them on a cargo freighter, and not a US Navy vessel? Wouldn't they want military protection of these, and avoid the chance of pirating and capture of the contents? People need to start using common sense, instead of just reading the propagandist diversion reporting, because 95% of reporting is pre-scripted by the controlled editors.
Read this article, as even Fox, before selling out, pointed to this right after 9/11

Tue, 12/27/2011 - 04:02 | 2012806 Michael
Michael's picture

The guy in the topic being interviewd reminds me of this guy;

Aldous Huxley interview-1958 (FULL)!

Tue, 12/27/2011 - 04:15 | 2012816 Michael
Michael's picture

Who is the leader of the Ron Paul Grassroots movement? They've raised more than 20 million for Dr Paul even without the doctor's involvement. Surely there must be a leader of the grassroots movement. Who or what can raise that much money for him without a leader? I want to know who or what that person may be?

Mon, 12/26/2011 - 20:43 | 2012442 q99x2
q99x2's picture

$32.50 per ounce then adjust for inflation. Couple hundred tops. That is if they don't have to fly over with gold detecting drones and force you to hand it over. If you are not in the U.S. you might get a better deal.

Mon, 12/26/2011 - 21:03 | 2012473 GetZeeGold
GetZeeGold's picture



If you can get it for that.....I'd say go for it.



Mon, 12/26/2011 - 22:23 | 2012557 economics1996
economics1996's picture

Dude here is a link to the Fed monetary base.  Fricking use it for Gods sake.[1][id]=AMBNS

Tue, 12/27/2011 - 00:11 | 2012677 buckethead
buckethead's picture

Wholly shit!

Tue, 12/27/2011 - 01:10 | 2012723 Max Fischer
Max Fischer's picture



How, exactly, am I suppose to use the Fed monetary base?    

Max Fischer, Civis Mundi

Tue, 12/27/2011 - 10:44 | 2013419 OldTrooper
OldTrooper's picture

Wallpaper, paper airplanes, toilet paper, oragami, cat box liner...the uses are limited only by your imagination.

Tue, 12/27/2011 - 01:12 | 2012725 Oh regional Indian
Oh regional Indian's picture

Hmmmm....what about the folks who say there might be too much gold?

It's the kicker that is coming. Disclosure moments abound. The Dragon Family case may be tin-foil nirvana, but yet, it has been filed and cannot be frivolous. 

So, in this time of no absolutes, I'd shy away from making gold one such. 

And it's scarcity is a key "Freegold" lynch-pin.



Tue, 12/27/2011 - 05:39 | 2012876 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

...but where is all this gold going to come from??

Mon, 12/26/2011 - 18:58 | 2012324 Sudden Debt
Sudden Debt's picture


We need a kick ass army like the US has. We have almost double the amount of citizens so plenty of canon meat! We build kick ass weapons which we sell but don't use....

Let's just build 20 aircraft carriers, train 10 million seals, 10 million drones, and lets just kill the chinese and the arabs!


Mon, 12/26/2011 - 19:03 | 2012330 GetZeeGold
GetZeeGold's picture



You may have something. Only those in the military in the US are allowed to retire at 50.

Mon, 12/26/2011 - 19:18 | 2012344 10 Euro Münze
10 Euro Münze's picture

Liebensraum = Love room  !  :)

Lebensraum = spave to live in.

Mon, 12/26/2011 - 19:33 | 2012367 SAT 800
SAT 800's picture

Cut him some slack; he's Belgian. they speak two languages poorly. And neither one of them is German.

Mon, 12/26/2011 - 19:49 | 2012386 achmachat
achmachat's picture

trivia of the day: German is one of the three official languages in Belgium

Mon, 12/26/2011 - 19:51 | 2012391 SAT 800
SAT 800's picture

Oh, dear, my bad. sorry.

Mon, 12/26/2011 - 20:55 | 2012463 Amish Hacker
Amish Hacker's picture

This is even worse than we thought.

Mon, 12/26/2011 - 19:34 | 2012369 Sudden Debt
Sudden Debt's picture

Exactly, make love and than go to war in the Liebensraum :)

No eh.... What is "spave"?

Mon, 12/26/2011 - 19:50 | 2012390 SAT 800
SAT 800's picture

I have no idea; but I'm on your side, honest.

Mon, 12/26/2011 - 19:53 | 2012394 TheGardener
TheGardener's picture

And thus spew Zarathustra...

I got your Liebensraum sorted out below.

P.S. : How should I reference to you when using your
intellectual property rights ? SD ? Like in Sicherheitsdienst or the executing branch of the Reichssicherheitshauptamt as in homeland security ?

Tue, 12/27/2011 - 02:01 | 2012758 wandstrasse
wandstrasse's picture

Make war in the Liebesraum, not love!

Tue, 12/27/2011 - 19:51 | 2014999 10 Euro Münze
10 Euro Münze's picture

I see that "C" and "V" are next to each other on the bad..

Mon, 12/26/2011 - 20:43 | 2012443 Monedas
Monedas's picture

Liebenstraume = Wet dream !

Tue, 12/27/2011 - 20:00 | 2015004 10 Euro Münze
10 Euro Münze's picture

Just like an Alptraum is a dream of the Alps!   :)


(In German Albtraum is a "nightmare" but it sounds like "Alp")

Mon, 12/26/2011 - 19:27 | 2012358 SamAdams1234
SamAdams1234's picture

But Americans breed Meat-muppets: easier to control.

Mon, 12/26/2011 - 19:32 | 2012364 SAT 800
SAT 800's picture

De-caf. De-caf is good; it really tastes alright. You need to calm down.

Mon, 12/26/2011 - 19:33 | 2012368 TheGardener
TheGardener's picture

Stop your rants, you might be misunderstood.

500,000 standing army as Poland had for provocating against
the 100,000 Reichswehr guard ,this time well trained and equipped would be enough to stage off the muslim invasion,
just as the Poles saved us Europeans just short of Vienna
last time around.

Reverse crusade, but with your "Liebensraum" attitude, no harm to anyone, just back to each others tribe.

Mon, 12/26/2011 - 20:46 | 2012449 q99x2
q99x2's picture

You can use our army. Everybody uses our army. Bankers use our army. Drug dealers use our army. Al Queda uses our army. Prostitutes use our army. Local stores use our army. Manufacturers use our army. How much you offering?

Mon, 12/26/2011 - 20:52 | 2012454 q99x2
q99x2's picture

Biotech companies use our army. Oil compainies use our army. In fact we just passed the NDAA so we can use them against ourselves. If you need an inside number to discuss price let me know.

Mon, 12/26/2011 - 22:26 | 2012563 q99x2
q99x2's picture

Sorry for the reckless rant. A bit of indigestion from the markets being closed.

Mon, 12/26/2011 - 21:16 | 2012483 Piranhanoia
Piranhanoia's picture


Mon, 12/26/2011 - 20:08 | 2012404 Smiddywesson
Smiddywesson's picture


"A gold standard is the last thing central banks would want. As it is, there is nothing controlling their idiotic academic powermongering schemes. 'Let me control a nation's currency, and I care not who makes its laws'.

If one presumes central banks and politicians want a fiscally responsible system, gold is the obvious answer. If one believes instead that they want power and control over the economy and citizens livelihoods, then the current system of chronic deficets will be continued."



I quoted your entire comment because it was flawlessly logical (you are my guy) but unfortunately, Ben Bernanke doesn't agree with you.  He lays out his plans in his 11/21/2002 Helicopter speech and his 10/31/2003 Japan speech.  They will link fiat to gold, ramp gold prices, devalue fiat, engage in gold purchases, print like crazy, and set price targets.  That will ramp stocks and hold off the inevitable for a while.  

They will link to gold in some way, but you are not at all wrong Strannick, because there's no way in Hell they will handcuff themselves.  Gold can be manipulated to any price that suits the powers that be, a basket of currencies cannot without ruining droves of industries.  So you are absolutely right, they won't handcuff themselves, but a tad bit off in thinking they only have the option to go to a pure gold standard.  That isn't going to happen.

The game was gold was money, and they controlled gold.

The game is now paper is money, and they control paper and gold.

The game has only one place to go, back to gold and they will control the gold.

The problem is to view gold as a safe and sound economic basis.  The central banks run a shell game and it doesn't matter whether they use gold or paper as the pea, the game is won by manipulating the pea.  Don't be a sucker and think a gold standard will solve all our problems.  It's like having a crook run your company and thinking a different method of accounting is going to keep him from stealing from you.

We are going to a gold referrenced system from a paper system because there is nowhere else to go.  That doesn't mean the vampires latched to our throats are going away, but it does mean that anyone with gold, and with the intestinal fortitude to hold their PMs throughout the long road ahead, will win in the end.


Mon, 12/26/2011 - 21:26 | 2012494 Marco
Marco's picture

Gold doesn't ensure fiscal responsibility ... countries were defaulting long before they could do it through fiat devaluation.

Oops, replied to the wrong post ...

Mon, 12/26/2011 - 21:45 | 2012524 tmosley
tmosley's picture

Sure, but the point is that those who held the currency, which was gold, didn't suffer like those who went through hyperinflation.

Gold does force honesty.  The banks can't do anything to force gold holders to suffer, save for forcing them onto a quasi-gold standard or onto fiat.

Tue, 12/27/2011 - 03:29 | 2012788 AnAnonymous
AnAnonymous's picture

Another epic US citizen moment.

Cheap propaganda as good US propaganda is.

When holding money, the question is always the same: owning enough of it. Gold as a currency is not different.

Tue, 12/27/2011 - 09:34 | 2013245 tmosley
tmosley's picture

Really?  How many Zimbabwe dollars was "enough"?

No, idiot.  Owning gold is about preservation of purchasing power, and keeping said purchasing power in your nation when the monetary authorities spaz out and sell their people down the river.

Tue, 12/27/2011 - 00:22 | 2012674 cranky-old-geezer
cranky-old-geezer's picture



Good points. 

This is why mere gold backing is meaningless.   They can change the "backing rate" any time they want. 

Today it's ...oh say... $100,000 per ounce.  Tomorrow they can change it to $120,000 per ounce, no problem ...and wait 6 months to announce it publicly.

Gold redeemable is the only thing that shackles the bankers

...assuming they put the redeemability rate on the currency so they can't change it later on.

No, not "one dollar of gold".  That won't work.

It has to be "0.XXXXX ounce of gold .999 fine", something like that.

A gold coin is a defacto gold standard.  It has a fixed amount of gold  that doesn't change.

Paper currency has to do the same thing to be a true gold standard.  It has to be redeemable for a fixed amount of gold that doesn't change.

Mon, 12/26/2011 - 22:38 | 2012574 disabledvet
disabledvet's picture

How about a simple currency board then? It's worked well for Hong Kong for decades now--and it would appear that thing ain't going anywhere anytime soon. Enter the Baggus? I say...."Enter the Haggis" instead!

Tue, 12/27/2011 - 04:10 | 2012813 Painted Blaze
Painted Blaze's picture

who the f**k would give this comment a downgrade...?

Tue, 12/27/2011 - 04:18 | 2012817 akak
akak's picture

Just what was "this" comment, anyway?

As you can tell, it can be very hard to backtrack to unattributed comments from the responses to them.

Tue, 12/27/2011 - 05:49 | 2012885 Seer
Seer's picture

Thatcher was piece of shit.

ALL Systems, even capitalism, will ultimately fail because they ALL seek toward concentration.  When will people fucking get it?

Play the victim... "socialists/fascists/whatever is a cause of my/everyone's problems."  Grow up!

If Thatcher et al REALLY had cared they'd have gotten rid of their respective govts.  Hypocrites, the lot of them: only saying shit to stir up hate and discontent to cloud over the FACT that they're busy behind the scenes making their friends money.

Mon, 12/26/2011 - 18:11 | 2012264 SAT 800
SAT 800's picture

Let's not forget Silver; "the other monetary metal".

Mon, 12/26/2011 - 19:13 | 2012338 Ignatius
Ignatius's picture

Silver is a critically important industrial metal.

I own some, but don't you think it makes more sense to save in gold, a non-critical commodity?  'Cause savings is what we're talkin about.  If a guy makes a grand and his expenses are a grand then he don't give a shite if it's FRNs, seashells or whatever.

If we all save in silver then solar panels, as an example, become prohibitively expensive.  If we save in gold there is no simular disruption to commerce.

Mon, 12/26/2011 - 19:49 | 2012385 SAT 800
SAT 800's picture

If you all, or we all, save in Silver, the International Silver market won't even notice the difference. Scale. Numbers. Arithmetic.

Mon, 12/26/2011 - 21:12 | 2012420 GetZeeGold
GetZeeGold's picture


They took a pretty strong notice when Buffett did it......screamed like lil piggies they did.

Mon, 12/26/2011 - 18:11 | 2012266 Libertarian777
Libertarian777's picture

uhnn.. COMPETING CURRENCIES bitchez...

Mon, 12/26/2011 - 20:29 | 2012428 WhiteNight123129
WhiteNight123129's picture


Mon, 12/26/2011 - 20:30 | 2012429 WhiteNight123129
WhiteNight123129's picture


Mon, 12/26/2011 - 22:37 | 2012573 Widowmaker
Widowmaker's picture

Buy, suckers, BUY!!

Tue, 12/27/2011 - 00:25 | 2012693 San Diego Gold Bug
San Diego Gold Bug's picture

Rehypotheticate this bitches.   Bite this Benny B.

Mon, 12/26/2011 - 17:58 | 2012249 Snakeeyes
Snakeeyes's picture

Look at the growth of M1 and M2. Look at size of the GSE/Agency debt (almost the size of the Federal debt). HOW will this end well?

Mon, 12/26/2011 - 18:17 | 2012276 wandstrasse
wandstrasse's picture

It will not end. It will transform to something much worse. There has hardly been any free market since 100 years ago. Money, values and prices have been commanded by a tiny plutocrat elite. But we were indoctrinated to live in free markets. Now whwn there is a major crisis, TPTB will blame the non-existing free markets for it and so will the population und thus hand over ever more power to TPTB. It is a really viscious trick which works like a clockwork.

Tue, 12/27/2011 - 05:55 | 2012887 Seer
Seer's picture

"Money, values and prices have been commanded by a tiny plutocrat elite."

Shocked!  Shocked!

Read history and let me know if it has EVER been anything other than this.

"There has hardly been any free market since 100 years ago."

Again, this SOUNDS good, but history tells us that as long as govts (churches/whatever vertical hierarchy) have been around there's been NO "free market."  Perhaps you're confusing the times of plenty of resources (gold rush etc.) with "free market?"

Mon, 12/26/2011 - 18:28 | 2012286 otnorli
otnorli's picture

when theres a shitstorm, you need toiletpaper

Mon, 12/26/2011 - 18:59 | 2012325 Sudden Debt
Sudden Debt's picture

And a newspaper and a pack of sigarets... Which might not be safe actaully now I think about it....

Mon, 12/26/2011 - 18:14 | 2012269 akak
akak's picture

In other words, Europeans will either have to voluntarily eat their peas, or else have their peas shoved down their throats.  Or maybe, mix them up with their mashed potatoes, and pretend that the peas are not even on their plates.

How about just not bringing peas into the house in the first place?


PS: I like peas!

Mon, 12/26/2011 - 18:28 | 2012285 qussl3
qussl3's picture

They are desperately attempting to have the Asians and Americans trade them steak for those damn peas though.


Mon, 12/26/2011 - 22:40 | 2012579 Widowmaker
Widowmaker's picture

And they are using gold to do it.

... As if gold has marginal utility to the 99%. Ha!

Mon, 12/26/2011 - 19:55 | 2012395 Schmuck Raker
Schmuck Raker's picture

"Pass the Peas" : The JB's

Tue, 12/27/2011 - 05:59 | 2012892 Seer
Seer's picture

And we'll hear that we should "Give Peas A Chance!"

Mon, 12/26/2011 - 18:14 | 2012271 apberusdisvet
apberusdisvet's picture

"they" will keep a lid on the gold price until after they have stolen all they can get away with.  Lybia, Greece and soon Italy and who knows else.

Since neither the FED/Treas nor the BOE has any gold left, will NATO attack Russia and China?

I would imagine that a majority of bullion sits in the private vaults of the Rothschilds, Morgans, Rockefellers, et al. and has for at least a century.

Mon, 12/26/2011 - 18:26 | 2012283 akak
akak's picture

Since the majority of the combined total world gold supply has been mined within the last century (almost 40% of it just since 1980, believe it or not), it could not possibly have been sitting in anyone's vaults for the last century.

Mon, 12/26/2011 - 19:36 | 2012372 SAT 800
SAT 800's picture

Don't disturn him with facts; he's having fun emoting.

Mon, 12/26/2011 - 19:50 | 2012388 trav7777
trav7777's picture

that is, um, how exponential growth works.

It should not appear incredible to you that HALF of all the X "ever produced" is in the last doubling interval

Tue, 12/27/2011 - 06:01 | 2012896 Seer
Seer's picture

Abiotic gold, bitchez!

Mon, 12/26/2011 - 18:27 | 2012279 7thCardinal
7thCardinal's picture

What does he mean by adjusting the price of Gold accordingly ?

Does he mean closing all the GS and JPM shorts ?

You can call money debasement by a thousand names the output is still the same...

Back in the old times they used to have this form of execution in China, called death by a thousand cuts, where the unlucky guy was being slowly sliced and left to bleed until it died... sometimes it tooks days ...

and this is exactly whats happening to all the fiat money right now...eur, usd, jpy, chf...and this went on slowly for decades..

Now the curve becomes steeper, it starts to look like a hockey stick, more and more each day...

Tue, 12/27/2011 - 06:05 | 2012900 Seer
Seer's picture

You just triggered an epiphany in me!

I'd always liked mathematics, but hated hockey.  I knew about the hockey stick thing and all, as pertains to exponentials, but it's now all come together!  I should embrace hockey and move to Canada! :-)

Tue, 12/27/2011 - 09:54 | 2013308 TheFourthStooge-ing
TheFourthStooge-ing's picture

That's what it's all aboot, eh friend?


Mon, 12/26/2011 - 18:28 | 2012287 Freegolder
Freegolder's picture

Well, the backing of currencies with gold never works, as governments will keep printing til the backing can't be sustained.

Easy money fiat systems never works either, as we are now seeing.

Hmm, if only there was a middle ground.....oh, hang on, there is, freegold.

Luckily, the world is evolving toward that system every day, and all it needs is the dollar to be cast aside (post hyperinflation), the move to a physical-only market (on its way with confidence shattered after MFGlobal, and more of the same to come), and a new reserve currency that doesn't suffer from Triffin's dilemma, as it floats against its constantly revalued gold reserves (hint, it already exists and is used in Europe).

Just a matter of time!

Mon, 12/26/2011 - 19:00 | 2012294 akak
akak's picture

and a new reserve currency that doesn't suffer from Triffin's dilemma, as it floats against its constantly revalued gold reserves

Fiat currencies NEVER "float" --- they merely sink.

Why should anyone have to put up with a constantly-depreciating government-issued fiat currency in the first place?  Just prohibit government from being involved in the issuance of money in the first (and last) place, and everything else in monetary affairs will take care of itself within the free market. 

This is where I think FOFOA's Freegold concept is fatally flawed --- fundamentally, it is just a twist on an old statist paradigm, with the value of money being manipulated by the financial elites to their own ultimate advantage. EVERY time you have a depreciating fiat currency you have wealth being siphoned off from savers and the productive economy to a sociopathic and parasitical elite.  So tell me, why should we ever tolerate such a monetary arrangement?

Mon, 12/26/2011 - 19:10 | 2012336 TheGardener
TheGardener's picture

And you know where this ends. One hundred percent of your income and assets. And for good measure, your live too.
We have been there before.

Mon, 12/26/2011 - 19:14 | 2012340 DaBernank
DaBernank's picture

Step 1: Create a Central Bank whose mandate is "price stability"

Step 2: USD hyper inflates

Step 3: Global acceptance of EUR as "freegold"

What could be easier?

Mon, 12/26/2011 - 19:28 | 2012359 Poor Grogman
Poor Grogman's picture

Indeed the flaw in free-gold is obvious , the whole free gold concept is simply an attempt to make the euro seem somehow more sophisticated and workable than the USD.
All fiat currency is simply a means of wealth confiscation and freehold is nothing more than a clumsy attempt to build some kind of smokescreen for this purpose.
What about free copper or silver or platinum, "what is the difference ?"
FOFOAs treatment of the "other monetary metal" is the giveaway that the free-gold concept has a motivation other than helping the downtrodden masses.
True free gold would consume the host currency in hyperinflation as people switched their monetary assets into gold while borrowing fiat to buy even more gold. is mere monetary sophistry being used to lend credability to the corrupt ECB.

Just BTFD folks and don't get starry eyed about free anything......

Mon, 12/26/2011 - 19:52 | 2012392 trav7777
trav7777's picture

you understand little, so pipe down.

The BEST currency would be fiat, printed in amounts commensurate with economic production.

CREDITmoney is the wealth-stealing evil.

Mon, 12/26/2011 - 20:20 | 2012416 Poor Grogman
Poor Grogman's picture

Great idea genius ...
Right up there with all your other pearls of wisdom...

Mon, 12/26/2011 - 22:49 | 2012591 disabledvet
disabledvet's picture

actually that is a good pearl of wisdom from the T-man. what is needed is gold backed MONEY as that obviates "the debt bombers." You'd need a VERY powerful General in this environment in order to pull it off. The irony that the USA actually has the guy in the form of Director Petraeus et al makes it an interesting concept if gold backed money is your thing...and your tired of a Fed AND a Treasury Department. Obviously "it's no accident that West Point is in New York." And of course Maria B even paid the next "powers that be" a visit as part of her "CNBC" thing. What a hottie! Sure she "loved all those boys" as well.

Mon, 12/26/2011 - 20:23 | 2012419 fnord88
fnord88's picture

Exactly. Free gold involves a floating price of gold. Explain to me how that is more statist than the gold standard, in which goverment sets the price of gold, and changes the price (inflation ) whenever they feel like it.

The whole concept of freegold, as i understand it, is that people save in gold, which floats freely against fiat currencies, so savers are not punished, as thier gold savings keep pace with the fiat inflation.

The gold standand would be worse than what we have now, as at least those who get it can currently protect thier wealth with gold, under the standard that would not be an option, as the government would be price fixing gold.

Mon, 12/26/2011 - 20:51 | 2012453 akak
akak's picture

Freegold is patently statist inasmuch as it presumes, if not demands, a government-issued, continually devaluing fiat currency.  Partial theft is still theft.

Why not just let the MARKET decide what is and is not money?  I can guarantee you that if I had the choice, I would piss on ANY fiat currency, and run to gold, and NOT just for my long-term savings.  (One of) FOFOA's mistakes lies in assuming that there is a clear-cut and tidy division between transactional currency and savings -- in practice, there is not.

Mon, 12/26/2011 - 21:14 | 2012479 fnord88
fnord88's picture

"if not demands, a government-issued, continually devaluing fiat currency. Partial theft is still theft."

But if your savings were gold, what would that matter? When you go to a bank and say, i want to deposit $1000 into my gold account, they say, OK thats 20 grams ( or whatever). When you withdraw, money printing means your 20 grams are now worth $1100. Would that not give you the benifits of both gold and fiat? Essentially it is competing currencies. Because I cannot see governments giving up the power to print currency. Ever. It's like asking them to give up power.

Mon, 12/26/2011 - 21:18 | 2012485 tmosley
tmosley's picture

Yeah, except they are devaluing the transactional currency.  SInce no-one holds that currency, by definition the velocity of that currency increases toward infinite, ie it hyperinflates by design.  It won't take long for the proceeds of your transaction to disappear.  In such a system, people would start trading gold directly almost immediately.

Freegold is a transition state AT BEST, and will collapse to a gold standard very quickly.  You probably wouldn't even be able to frame out a three month time period where Freegold was a reality.

Mon, 12/26/2011 - 22:13 | 2012546 fnord88
fnord88's picture

had not considered how fast the velocity of transactional would increase. Thank you, more to ponder.

Mon, 12/26/2011 - 22:38 | 2012575 Internet Tough Guy
Internet Tough Guy's picture

lulz. Don't listen to mosley, he is clueless. Freegold solves triffins dilemma (and FOFOA'S dilemma): Triffin's dilemma observes that when a national currency also serves as an international reserve currency (as the US dollar does today), there are fundamental conflicts of interest between short-term domestic and long-term international economic objectives. But this is only the case if that currency does not embrace a "secondary media of exchange" that is allowed to float in value in a quantity not managed by the currency manager (i.e. physical only), and can be purchased and stored in lieu of retaining debt denominated in the primary medium.


and velocity is self correcting with freegold:


To perform well, any store of value should not be used also as a medium of exchange, as at least part of the value being exchanged in any given transaction would not be kept as savings, and would need to be further exchanged to meet current expenses. This increases the velocity of the store of value, reducing its value. Gold, like any other store of value, stores value best when it lies very still.

With a Freegold Standard, only the exchange rate of a currency with Freegold need be established to find the currency’s value, as Freegold is the proxy for the stock of value, wealth.

Freegold acts like a sponge, absorbing surplus value in any given zone, and transferring it between zones through arbitrage, out of deficit zones (net value consumers) and into surplus zones (net value producers). All sovereign entities, whether individual, state, or nation, interact with this system in the same way, only on different scales (micro/macrocosm). They may have different motivations for individual transactions when storing value in or retrieving value from Freegold, but the mechanism they use will be the same - the purchase or sale of unencumbered gold in a floating free market.

The Freegold market is established by the bidding for unencumbered physical gold in preference to encumbered gold derivative products, as these derivatives are found to not perform as well as unencumbered physical in monetary crisis, and as a result are discounted by the market. This is a simple and spontaneous reaction in accord with the self-interest of market participants. When monetary confidence falters the preservation of value becomes the focus, and in this gold is the obvious focal point.

In practice, any currency is valued by the market only by that which it can be exchanged for. Under a Freegold Standard, currencies are technically, but not officially, backed by gold - a currency that cannot be exchanged anywhere anytime by anybody for gold will be avoided in favour of one that can. It is privately-held gold reserves that make themselves available for this exchange, at the right (floating) price, not Central Bank gold reserves. "

Mon, 12/26/2011 - 23:40 | 2012643 tmosley
tmosley's picture

Yeah, don't listen to me, or bother to address my points which have proven true time and again throughout the history of paper currency.

When monetary confidence falters the preservation of value becomes the focus, and in this gold is the obvious focal point.

Duh, this has to happen.  What do you think happens to the value of the transactional currency when this happens?  Zimbabwe was under Freegold for about thirty seconds, when it promptly collapsed to a gold standard.

In practice, any currency is valued by the market only by that which it can be exchanged for. Under a Freegold Standard, currencies are technically, but not officially, backed by gold

The author (you?) has no idea what the word "backing" means.  They are NOT "technically" backed by gold.  They are totally unbacked!  Just like with Zimbabwe dollars, the market will lose faith in the transactional currency, and start using gold directly.  Backing means a solid tie at a fixed price, such that there is either EXACTLY as much currency in circulation as there is gold in the treasury, or there is LESS circulating currency than there is gold in the treasury.  If the market sets the price, the transactional currency will revert to it's intrinsic value--ZERO.

This is not a difficult concept, but FOFOA has cast a spell over many goldbugs.  These fools are CONVINCED that the Euro is backed by gold (and somehow different from any other currency in the world), and any idiots listening will lose 100% on any paper currency bets.  His only redeeming feature is that he tells people to own gold.  But he does it for the wrong reasons, and when people see through his convaluted logic, they question the value of holding gold.

Tue, 12/27/2011 - 00:06 | 2012670 akak
akak's picture

This is not a difficult concept, but FOFOA has cast a spell over many goldbugs.  These fools are CONVINCED that the Euro is backed by gold (and somehow different from any other currency in the world), and any idiots listening will lose 100% on any paper currency bets.  His only redeeming feature is that he tells people to own gold.  But he does it for the wrong reasons, and when people see through his convaluted logic, they question the value of holding gold.

Plus, nobody should have to use rambling, torturously circuitous, 243,000 word essays in order to make their (supposedly simple) arguments.

And I still fail to see why the situation we already have today ---- fiat currencies with a (relatively) open gold market --- is not this supposed "Freegold" in practice.  I guess I just need to read 3,781,970 more words on the subject before it all finally dawns on me.

Mon, 12/26/2011 - 21:31 | 2012502 Poor Grogman
Poor Grogman's picture

So in this free gold system the central bank could only steal the value of fiat that was in your wallet because your savings would be in gold.

Therefore they would be forcing you into the freehold banking system... Or fleecing the cash you held.

Now just suppose for a second that they wanted to get rid of cash as the next step, or introduce heavy transaction fees for free gold banking......

Wow the mind boggles at the personal freedom that one would have under such a system.

When the left hand moves folks.. look carefully at what the right hand is doing....

Mon, 12/26/2011 - 21:53 | 2012528 fnord88
fnord88's picture

But is the same problem not inherent in gold standard. Does it not involve giving the government the power to fix the price of gold, to be repriced whenever they feel like it?

I'm not arguing, just trying to invision the best solution. Coming from a physics background, i find my understanding of a system is deficient until I can understand it mathamatically AND conceptually. Relativity took a long time, quantum mechanics took longer. Economics makes no fucking sense whatsoever. Mathamatically it seems a deflationary system would work the best, but i'm still at the stage where I don't even know how much I don't know, and am thus hopelessly niave on many matters.

Everyone here seems to agree the system is fucked, but nobody as yet seems to have offered a solution which makes mathematical sense to me. Abolishing fractional reserve and treating the economy as biological rather than mechanical also makes intuitive sense, but mathematically it is very inflexible.

Still, love ZH and the comments. Am learning fast, but worry about always reading people whom I agree with. Anybody recommend a good anti gold site? Keep googling "gold in a bubble", but yet to find convincing argument.

Mon, 12/26/2011 - 22:23 | 2012556 akak
akak's picture

Anybody recommend a good anti gold site?

You could hardly do better (or worse?) than to go to and read the daily anti-gold screeds of one Jon Nadler.  And they are indeed good --- for a laugh.

Mon, 12/26/2011 - 22:24 | 2012559 Poor Grogman
Poor Grogman's picture

"Fixing" the price of gold is not the answer but will result in failure just like before.
A gold standard must be a system linked to a weight of specie and redeemable in such just as the US constitution is written.

You must be able on demand to withdraw specie from the bank if desired.

This is the only way to ensure integrity of the system and hold the finance industry accountable.

Anything else just results in fractional lending and eventually.. here we go again....

Mon, 12/26/2011 - 22:48 | 2012589 Internet Tough Guy
Internet Tough Guy's picture

The US cannot return to a gold standard. The euro has the dollar checkmated.

Just the existence of the euro renders this attempt futile. First, as soon as the US devalue with respect to gold and thereby achieve a better 'gold backing' for their dollar, the euro would immediately enjoy effectively the same backing as long as there is a liquid market for gold in euros.

Second, as soon as the market suspects that the price of gold in dollars is artificially low (which would probably be the case), gold in euros would be valued higher. This would devalue the euro with respect to the artificially high dollar, cause the US trade deficit to widen and gold to flow from the US to Europe.

The ECB can speed this process up at any time by purchasing gold in euros and thereby increasing the valuation gap. Rickards would probably call this currency warfare, the nasty Europeans devaluing again, but in reality they would have just called his bluff, i.e. his still artificially overvalued dollar.

The mere existence of the euro prevents the US from returning to a gold exchange standard. Anything short of free convertibility in physical gold at a market price would fail after a short period. The requirement is just
1) physical only settlement in euros without any synthetic supply (unallocated)
2) enough liquidity for CBs to trade their quantities

Mon, 12/26/2011 - 23:17 | 2012614 akak
akak's picture

I fail to grasp the essence of your argument.

You seem to imply that there is something special, if not magical, in the existence of the euro.  But it is nothing but another (failing) fiat currency, fundamentally no different from 10,000 other now-dead fiat currencies that came before it.  What you seem to be implying is that the USA could not go back onto a gold standard as long as ANY other fiat currency exists in the world, or the dynamic that you describe would take hold; that scenario can be argued (although I would say weakly), but the euro by itself has nothing to do with it.

Mon, 12/26/2011 - 23:20 | 2012619 Poor Grogman
Poor Grogman's picture

The US may or may not do something or other...

I agree totally...

Tue, 12/27/2011 - 03:43 | 2012794 DaBernank
DaBernank's picture

The ECB monetizing only €20 billion per week via back-door mechanisms makes it so superior to the Fed.

Tue, 12/27/2011 - 00:02 | 2012667 fnord88
fnord88's picture

geez, you would think i would know how to spell mathematically by now. Maybe it's not that economics makes no fucking sense. Maybe I smoke way too much of the green stuff. Or i'm just stupid. Either way, thanks for the ideas guys. To think I spent the last 15 years reading MSM.......

Tue, 12/27/2011 - 01:34 | 2012740 Poor Grogman
Poor Grogman's picture

I don't blame anyone for failing to understand "the system"

We are naturally inclined to apply logical deduction when trying to solve a problem.

However the logical approach totally fails because one is actually trying to perceive a ponzi scheme when viewed from inside.

Is there a useful formula for this? If so let me know.....

Mon, 12/26/2011 - 23:01 | 2012601 disabledvet
disabledvet's picture

even after all that "fiat" is proved to be "fools gold"? some..."power"...indeed. We fielded a 10 million man military during WWII. And now look at the USA. Twice the population...all the wars you could wish for...and no military to face them. Gee...leaving aside what an historical anomaly it is for the USA to lose sure doesn't sound like a recipe for success. And of course...NO ONE BENEFITS! Granted we only had a nominal gold standard in WWII...although in WWI it was still pretty powerful...there was only one entitlement back then either way: you're right to watch as your Armies were victorious. Now Wall Street (of all places!) literally has a Judge declare that stealing gold is perfectly legal! The government will not be far behind...stealing...EVERYTHING. I'd prefer to get out while i still can myself. None of these people are to be believed...let alone taken seriously. "I got mine" is all they care about. Hell...Rahm even had a sign for it: "Go Fuck Yourself" it said. Quite frankly i was surprised he lost his job. I wonder how he feels about say...."losing an entire Army corps"? "I hate them the most" comes to mind. the age of "We go to the moon in this decade not because it is easy but because it is hard" as been replaced with "we demand our government check not because it easy but because without it we all will die." why should the private sector care then? what's in it for them? if your answer is "more bailouts" then THEY are the fools indeed.

Tue, 12/27/2011 - 04:57 | 2012850 Belarusian Bull
Belarusian Bull's picture

Indeed, i had that problem with FOFOA's concept as well.

Sound money should have all the characteristics in one unit to be truly sound, that's the point.

Proposing different types of money for different purposes just doesn't make any sense to me.

Mon, 12/26/2011 - 21:14 | 2012480 tmosley
tmosley's picture

Oh would it now?  And who, in your nonsense world, would receive the benefit of this money first?  If someone gets something for nothing, it isn't a good system, and it WILL end in failure.  You can't get gold for nothing.  You either have to work and trade for it, or pour your sweat into the earth for it.

Mon, 12/26/2011 - 23:09 | 2012607 disabledvet
disabledvet's picture

r u kidding? this is a GREAT system. If you're the government! Listen to the "Ode's to Financial Repression" on Bloomberg. AS IF NEW YORK IS THE BIG WINNER HERE. HAHAHAHAHAHA! How pathetic. Washingon DC is the big winner! You and i are now beholden to everything THEY do! Outside of ZH does anyone even care? Hahahaha. Of course not. the name of the game is...REPRESSION. That's GOVERNMENT work...not the work of some financial..."digitati." In this world..."you gotta pay for that." No thanks, i'll pass. Wake me up when someone isn't lying about "all the money being made." And yields reflect...ALL OF THIS! If this economy was in actuality recovering then we would have a wonderfully upward sloping yield curve...with pricing power and final sales the "proletariat" would actually be getting paid, etc, etc. Nope. Instead all there is is..."government work." GET USED TO IT.

Mon, 12/26/2011 - 19:50 | 2012389 Ignatius
Ignatius's picture

The problem only arises if one is saving in fiat; day to day income and expenses matter not.  

Saving in debt is the problem, particularly in the ZIRP environment.

Mon, 12/26/2011 - 20:25 | 2012422 Advoc8tr
Advoc8tr's picture

I think the idea is that fiat would only be a transaction intermidiate?  Every time a central bank printed the price of gold in that currency would adjust accordingly. If they print too much too often people would stop holding it for even the shortest periods of time.  If everything was denominated (priced) in gold units and converted to fiat only for transactional convenience we would be protected from monetary inflation to a large degree.

Sounds like a good idea to me. Definitely a step in the right direction. Reality is we need transactional currencies but know that governments cannot be trusted to keep the fiat money supply linked to anything unless they are forced to.

Having the government set the price of gold is not going to work because they can only be trusted to lie, cheat and steal.  It simply requires that evryone agrees that a currency is vlaued by dividing its quantity into the known quantity of gold reserves and the market would adjust the price of gold in each currency continuosly.

money as debt has to go.

Mon, 12/26/2011 - 20:32 | 2012432 lasvegaspersona
lasvegaspersona's picture


I think you might not understand FOFOA. He says he is merely observing and that the wise thing to do is to play along with what is going to happen anway. You on the other hand are asking for some heavy heavy lifting. You are issuing the call to change government....and human nature. We as a population love fiat, we like to borrow it and pay it back later when it is worth less. We just don't like finding our savings melt away.

Many people here at ZH say they want harder money but lets be honest...that is purely fantasy. It is our ideal. On a day to day basis I'll bet the average ZHer is as fond of fiat as they are the stuff it buys. We only say we want gold backing of our currency. We rejected it before and will again because it is just too hard and we don't really like hard.

Mon, 12/26/2011 - 21:04 | 2012461 akak
akak's picture


"WE" rejected nothing --- it was government(s) who KILLED the gold standard, over we the people's objections.

It is erroneous, and insulting, to attempt to claim in regard to a gold-backed currency that "we rejected it and will again because it is just too hard" --- it was the central bankers and their political lackies (or vice-versa) who rejected gold, NEVER the common man.  Your understanding of monetary history is very much confused.

Mon, 12/26/2011 - 21:09 | 2012477 Poor Grogman
Poor Grogman's picture


We as a population love fiat, we like to borrow it and pay it back later when it is worth less.

Ask the American home owners how that worked out for them?

At the end of the day if you play with cheats you will get fleeced...

Mon, 12/26/2011 - 21:25 | 2012496 nmewn
nmewn's picture

"We as a population love fiat, we like to borrow it and pay it back later when it is worth less. We just don't like finding our savings melt away."

Leaving aside the moral & ethical considerations of where & how fiat does borrowing what you don't have (and being charged high rates of interest for it) equate to any love of doing so? Its an item of a depreiciating asset or the item has already been consumed before the bill (plus interest) ever hits the mailbox.

I never have "got it" on that point.

To my way of thinking, borrowing is too easy. Shouldn't the "deep thinker" statists in government be promoting saving for the item in question?...unless of course, they prefer debt slaves ;-)

Mon, 12/26/2011 - 23:15 | 2012613 disabledvet
disabledvet's picture

the statists are promoting "savings" the form of "buy government debt or die!" what we need is INFLATION. that connotes "risk" in the system...and creates WORK in order to drive down "the price." instead we have an emerging DEFLATION. Deflation devalues YOU AND ME...the people who have to "work for a living." Capital is basically ominopotent in this it is owned either by "mega-government" or "Mega-Inc."...and that's it. The rest of us...for all intents and purposes..."get nothing." I am curious about one thing: why do we even have elections anymore? What purpose do they serve?

Tue, 12/27/2011 - 07:15 | 2012934 nmewn
nmewn's picture

"the statists are promoting "savings" the form of "buy government debt or die!"

Sure looks that way. I do find it interesting that as of Jan.1 the commoner won't be able to "buy & hold" the most basic of government debt..."savings bonds". They too will go digital...into the ether, into that great digital

The problem as I see it is, they can't get real inflation by printing digital money and sticking it on a digital pallet next to the old digital debt. They can certainly destroy its acceptance as money I suppose. Which is their ultimate purpose I think. They want a purely command & control credit system with the serfs on the very bottom. This means doing away with "walking around money".

What we know as currency.

"I am curious about one thing: why do we even have elections anymore? What purpose do they serve?"

I'm curious why they bother even taxing us, they can print whatever they the eggheads say. It can only be to hold the citizens wealth down to certain levels.

As for elections, I'm still kinda old school I guess...

"One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors."-Plato

Of course, it doesn't help that we churn complete imbeciles from our universities decade after decade either ;-)

Tue, 12/27/2011 - 10:37 | 2013402 TheFourthStooge-ing
TheFourthStooge-ing's picture

disabledvet, by way of nmewn, asked:

I am curious about one thing: why do we even have elections anymore? What purpose do they serve?

Elections serve to cultivate the illusion that common citizens have some sort of say over how they are governed. The division of the War Party into ostensibly opposing democratic and republican factions serves to support the illusion of choice on election day. The charade of democracy is difficult to maintain if you don't at least pretend to have more than a one-party system.

nmewn then wondered:

I'm curious why they bother even taxing us, they can print whatever they the eggheads say. It can only be to hold the citizens wealth down to certain levels.

The purpose of the income tax is to force citizens into indentured servitude for at least part of the year. That the federal income tax was created at the same time as the private outsourced federal reserve monetary system is no coincidence. The way to keep the citizenry from abandoning federal reserve notes is to compel taxes payable in federal reserve notes and impose threatening penalties for noncompliance. It's an easier system to maintain than outright slavery, and far less controversial since most people will never figure it out.


Tue, 12/27/2011 - 06:14 | 2012905 Seer
Seer's picture

I agree, except that I don't believe that "saving" should necessarily equal piousness.  Saving is just something that people should be allowed to do, it's not better or worse than anything else.  And, really, in the current system nothing is really saved anyway: it's a circulation issue, how fluid/liquid things are; and, if one were to look at the intent of the founders of the US, the whole idea was to promote trade and commerce (which, if everyone were to save, wouldn't really happen).

NOTE: as long as people expect a State to protect Their property then they are open to being exploited by the State (the State taking your property).  "Independent" money can still be abused by the State.

Tue, 12/27/2011 - 09:58 | 2013320 Freegolder
Freegolder's picture

The currency would just be a method of exchange, so if you have saving to do, you do it in gold as the best store of value.

As fiat devalues, so gold will rise, but physical gold only, once the paper manipulation has fallen to dust.

I suggest reading more Fofoa, your comments indicate you have not fully grasped the concept.


Mon, 12/26/2011 - 18:32 | 2012288 SILVERGEDDON

HFT ain't good for me. CDS's gonna make some messes. TBTF gonna fall off a cliff. Wall Street is dead meat. Banks so bold layin' dead and cold. Gonna be prepper people, and the rest of the Sheeple. God bless this mess. Holy fuck! I'm a poet, and didn't even know it.

Every President through modern history has spent money like their hair was on fire. No exceptions. And, Congress approved an endless litany of unbalanced deficit spending budgets year after year. They didn't mind creating slavery for the tax payer, and printing free money compliments of the Fed for their banker / Wall Street buddies to bail them out of the mess created by the miracles of deregulation. lobbying, and corruption. All accomplished regardless of which party or President was in charge. They are all cut from the same block of cheese, and they are all culpable.

 I just hope we survive the end result of having criminals running the country for decades. Put your money in something tangible, because the dollar is going to continue to tank, resulting in way more inflation. And, banks may not survive the firestorm of margin lending, credit default swaps, and derivatives created that exceed 250 quadrillion dollars in total  - more money than the gross domestic product of the entire planet for decades.

The only paper I own is the stuff I wipe my ass with. Market paper is worthless, because I cannot do a good job of wiping my ass with it. Gold was worth $28.00 an ounce when I was a kid. Silver was worth whatever was printed on the coin you spent. Any one think those days are coming back? All of the lying bum fucking aristocracy of the Age Of Paper Power can burn in their paper suits soonest. I won't even bother pissing on them to put out the flames. I collect gold, silver, lead, copper, real dry powder, food, tools, diesel fuel, and other useful commodities. There is a community of folks all doing the same, so skill sets and extra eyes and hands can guard each others sixes, and "break on through to the other side, break on through to the other side, YEAH "

Mon, 12/26/2011 - 18:52 | 2012313 Doña K
Doña K's picture

How do I sign up?

Mon, 12/26/2011 - 23:22 | 2012622 disabledvet
disabledvet's picture

It has been said "one need only have the Doors of your mind opened":
Of course I'm a big follower of Bug Bunny myself so here's my view of that:

Tue, 12/27/2011 - 06:45 | 2012932 Seer
Seer's picture

Read the story of the Scorpion and the Frog.

It's NOT the players, it's the GAME!

We're now seeing how much of the rest of the world has been conned/fucked by this System.  Sadly, most here didn't give a rat's ass until the stench wafted to their homeland.

Mon, 12/26/2011 - 18:43 | 2012305 DosZap
DosZap's picture

7th Cardinal,

What does he mean by adjusting the price of Gold accordingly


The only thing he could mean that makes sense, is to take the amount of currency in circulaton, and dide the number of ounces of gold into that figure.(any other way is not correct).

That WOULD be the true price of Gold.

Mon, 12/26/2011 - 18:54 | 2012320 Doña K
Doña K's picture

By the time you finish dividing, you need to start again, as printing keeps going on. How about saying that the price of gold is free floating to what one will sell it for at the moment of the transaction?

Mon, 12/26/2011 - 20:13 | 2012409 trav7777
trav7777's picture

that would be dumbassedly artificial.

Why not let the MARKET decide how many FRNs are needed for each ounce instead of having central control?

Mon, 12/26/2011 - 21:53 | 2012489 GetZeeGold
GetZeeGold's picture


Because dumbass......if I can print trillions of dollars......and jack gold down and buy it cheap......that's exactly what I'm going to do........DUMBASS.

Rinse and many times as I can.......YOU DUMBASS.


The price of gold was only truly in a free market for a brief moment in 1980......for the last 100 years.....only once briefly in 1980.


Mon, 12/26/2011 - 23:24 | 2012624 disabledvet
disabledvet's picture

you mean it's not a free market now? man, "who's the greedy bitch this time"? i think i hear ya' though...interest rates were around 18 percent back in 1980. was that "free" enough for you as well?

Tue, 12/27/2011 - 06:52 | 2012943 Seer
Seer's picture

"The price of gold was only truly in a free market for a brief moment in 1980"

Hope this isn't one of those stupid "Reagan as Hero" things.

BTW - IF govt is involved then there is NO such thing as a "free market."  Keep in mind that a majority of people in the US would be fine with legalizing pot, yet... (and speaking of Reagan, it was his administration that unleashed more Statist power with seizing property due to [possible] drug connections)

Tue, 12/27/2011 - 07:28 | 2012982 GetZeeGold
GetZeeGold's picture


Dude....relax....take a hit.

The POG was controlled before 1980......and has been since.....but I've been able to work around it.



Mon, 12/26/2011 - 18:53 | 2012315 Sudden Debt
Sudden Debt's picture

I don't mind a brake up... WHY DO I NEVER GET TO BE INTERVIEWED!!!

Mon, 12/26/2011 - 19:42 | 2012378 SAT 800
SAT 800's picture

Maybe because you look like Mr. Potato Head with sharks teeth, high on crack ?

Mon, 12/26/2011 - 18:55 | 2012321 RobotTrader
RobotTrader's picture

Bottom line is that the central banks are not printing fast enough


Gasoline prices continue to get crushed here in Los Angeles, everyone is now afraid of deflation.$/G

Countries like the USA and Japan have crushing deficits and huge debts but it doesn't matter.

The JGB, U.S. Treasuries, Yen, and the U.S. Dollar are the stalwarts of safety and security now.

Just check out the fantastic drop in yields since 1981:

The monstrous rally in the Japanese Yen since 2007:

If these guys knew what they were doing, they would be printing faster so that we would have a healthy rate of inflation of about 4% - 5% per year, the Dow would be over 15,000 by now, gold would be over $2,000, and the world would be enjoying a mini-boom in the economy.

Bond vigilantes would be out in force driving up yields and forcing more money out of bonds and into stocks.

The inflation would be high enough to pretty much evaporate half the deficit in 20 years.



Mon, 12/26/2011 - 19:02 | 2012327 akak
akak's picture

RobotLemming: Confusing "nominal" and "real" since 2007.

Get the fuck out of here, you asshat troll --- and I say that even if (and especially if) you are nothing but a creation of Tyler(s) for his/their own amusement.

Mon, 12/26/2011 - 19:49 | 2012387 jomama
jomama's picture

no one appreciates good humor anymore.

Mon, 12/26/2011 - 20:15 | 2012408 akak
akak's picture

Are RowboatTraitor's posts meant, then, merely as humor?

If so, I would argue that their ostensible humor is subtle in the extreme --- and from all evidence that I can see, lacking entirely.

Mon, 12/26/2011 - 20:52 | 2012455 jomama
jomama's picture

i take them ½ face value ½ humor.  it's just difficult to tell when he's being serious.  

for all the swipes people take at him, you notice he almost always turns the other cheek?

happy christmakwanzaakkuh

Mon, 12/26/2011 - 21:01 | 2012470 GetZeeGold
GetZeeGold's picture


I love humer.....what part about " ignorant slut" isn't funny?

Then again....Dan Aykroyd does it much better than me.

Mon, 12/26/2011 - 23:35 | 2012633 disabledvet
disabledvet's picture

actually that is one of the greatest one liners ever. is it susstainable though? i have doubts. anywho...RT is absolutely right...we need inflation since as we all know with Effen Global "the alternative is confiscation." That is WALL STREET confiscating private property. Those people have to be completely RETARDED if they think they're the expert in that field. Taxes are going to SOAR as "the real experts" (governments) step in to "deal with the crisis." Look at this example:

Tue, 12/27/2011 - 19:11 | 2012992 GetZeeGold
GetZeeGold's picture

Edit....could have been taken the wrong way.

Mon, 12/26/2011 - 19:44 | 2012380 SAT 800
SAT 800's picture

Oi Vey.

Tue, 12/27/2011 - 07:05 | 2012955 Seer
Seer's picture

Forcing more money out of bonds and into stocks STILL won't resolve the issues of not being able to force people to spend what they (still) don't/won't have.

There will be no more growth in consumption.  Look around.  Even if you were to wipe out ALL debts there'd still be the issue of having to crank up the costs of everything, which would further push down demand.

It all follows the oil production curve.  As oil production has flattened out so too has growth: though, however, "economic" growth has continued to outrun it a bit with govts acting as a slower brake (but no matter, the FULL application of the brakes WILL eventually occur).

Reality comes for us all:


Mon, 12/26/2011 - 19:23 | 2012347 Ted K
Ted K's picture

I guess a MIXTURE of option 1 and option 3 is too complicated for these Mises guys. Either that or it's less melodramatic and you can't sell gold without selling extreme scenarios. 

The Mises faggots will say "Oh, well we didn't think they would do BOTH, those dagnabit bureaucrats!!!!"

Tue, 12/27/2011 - 01:25 | 2012732 akak
akak's picture

Nothing bolsters a sound and rational argument, nor adds to one's intellectual credibility, like the use of the word "faggot".

Tue, 12/27/2011 - 02:22 | 2012771 Ted K
Ted K's picture

Some of us don't need to check the PC winds of the last 5 minutes TO SAY WHATEVER THE FUCK WE WANT.

And yes, clamoring for a heavy yellow piece of rock to save you in time of confusion or calamity, is about as intellectually rigorous as sticking your winky high up into the same sex's intestinal tract. 

Unless of course you treasure the thought of buying a Coca-Cola with gold shavings contaminated with your own hepatitis. In which case, don't let me interrupt.

Tue, 12/27/2011 - 03:33 | 2012790 akak
akak's picture

Thank you for that thoughtful and well-reasoned reply.

Mon, 12/26/2011 - 19:24 | 2012352 Georgesblog
Georgesblog's picture

The repercussions are happening. They just aren't bureaucratic and judicial. Europe is in a world of hurt, of their own making. Sow in debt, reap poverty. The USD is following right along.

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