Gold And Grand Theft Economics

Tyler Durden's picture


The tectonic battle between a market trying to deflate its debts and the central banks attempting to reflate the impaired assets to maintain the status quo is becoming increasingly violent. In a brief clip, Santiago Capital's Brent Johnson explains the fallacy of fiat money, the dynamics of the velocity of money in a 'troubled' economy, the 'we are going to give the banks a lot of money' plans, and the inevitable 'there's no more money' moment when the inflationary and deflationary tremors come unstuck and become shock-waves. There will be no warning, no bell-ringing at the onset of the end of the monetary system itself as he notes the slate of Stability & Growth Pacts (EU) and The Recovery and Reinvestment Act (US) will inevitably be seen as the greatest unauthorized transfer of wealth in history - and being exposed to gold stored outside of the banking system, there is a protected route as the world staggers from tremor to tremor.

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Tue, 08/07/2012 - 17:47 | 2685900 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

In this brief clip....

Shit man I write that on Zero Hedge like everyday.

And I write it better than anybody.

Tue, 08/07/2012 - 18:23 | 2685978 Thomas
Thomas's picture

BTW-Kotlikoff says that the unfunded liabilities, which he puts at $210T, are the liabilities remaining after the projected tax revenues and other expenses have been factored in. These really are the ones that are unfunded with no obvious way to fund them.

Tue, 08/07/2012 - 18:29 | 2685994 DoChenRollingBearing
DoChenRollingBearing's picture

@ Thomas

The unfunded liabilities CANNOT be paid pack.  Either default or default via high inflation.

Tue, 08/07/2012 - 18:36 | 2686012 Jay Gould Esq.
Jay Gould Esq.'s picture

Quite so.

It would be no surprise at all if, in the not too distant future, an absolutist North American government invokes, by executive order, "for the public good," the ancient "debt jubilee."

Tue, 08/07/2012 - 18:42 | 2686026 veyron
veyron's picture

Unfortunately we have no queen ...

Tue, 08/07/2012 - 18:50 | 2686053 tenpanhandle
tenpanhandle's picture

what about Barney frank?

Tue, 08/07/2012 - 18:56 | 2686071 DoChenRollingBearing
DoChenRollingBearing's picture

+ 145

Tue, 08/07/2012 - 19:30 | 2686164 JPM Hater001
JPM Hater001's picture

Slow Clap for the conclusion...I dont want it either...but prepare we must.

Tue, 08/07/2012 - 19:37 | 2686175 Pladizow
Pladizow's picture

Distiguish between a debt and a liability - there is NO legal obligation to pay a liability - buy buy SS, medicare & Medicaid!

Tue, 08/07/2012 - 21:23 | 2686425 economics9698
economics9698's picture

Sounds like a infomercial for gold.

Tue, 08/07/2012 - 20:10 | 2686263 Dr. Engali
Dr. Engali's picture

    +1  LOl funniest comment I've read today.

Tue, 08/07/2012 - 18:49 | 2686050 tenpanhandle
tenpanhandle's picture

Unfunded liabilities equate to unfunded promises.  Get rid of promisers and liabilities never get paid. Get rid of the promisees and liabilities disappear.  In any event, I would be quite alarmed if I relied upon the Govt. to provide my sustenance.

Tue, 08/07/2012 - 19:12 | 2686114 hannah
hannah's picture

"Gold is the corpse of value,. . . . Wealth that is stored up in gold is dead. It rots and stinks."


Tue, 08/07/2012 - 19:38 | 2686178 Pladizow
Pladizow's picture

I love that smell!

Tue, 08/07/2012 - 22:13 | 2686514 mjcOH1
mjcOH1's picture

"I love that smell!"


It's the smell of victory.

Tue, 08/07/2012 - 21:31 | 2686440 kliguy38
kliguy38's picture

that's exactly what the proles are supposed to think.......stay away from works...until it doesnt'

Wed, 08/08/2012 - 06:27 | 2686998 Freddie
Freddie's picture

"Gold is the corpse of value,...."

Do they keep that "corpse" over at the J.P. Morgue?

Tue, 08/07/2012 - 19:57 | 2686222 Stuck on Zero
Stuck on Zero's picture

Every unfunded liability is someone's (assumed) asset.  Just make sure your assets aren't unfunded.


Wed, 08/08/2012 - 03:46 | 2686930 Silver Alert
Silver Alert's picture

They would never have to be paid out if lots of people died.

Tue, 08/07/2012 - 20:01 | 2686235 CheapBastard
CheapBastard's picture

Someone will shoulder the debt.



Bonds for $105 Million to Cost School Over $1 Billion

A California school district is shouldering $1 billion in interest on a $105 million bond in a deal intended to defer most of the payments for 35 to 40 years.

The Poway Unified School District, in San Diego County, structured its 2011 sale of capital-appreciation bonds to avoid debt service until 2033, with the largest sums -- more than $300 million each -- due in 2046 and in 2051, according to data compiled by Bloomberg.

Wed, 08/08/2012 - 21:19 | 2689608 draghithebearslayer
draghithebearslayer's picture

It doesn't take a genius to see that the rationale behind that deal was something like "By the time we have to repay the debts, I'll be long gone/retired/dead, so it's not my problem!" The question I ponder is whether the borrowers really expect them to pay back that money, because the people who's gonna be in charge, those in teens and 20s now, sure as hell won't.


Tue, 08/07/2012 - 17:51 | 2685911 Robot Traders Mom
Robot Traders Mom's picture

"There will be no warning, no bell-ringing at the onset of the end of the monetary system itself"


All the manipulation, all the hatred towards Blythe, etc we should all be treating as a gift to buy more because when that final bell rings, it will be too late.

Tue, 08/07/2012 - 17:55 | 2685920 malikai
malikai's picture

I love her. She taught me things I can not even begin to describe. Painful things.

Tue, 08/07/2012 - 18:12 | 2685954 francis_sawyer
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I'm not paying her for the sex... I'm paying her TO LEAVE after it's done... (& furthermore ~ it was SHE who insisted settlement in her coinage [or paperage] of choice)...

Fuck her if she can't take a joke... No ~ REALLY!

Tue, 08/07/2012 - 23:02 | 2686600 Chuck Walla
Chuck Walla's picture

I'm not paying her for the sex... I'm paying her TO LEAVE after it's done... (& furthermore ~ it was SHE who insisted settlement in her coinage [or paperage] of choice)...

Oh, you're paying her for sex. But she's fucking you and the rest of "the little people" with Bawney Fwank's dildo.



Tue, 08/07/2012 - 18:27 | 2685985 DoChenRollingBearing
DoChenRollingBearing's picture

@ Robot's Mom

+ 1

Trouble usually arrives unannounced and unexpectedly...  Practically the definition of a Black Swan.  I cannot predict the future (hardly anyone can), so I hedge as much as possible.  Gold is perhaps the BEST way.  Physical gold at a bit over $1600 is very underpriced.  I agree: "Thanks, Blythe!"

And when "that Monday" arrives, the gold will be all gone withing 48 hours, max...

Tue, 08/07/2012 - 18:35 | 2686007 resurger
resurger's picture

She's running a matched book ...


Tue, 08/07/2012 - 18:52 | 2686059 tenpanhandle
tenpanhandle's picture

@Robot traders Mom:

Of all the avatars on Zero Hedge, yours is the only one that actually freaks me out.

Tue, 08/07/2012 - 19:21 | 2686141 PersonalRespons...
PersonalResponsibility's picture

Still the only one?

Tue, 08/07/2012 - 19:54 | 2686219 tenpanhandle
tenpanhandle's picture

actually, I thought Robot Traders Mom's avitar was a pic of  Hilliary when she was young.

Tue, 08/07/2012 - 20:25 | 2686298 Manthong
Manthong's picture

I kind of thought that's what the spawn of Pelosi and Reid would look like.

Tue, 08/07/2012 - 20:13 | 2686273 Hobbleknee
Hobbleknee's picture

But does it have a compass in the crotch?

Tue, 08/07/2012 - 20:55 | 2686370 tenpanhandle
tenpanhandle's picture

I would not even venture a guess what it has in the crotch.

Wed, 08/08/2012 - 06:51 | 2687007 MillionDollarBoner_
MillionDollarBoner_'s picture

Is that, like, a directional compass?

Or one like in my geometry set? 

Tue, 08/07/2012 - 23:05 | 2686607 Chuck Walla
Chuck Walla's picture

Of all the avatars on Zero Hedge, yours is the only one that actually freaks me out.


You really HAD to know Robot Trader to get it.  Believe me, its a reasonably accurate depiction.



Tue, 08/07/2012 - 17:54 | 2685915 youngman
youngman's picture

I agree it will happen over some weekend.....and come Monday will be a clusterfuck....everyone scrambling to get on the train...but it will be much more expensive if not impossible...

Tue, 08/07/2012 - 18:19 | 2685974 DoChenRollingBearing
DoChenRollingBearing's picture

Yes, + 1

It is important that we all pay attention to what is going on, particularly on the weekends.  Weekends provide lots of cover for The Mainstream Media to keep everything quietER.

It is harder to buy physical gold on the weekends as well...  And the following Monday?  Last chance, beat the rush!

Tue, 08/07/2012 - 20:40 | 2686336 sosoome
sosoome's picture

"...and come Monday will be a clusterfuck....everyone scrambling to get on the train..."

Come monday morning, the train will have are gone.

Tue, 08/07/2012 - 17:54 | 2685919 LawsofPhysics
LawsofPhysics's picture

Is there any way at all to follow the total monetary base of the world, not just the dollar?  What is the total monetary base of all fiats currently being held in real vaults or in the electronic world?

By the way, that which cannot be sustained, won't. Hedge accordingly, that's all you can do anyway.

Tue, 08/07/2012 - 17:56 | 2685922 Mr Lennon Hendrix
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One million dollars!

Tue, 08/07/2012 - 22:20 | 2686521 mjcOH1
mjcOH1's picture

To parraphrase, "I will gladly trade you one hamburger oday for 1 milion dollars tomorrow".


There's going to need to be a lot of dubbing to adjust the context for the kiddies...

Tue, 08/07/2012 - 20:15 | 2686278 Bay of Pigs
Bay of Pigs's picture

Wait a second, all the USD bulls told me otherwise....


Tue, 08/07/2012 - 23:20 | 2686624 mick_richfield
mick_richfield's picture

You mean M1, right?  Not M3.

I'm going to guess that's between 10 and 15 trillion USD equivalent.



Tue, 08/07/2012 - 17:58 | 2685928 booboo
booboo's picture

Well, if Brent REALLY believed that competing Tectonic forces give no warning he may want to move out of that 2nd floor of his San Francisco office.

Tue, 08/07/2012 - 18:56 | 2686067 tenpanhandle
tenpanhandle's picture

when the birds stop tweeting and the dogs start barking, buy all the gold you got cash for.

Tue, 08/07/2012 - 19:04 | 2686092 JohnG
JohnG's picture

So NOW then....

Tue, 08/07/2012 - 17:59 | 2685932 Surrealist
Surrealist's picture

The UK Terrorgraph's International Business Editor of Doom - Ambrose Evans-Pritchard - is now cheering global economic recovery based on money supply data. What gives?


Global slump risk falls as world money rebounds


Tue, 08/07/2012 - 18:01 | 2685939 magpie
magpie's picture

I fear he has been gleichgeschaltet after recent events...

Tue, 08/07/2012 - 19:42 | 2686081 chump666
chump666's picture

He has thrown out some bad calls, this guy, trying to stay ahead of the a journalist. 

Now if he trades in the market, what he will notice, yes, there is money supply, neg real interest rates as central banks and governments only look at stock charts to judge economic recovery...but, inflation has HIT the middle east, India, Asia and slammed right into China.  Proof?  USD bids every singe day when Asian market open, in other words Asia is dumping their currencies and running to the USD, manly corporations buying up.

If you are bullish and long you get killed with volatility, simple, market is topping out on a re-inflation trade via ECB bond buying (Italy/Spanish debt), the ECB will blame Germany for a stock market crash, so Merkel will throw in the towel (sans dissent and the Germans finally waking up to the fact they got gamed by non elected EU/ECB officials...till then.)  The ECB is now a rogue governing body within Europe.  Still, markets need DXY sells to justify long rallies, this won't happen as long as inflation is ripping through the east.  Next port of call, war.  Middle East is about blow up (all of it), China getting frisky with India (south china sea gas disputes) etc.  oil Inflation leads to war. 

War will kill the bond markets and send stocks into a crash, USD/gold/oil will be bid etc


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