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The Exter Inverted Pyramid - A Refresher
This morning, a vastly expansive essay by Lew Spellman of the University of Texas in Austin titled "Warren Buffett and the New Calculus of Gold" is making the rounds, and while the narrative is largely defensive of gold, and its role as the only true safe collateral in a world rapidly depleted of the latter (as we have been arguing for the past 2 years) as proven over and over by the fact that the entire modern system now relies more on re-re-re-rehypothection of existing collateral than on spending money for CapEx purposes and to replace an aging asset base, we wonder: is this realization really just now being grasped by the world? Are the forward thinkers of the world only now understanding that in a world with hundreds of trillions of imaginary collateral whose ultimate owner will never be tracked down, and a daisy-chained bankrupt domino collapse will come before anyone finds out who owns what (much in the same was as MF Global is a symptom of the entire modern financial system), only that which is tangible, undilutible and real will have value? Finally, is the avant-garde of Keynesian thought only now (re)discovering the Exter inverted pyramid? Because one can spend 30 minutes reading the Spellman essay, or... cast a quick glance at the picture below to understand the true value of everything in a world in which the monetary fabulation of the past 99 years is finally unwinding.
One picture in this case is absolutely worth well over a thousand words.
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On sale!!!!
Blue light Monday morning surprise special.
Let us Vajazzle that graphic, and all will be well.
Fixed...
https://encrypted-tbn0.google.com/images?q=tbn:ANd9GcSRgKU1dAEXsbIsI8sIY-H1LAxc3sVqYMy9h2_NTTncBfws8e0mHA
"Are the forward thinkers of the world only now understanding that in a world with hundreds of trillions of imaginary collateral whose ultimate owner will never be tracked down, and a daisy-chained bankrupt domino collapse will come before anyone finds out who owns what (much in the same was as MF Global is a symptom of the entire modern financial system), only that which is tangible, undilutible and real will have value?"
apparently not quite yet. gold and silver getting reamed again this morning.
AND the fiatistas are still in love with their credit default swaps.
I find it curious that Real Estate and Commodities are up in the red zone. They are hard assets after all. Gold is a commodity too, only it serves as money, so I agree it should top the other hard assets. ...but it's good to have hard assets that are less portable - harder to steal - like real estate.
Wiemar republic would suggest the opposite. Values dropped more than 80%. Think real return that is the interest rate less inflation. If you sell real estate in a hyper situation you'd lose between contract date and close date. Also, who os going to lend under that situation? Its called an illiquid investment for good reason.
There are two kinds of real estate. One the one hand, there are tract homes, apartments, condos, and commercial buildings. Essentially, this is all urban real estate. This kind of "property" rightfully belongs exactly where it is on the pyramid. It's value is highly determinate, based on all sorts of human "laws" and constructs that can collapse at any moment and render this property worthless.
On the other hand is land capable of producing food or other raw materials. This is rural real estate. To someone who lives on the land, and has the skills to realize economic value (ie, food) from the land, this property elevates the owner to a realm entirely separate from the flucutations of money valuation. So what if the "price" of the land drops to zero? The owner is independent- he/she gains sustenance from the land itself, and the economy, so called, can go f**k itself.
Land with water will make a man truly free- hence Jefferson's desire to base a true free republic around small agricultural freeholders who on the most essential basis were independent.
On the other hand is land capable of producing food or other raw materials. This is rural real estate. To someone who lives on the land, and has the skills to realize economic value (ie, food) from the land, this property elevates the owner to a realm entirely separate from the flucutations of money valuation. So what if the "price" of the land drops to zero? The owner is independent- he/she gains sustenance from the land itself, and the economy, so called, can go f**k itself.
Your are 100% SPOT on, for the past 5000yrs.........but no longer.
The PTB have passed already laws stopping you from doing exactly what you want to do................
Catching comes before hanging.
Force projection can be an issue when you can't pay to project your force forcefully.
All politics are local.
You don't live in the country.
The flaw is that the PTB rely upon the mid and lower level employees for implementation. If / when things really go in the dumper, and the implementers are not getting paid or get overwhelmed, it all breaks down. I was in New Orleans after Hurricane Katrina, and nothing was getting implemented until outside resources came in. The police and municipal workers all melted away. There were no foreclosures or evictions for weeks after Hurricane Katrina. The legal system and the police will be overwhelmed. Out of sight and out of mind will a good place to be until the inevitable Jubilee.
DING DING DING DING DING
We have a winnahhhh...!
Property is worth some its weight in metal as long you follow the cliche rules (location location location) so for you guys over there its like around Central Park, for this side of the pond its Central London, so yes Tyler we do indeed have a winner! Can't wait for the physical average in Gold. If i'm not mistaken thats around 50 oz's, but please quote me if i'm wrong!
Been living that way since 1984. Not an easy life, but a rewarding healthy one, at least until they monitize or pollute the water well. Hope all these whiney Boomer Blamers can comprehend ur post, but then again some people fish while others cut bait.
It's called if you haven't moved into a permanent residence already, then you're probably renting... rent changes month to month in that scenario...
There are certainly risks... but there are also ways to mitigate risk...
@edwardscpa
The issue is liquidity, and RE is very illiquid (even with clear title).
I would make a few changes however:
Commodities I agree should be further down depending on utility (food lower, rare earth elements higher).
Right before gold we should see fine art, gemstones, copper, nickle and silver, in that order
Right after gold we should see lead & brass.
wrong.
I am?
Point out where. RE is a LIQUID asset? ORLY?
(crickets)
You're an idiot.
@ edwards CPA and LowProfile
Correct. Exter's Pyramid shows LIQUIDITY! Not all hard assets are liquid (easy to sell at near their worth). Yes, I might tinker a little bit to with relative liquidity of various things. Lead and brass surely would be liquid as of course silver. Fine art will hold its value over longer periods of time, but might not be liquid (only way to get rid of it, in extremis, would be to sell it a a fire sale price).
Ah - yes, then, a liquidity pyramid makes sense. As a store of value, I'd put RE up higher. And I use value loosely. I pay cash, and am not concerned about selling at unfavorable times. I'm talking about rental property, where rents would eventually scale with the value of the currency (or a new currency...). Something that offers some level of protection, vs a bond say. In short-term "societal breakdown", a squatter may be hard to evict as noted above, but provided we don't revert to being cave men, law and title will eventually kick in. I wouldn't suggest buying RE with your milk money, but with excess cash, why not?
gold and silver getting reamed again this morning.
To be expected.....................as the EU crashes and burns, we will ultimately lose 40% of our export business.
Whoooops dere it tis!!!..................then , there goes our market, make sure you keep lots of dry powder,because the deal of the century is coming our way. Great shot at gold at under 1k, and silver in the teens, lower twenty region..........
Just hope you are fast on the trigger.
Fast on the trigger is one thing, but the availability of phyzz at those prices is quite another.
+ 1 to Dos and Grin.
Get your pysical while you can.Wheter it is two years from now, or two weeks from now, real gold will be hard to get., especially at the low prices we see now.
¬So Whoooop der it iz whoooop der it iz
And as per previous post, thank you Blythe, you little minx. 1 oz Silver Maples at £25-26 from a London Dealer! (Not from previous post) I could suck your c£iT (and rub my tounge on it at the same time)
Wooop der it iz
I genuinely have sympathy for silver bugs. It's nothing but an industrial metal these days. Look to the future: do you see central banks and Kyle Bass and other wealthy giants buying silver? No, just gold.
At the very least hold 50/50 by value, but silver is going to really suffer when the economies of the world retrench to their post-bubble levels. The futures/physical mismatch will not help you.
Also, be wary of China's huge silver supply, and the market they're just launching, it's bound to drive down prices. Silver could easily be the new Nat Gas.
HAHAHAHAHAHAHAHAHAHAHA!
Thanks for the funny.
He's right.
You're not.
+ 1
Freegolder, while perhaps a bit uncharitable with his words, is probably right. The central banks store only gold.
Gold is for preserving wealth. Silver is for speculating and for spending in a SHTF. Look, I own silver too. But, the great $-value of my PMs are in GOLD!
Also, be wary of China's huge silver supply, and the market they're just launching, it's bound to drive down prices.
Agree to apoint, but the poor Eastern peoples cannot afford any gold, so their next choice is Silver.And there are a hell of a lot of them.Then you have supply and demand,to which silver is in very short supply right now,and as the numbers increse in the eastern bloc, demand for it will also, the only reason its at 31.00 is because the PTB slam it when it starts EVERY run.
Silver has always been the go to for money, used far more as such than gold over thousands of years.
I wonder if China's game is to monetize silver.
They have (I believe) the longest stretch of history where it was used as sovereign money.
I am a FOFOA follower, but that would throw a huuuuuuge monkey wrench into his thesis.
FOFOA is my Trail Guide too. We would have to see if China (and maybe Mexico) did use silver as money.
I kinda doubt that it will happen, but my track record at predicting the future is well-documented to not be very good...
Trolling plain and simple
/
Here's where the pyramid originated
http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html
It should be read by all
excellent read, paperwillburn. thnx.
Thanks for the reference, paperwillburn.
If "down" = "more secure," there's a basic problem with the pyramid.
Since stockholders rank lower than bondholders in bankruptcy, "listed stocks" belong ABOVE "corporate bonds," not below.
Stocks also belong above muni bonds, since municipalities have the power to tax and corporations don't.
Good concept on the inverted pyramid, but the asset hierarchy is muddled.
The pyramid measures LIQUIDITY. Real estate is a hard asset, but not liquid (defined as being easy to sell at a normal (non-firesale) price).
FOFOA copied it from Trace Mayer, J.D.'s Run to Gold website. http://www.runtogold.com/2008/04/confirmation/
Mayer adapted it from Exter.
Kind of a chore to find the original.
http://www.gold-eagle.com/editorials_08/morgan050809.html
So change "pyramid" to image as I was talking about the exact image which was posted not "exter's pyramid"
The Pyramid is screwed,the last one is correct the three above it are as bad as the the top three tiers of the pyramid.
this is true. but i think the pyramid suggests the order in which wealth flees from one "investment op" or perceived "safe haven" to another.
I agree. Real estate is certainly too high up, it may be overpriced but it is a real asset with ineradicable value unlike many others up there. And somewhere there should be something to indicate that the pyramid expands according to a log scale, and that the top layers should really be wide enough to fill ten or so widescreen computer monitors.
It is a LIQUIDITY pyramid.
RE is ILLIQUID.
It is also dependent on rule of law to establish ownership, and it's price (own or rent) is PURELY A FUNCTION OF THE LOCAL PREVAILING WAGE.
You guys sound like you need to buy some precious metals.
You could have pointed that out without the caps or bold print, though admittedly the condescension may have been warrented since I did not read the linked article but just looked at the picture.
The last three millimeters at the tip of the pyramid under "GOLD" will soon read "SILVER".
Bernanke will own all the Gold after this...
Of course he will.....that's been the plan all the time.
Hope the Muppets don't figure it out.
Bernanke doesn't need to own the gold. Confiscation was a messy business afterall.
Today, they'll likely pass a Gold Sales and Export Act which puts a 35% tax on all transactions involving gold, and a 50% tax on gold exports -- with confiscatory penalties for evasion.
Simple as that, the Gubmint will confiscate the value of gold without having to go through the messiness of seizure.
Don't think it isn't coming. The good news is that we'll likely hit $5k per ounce right around the time that happens. The trick to any good trade is knowing when to get out. And I promise you that most people who were smart enough to buy will not be smart enough to call a top.
Will there be a tax when I spend my gold?
If you feel like it......send them a check right now. Warren's secretary did!
Gifts to the United States
U.S. Department of the Treasury
Credit Accounting Branch
3700 East-West Highway, Room 622D
Hyattsville, MD 20782
http://www.fms.treas.gov/faq/moretopics_gifts.html
Sell if for silver......what else would you sell gold for?
20 acres of farmland with a sharecroppers shack and water rights, 2 mules, more beans, bukkets and bandaids?
+ 4 ak47s ammo and spares
There was that article out yesterday about them taxing the 401ks going forward. I am curious to see if they do that. If that pisses people off it could potentially push more people into buying physical. If they then turn around and tax the hell out of that like you say I think things totally break down.
401ks are taxed (deferred)
401ks are taxed (deferred)
Uh, hate to rain on your parade,but the legislation these idiots are speaking of makes them taxable when the funds are put INTO the 401k, so WHY own them?.
Talk about a disincentive to participate, or even HAVE a plan is stupid....................................under the proposed NEW rules.
They then become like a ROTH IRA, except you still get a match from your employer.
There was that article out yesterday about them taxing the 401ks going forward
I saw it also, idiots. Five will get you ten, that will pass and be made retroactive.
Time to cash out and pay the taxes before Bush tax breaks expires,or they are seized.
No faster way to kill a savings plan.WHY in GODS name would anyone put funds into a plan, that has no benefit for the saver?.
Just like Roths, why cant everyone participate????............stupid.
Be way better off controlling your own money, and either buying hard assets, or putting it in a 1.5% account at the Bank,at least you HAVE access to it.
Bullish for mattresses!
You assume that the government will be smart enough to know when a transaction in gold or silver has occurred. I see it happening in my neck of the woods already. For the most part, aside from the two parties involved, no one else knows. FAIL.
I am assuming that people are stupid. I am assuming that just the announcement of it, after people saw their retirement accounts taxed very effectively, will be enough to get people to open their eyes. But who the hell knows. Maybe not. Like Stepehen King wrote..
"A mule doesn't like to plow. But he likes carrots. So you hang a carrot in front of his eyes. A mule without a carrot gets exhausted. A mule with a carrot spends a long time being tired. You get it?"
"No."
No, Eurasia will.
I doubt that he will even have ownership of his own anus when this over.
Up arrow for making me chuckle on a Monday with AG getting taken out. :)
So he is a traditionalist after all !!! Better late than never.
Might need to move govies higher up (lower quality) in the pyramid.
I get the point.
To me... The symbol just looks like a large scale version of the comment buttons at the side of Max Fischer comments (except for the tiny green coloring at the bottom)...
Just put diamonds away from that red area...
Just put diamonds away from that red area...
Where u want em'?, unless they are TOP grade GEM quality, top of the heap, they are almost worthless, DeBeers sets prices on all of them.And owns the entire market.
Not any more. That lock was broken years ago.
Uh...Don't forget the arrival of 'man-made diamonds'...
High quality investment grade diamonds should be far lower, nearer Gold. Even if DeBeers were to no longer be controlling the diamond market there will always be diamonds. Diamonds have a way of surviving the problems and are extremely compact and easy to store and move. See how wealth is transferred when there are major upheavals...portable and 'no backer' assets will always shine..."shine on you crazy diamond". Silver, platnum and maybe palladium should be on this 'modern' inverted-pyramid. And add "all other derivatives".
Can you tell a difference between a synthetic diamond created in a lab and the one your girlfriend wants to wear? Thought not.
As far as the incluson of the other major precious metals don't forget its digital brethren, bitcoin. If a form of money needs to be delivered someone electronically (say a family member in another country), fast, that gold and silver might not be as useful as an online equivalent.
If gold is green then I'll buy it. Its the golden color that puts me off. Reminds me of Iconic penitence and eternal shame, for just having the privilege of being born a human being.
Having now lived some time, I do realise we are the worst bugs that the Creator of All invented. We've even managed to paint food into gold stained junk and pure water into waste effluent. Now that takes some doing!
Maybe eternal shame is the name of the game. I'm beginning to have my doubts about human progress. But I'll never vote for a bearded Only One ; I prefer to think it has gorgeous tits!
Iran Claims It Has A Blockade On The Strait Of Hormuz
http://www.businessinsider.com/iran-...-hormuz-2012-4
404
Chaos "created" (evolved) us, and chaos will "destroy" (evolve) us.
False on it's face, evolution implies negative entropy.
'Commodities' doesn't quite capture the petrobuck paradigm. That'll be an issue, some might even say problem.
If you want to buy petrol from Iran.....you'd better have some gold.
Or 4 aircraft carriers and a shitload of ballistic missiles carrying 30 pounds of silver...
Heh heh.....true that!
If only the bankers didn't make this more true with their every action. Nothing changes. All paper money dies when not backed by gold. All paper money returns to gold to save itself before once again debasing. It is the cycle of ponzi.
whoa...hold on a second, something's not right. Where's AAPL in that pyramid?
It's right at the tippy point.....but you need a magnifying glass to see it.
"Your OS is no longer supported, you need to purchase OSXXVIII."
"This song has been transferred to more than 3 devices and is no longer valid."
"FoxConn employees are happy and well paid."
Ron Paul knocking it out of the park on CNBC this morning.
END THE FED.
Gold on sale today!
LIESman has a hard time interviewing Dr Paul. Guess because he's an ignorant journalist prick. That Sorkin punk can't even string together a question and Squicky just keeps saying "but......but....Warren says"
My only objection to the pyramid is that the bottom green point should have "productive assets", including agricultural real estate. Gold is not the only real asset - and all the paper above is a claim against real assets.
The base of the pyramid is for items that meet all 4 definitions of money. Productive assets are nice to have, right up until you have to try to move them in order to escape.
What? No silver?
by the time everybody runs to gold, there won't be any silver left.
Falls under commodities as worthless, better go stock up on AAPL I guess, its valued more highly in the pyramid
(1) Gold (2) T-Bills (3) Llama wool
Spellman mugged FOFOA, but still got it partly wrong. Gold won't back currency but will float against all currencies.
To be fair FOFOA is a little hard to read, so one can understand that plagiarizing him would be even more difficult.
What, like it does now then?
Currently pricing paper gold at par with physical gold depresses the price. Eliminate the paper gold to discover the real price of gold.
What for? Let the dummies buy a bit more paper gold. The only cure for manipulation is to let it go beyond the point of no return.
They are missing one more part of the pyramid. On top of Gold goes Guns and Ammunition
Guns & ammo go in front of your gold.
Food and potable water might rate above all else if cities breakdown.
a good woman, is worth more than any amount of gold. rich and alone, is just another form of poverty
NEXT TIME THE GRAPH SHOULD INCLUDE THE WORTHLESS PAPER TRADING ON THE BANKS' BOOKS
“Fiat money has no place to go but gold,” - Alan Greenspan 15th Sept 2010: http://www.nysun.com/editorials/greenspans-warning-on-gold/87080/
And as covered by George Washington at the time: http://georgewashington2.blogspot.com.au/2010/09/greenspan-fiat-money-has-no-place-to-go.html
In the short run it is true that fiat has no place to go but gold. In the long run fiat has no place to go but hell.
Hmmm, am I travelling in time and watching the wrong market data? In my screen gold is going DOWN big time, and silver is WINNING the race DOWN!
So, who is discovering what pyramid, eh?
So you buy when it's up? Note to self, sell to Beastmanager when it's up...hahaha
Either your IQ or your age is very low. Do not need to know, keep it for yourself.
Are you trying to be a 'try hard'? Since when... did either IQ or Age, make a person profitable in markets? Neither one or the other, makes a person profitable in markets. So why are you trying to put shit on me, by suggesting two lame things: IQ & Age; that you consider me deficient in?
1642 at open to 1629 right now is going down big time?
HAHAHAHAHAHAHAHAHA!!!
Another funny!
Thank you.
forgot guns and ammo below gold.
forgot guns and ammo below gold.
Silver down 3.28% Gold down 0.97% QQQ down 0.84%.The pyramid has been temporarily inverted thanks to the power of the Fed.
Sell in May and go away.
Gold looks sick
You keep using that word. I do not think it means what you think it means.
There's a shortage of perfect breasts in this world
If fiat does die,
first phase is horrible deflation crushing everything including spot gold
timing is everything
"first phase is horrible deflation crushing everything including spot gold"
Good luck timing that.
"On Sale" not "sick", "On Sale".
Options expiration and price suppression.
Dow/Gold ratio means equities are sick, Gold running circles around the patient.
Brain-dead. The triangle asserts Fed paper is a harder asset than diamonds or an apartment building. I want to do deals with people who believe in this.
F= m x g
free fall
With the exception of gold occupying the premier position, the positioning of everything else is absolute crap. Give me real estate of any sort in the event of a meltdown rather than useless paper money which we won't be able to access when banks screw their doors closed.
The fact remains that we are basically shuffling around the same aging physical assets and shuffling the same old paper assets which can only be rolled over and never paid off.
The populace will however be soothed by emergency supplies of hot dogs and soda and free access to cable TV in the event of a meltdown so that they can remain INFORMED between sports programs.
You still must pay property taxes. If there is not enough income from the real estate property to pay the taxes, the government will sell it on public auction. That would be a 100% loss.
should be GOLD/SILVER...
Please indicate where SILVER is !!
Don't worry. Silver is there in the embrace of gold. Regardless of what multiples one trades to the other, they are both items with a historically solid pedigree. Both will be worth a lot more than the system which is currently ignoring them, manilating them and bagging them.
Interesting that Stock are much higher up the FRN's. Consider that the As the gov't prints trillions, devaluing the currency, Stocks will go up in value. Consider than since the low in march 2009, the S&P has nearly doubled while the purchasing power of the dollar (in terms of food and energy) as nearly lost half of its value. In times of high inflation or hyperinflation, stocks hold value better than paper currency. although they usually do not retain 100% of their value. They just devalue less than paper currecies.
Treasury Bills are probably worse than Corporate and MUNI bonds, since the yields onf Treasuries are close to zero or have negative real yields. I perfer to own quality Corp. Bonds over Treasuries. Big companies offering Corp Bonds are just as secure as treasuries since the gov't will bail out the too big to fail.
I would also change the bottom "Gold" into tangible assets which include PM's along other high value assets that are likely to retain value no matter what happens.
love a big vi jay jay that also has arrows to the spot
The inverted pyramid reminds me somewhat of a Columbian prostitutes pubic region. Go for the gold.
next choice for poor people is not silver but welfare credit cards and new virtual tax-free local community money we see poping up in Argentina Greece and Spain
water, food.
Invert the Pyramid
Surprisingly you might be on the cutting edge.
Just last week we had a Q&A for the future Congressional House theives. Nine of them in all. I was so appalled with their slights and slurs at various people, regardless of party, that I just couldn't believe what I was hearing.
Only after when I was telling a friend of mine it dawned on me, they're truly stupid. They have no insight, they have no fresh ideas or solutions, they are just idiots spewing the same terrible party rhetoric for the millionith time.
If you truly asked them a pointed question about economics or paper currencies I think they would sound just like CNBC or some similar outlet. They are all the product of years of propaganda and even though one of them was the lawyer for the marine funeral's father that tried to sue that quaint church from Topeka, KS (ie a lawyer that holds some special esteem in our area) he was just as unimpressive as all the rest and yet he presented a Constitutional case. Scary!