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Guest Post: Gold Bonds: Averting Financial Armageddon

Tyler Durden's picture




 

Written by and © by Keith Weiner

Gold Bonds: Averting Financial Armageddon

After the near-collapse of the financial system in 2008, a growing number of people have come to realize that our monetary disease is terminal.  It is that group to whom I address this paper.  I sincerely hope that this group includes leaders in business, finance, and government.

I do not believe that my proposal herein is necessarily “realistic” (i.e. pragmatic).  There are many interest groups that may oppose it for various reasons, based on their short-sighted desire to try to continue the status quo yet a while longer.  Nevertheless, I feel that I must write and publish this paper.  To say nothing in the face of the greatest financial calamity would go against everything I believe.

***

It seems self-evident.  The government can debase the currency and thereby be able to pay off its astronomical debt in cheaper dollars.  But as I will explain below, things don’t work that way.  In order to use the debasement of paper currencies to repay the debt more easily, governments will need to issue and use the gold bond.(Wherever I refer to gold, I also mean silver. For the sake of brevity and readability I will only say gold in most cases.

I give credit for the basic idea of using gold bonds to solve the debt problem to Professor Antal Fekete, as proposed in his paper: “Cut the Gordian Knot: Resurrect the Latin Monetary Union” (http://www.professorfekete.com/articles/AEFCutTheGordianKnot.pdf).  My paper covers different ground than Fekete’s, and my proposal is different as well.  I encourage readers to read both papers.

The paper currencies will not survive too much longer.  Most governments now owe as much or more than the annual GDPs of their nations (typically far more, under GAAP accounting).  But the total liabilities in the system are much larger.

Even worse, in the formal and shadow banking system, derivative exposure is estimated to be more than 700 trillion dollars.  Many are quick to insist that this is the “gross” exposure, and the “net” is much smaller as these positions are typically hedged.  But the real exposure is close to the “gross” exposure in a crisis.  While each party may be “hedged” by having a long leg and a balancing short leg, these will not “net out”.  This is because in times of stress the bid (but not the offer) is withdrawn.  To close the long leg of an arbitrage, one must sell on the bid (which could be zero).  To close the short leg, one must buy at the offer (which will still be high).  When the bid-ask spread widens that way, it will be for good reason and it does not do to be an armchair philosopher and argue that it “should not” occur.  Lots of things will occur that should not occur.

For example, gold should not go into backwardation.  This is another big (if not widely appreciated) piece of evidence that confidence in the ability of debtors to pay is waning.  Gold and silver went into backwardation in 2008 and have been flitting in and out of backwardation since then.  Backwardation develops when traders refuse to take a “risk free” profit.  That is, the trade is free from all risks except the risk of default and losing one’s metal in exchange for a defaulted futures contract.  See my paper (http://keithweiner.posterous.com/61392399) for a full treatment of this topic.

The root cause of our monetary disease has its origins in the creation of the Fed and other central banks prior to World War I, and in the insane treaty signed in 1944 at Bretton Woods in which many nations agreed for their central banks to use the US dollar as if it were gold, and this paved the way for President Nixon to pound in the final nail in the coffin.  He repudiated the gold obligations of the US government in 1971, thereby plunging the whole world into the regime of irredeemable paper.

The US dollar game is a check-kiting scheme.  The Fed issues the dollar, which is its liability.  The Fed buys the US Treasury bond, which is the asset to balance the liability.  The only problem is that the bonds are payable only in the central bank’s paper scrip!  Meanwhile, per Bretton Woods, the rest of the world’s central banks use the dollar as if it were gold.  It is their reserve asset, and they pyramid credit in their local currencies on top of it.

It is not a bug, but a feature, that debt in this system must grow exponentially.  There is no ultimate extinguisher of debt.  In my paper on Inflation (http://keithweiner.posterous.com/inflation-an-expansion-of-counterfeit-c...), I define inflation as an expansion of counterfeit credit.  I define deflation as a forcible contraction of counterfeit credit, and the inevitable consequence of inflation.  Well, we have had many decades of rampant expansion of counterfeit credit.  Now we will have deflation, and the harder the central banks try to fight it by forcing yet more expansion of counterfeit credit, the worse the problem becomes.  With leverage everywhere in the system, it would not take many defaults to wipe out every financial institution.  And there will be many defaults.   One default will beget another and once it really begins in earnest there will be no stopping the cascade.

Another key problem is duration mismatch.  Today, every bank and financial institution borrows short to lend long, many corporations borrow short to finance long-term projects, and every government is borrowing short to fund perpetual debts.  Duration mismatch can cause runs on the banks and market crashes, because when depositors demand their money, banks must desperately sell any asset they can into a market that is suddenly “no bid”.  In two papers (http://keithweiner.posterous.com/fractional-reserve-is-not-the-problem and  http://keithweiner.posterous.com/falling-interest-rates-and-duration-mis...), I cover duration mismatch in banks and corporations in more depth.

Most banks and economists have supported a policy of falling interest rates since they began to fall in 1981.  But falling interest rates destroy capital, as I explain in that last paper, linked above.  As the rate of interest falls, the real burden of the debt, incurred at higher rates, increases.

Related to this phenomenon is the fact that the average duration of bonds at every level has been falling for a long time (US Treasury duration began increasing post 2008, but I think this is an artifact of the Fed’s purchases in their so-called “Quantitative Easing”).  Declining duration is an inevitable consequence of the need to constantly “roll” debts.  Debts are never repaid, the debtor merely pays the interest and rolls the principal when due.  As the duration gets shorter and shorter, the noose gets tighter and tighter.  If there is to be a real payback of debt, even in nominal terms, we need to buy more time.  At the US Treasury level, average duration is about 5 years.  I doubt that’s long enough.

And of course the motivation for building this broken system in the first place is the desire by nearly everyone to have a welfare state, without the corresponding crippling taxation.  It has been long believed by most people a central bank is just the right kind of magic to let one have this cake and eat it too, without consequences.  Well, the consequences are now becoming visible.  See my papers (http://keithweiner.posterous.com/the-laffer-curve-and-austrian-economics and http://keithweiner.posterous.com/a-politically-incorrect-look-at-margina...) discussing what raising taxes will do, especially in the bust phase like we have now.

In reality, stripped of the fancy nomenclature and the abstraction of a monetary system, the picture is as simple as it is bleak.  Normally, people produce more than they consume.  They save.  A frontier farmer in the 19th century, for example, would dedicate some work to clearing a new field, or building a smokehouse, or putting a wall around a pasture so he could add to his herd.  But for the past several decades, people have been tricked by distorted price signals (including bond prices, i.e. interest rates) into consuming more than they produce.

In any case, it is not possible to save in an irredeemable paper currency.  Depositing money in a bank will just result in more buying of government bonds.  Capital accumulation has long since turned to capital decumulation.

This would be bad enough, as capital is the leverage on human effort that allows us to have the present standard of living.  We don’t work any harder than early people did 10,000 years ago, and yet we are vastly more productive due to our accumulated capital.

Now much of the capital is gone, and it cannot be brought back.  It will soon be impossible to continue to paper over the losses.  The purpose of this piece is not to propose how to save the dollar or the other paper currencies.  They are past the point where saving them is possible.  This paper is directed to avoiding the collapse of our civilization.

If we stay on the present course, I think the outcome will look more like 472 AD than 1929.  We must solve three problems to avoid that kind of collapse:

  1. Repayment of all debts in nominal terms
  2. Keep bank accounts, pensions, annuities, corporate payrolls, annuities, etc. solvent, in nominal terms
  3. Begin circulation of a proper currency before the collapse of the paper currencies, so that people have something they can use when paper no longer works

I propose a few simple steps first, and then a simple solution.  All of this is designed to get gold to circulate once again as money.  Today, we have gold “souvenir coins”.  They are readily available, and have been for many years, but they do not circulate.

A gold standard is like a living organism.  While having the right elements present and arranged in the right way is necessary, it is not sufficient.  It must also be in constant motion.  Gold, under the gold standard, was always flowing.  Once the motion is stopped, restarting it is not easy.  This applies to a corpse of a man as well as of a gold standard.

The first steps are:

  1. Eliminate all capital “gains” taxes on gold and silver
  2. Repeal all legal tender laws that force creditors to accept paper
  3. Also repeal laws that nullify gold clauses in contracts
  4. Open the mint to the (seigniorage) free coinage of gold and silver; let people bring in their metal and receive back an equal amount in coin form.  These coins should not be denominated in paper currency units, but merely ounces or grams

Each of these items removes one obstacle for gold to circulate as money, along side the paper currencies.  The capital “gains” tax will do its worst damage precisely when people need gold the most.  At that point, the nominal price of gold in the paper currencies will be rising very rapidly.  Any sale of bullion will result in a tax of virtually the entire amount, as the cost basis from even a few weeks prior will be much lower than the current price.  This amounts, in the US, to a 28% confiscation of gold.  This tax will force people to keep gold underground and not bring it to market.  It will contribute to the acceleration of permanent backwardation.

It is important to realize that gold is not “going up”.  Paper is going down.  There is no gain for the holder of gold; he has simply not lost wealth due to the debasement of paper.

Current law forces creditors to accept paper as payment in full for all debts, and there are also laws that nullify gold clauses in contracts.  Repeal them, and let creditors and borrowers negotiate something mutually agreeable.

Finally, the bid-ask spread on gold bullion coins such as the US gold eagle or the South African krugerrand is too wide.  If the mint provided seigniorage-free coinage service, then people would bring in gold bars and other forms of bullion until the bid-ask spread narrowed appropriately.  One of the attributes that gives gold its “moneyness” is its tight spread (even today, it is 10 to 30 cents per $1600 ounce!)  But currently, this tight spread only applies to large bullion bars traded by the bullion banks and other sophisticated traders.  This spread must be available to the average person.

As I said earlier, these steps are necessary.  Gold certainly will not circulate under the current leftover regime from Roosevelt and Nixon.  But it is not sufficient to address the debt problem.

Accordingly, I propose a simple additional step.  The government should sell gold bonds.  By this, I do not mean gold “backed” paper bonds.  I mean bonds denominated in ounces of gold, which pay their coupon in ounces of gold and pay the principal amount in ounces of gold.  Below, I explain how this will solve the three problems I described above.

Mechanically, it is straightforward.  The government should set a rule that, to buy a gold bond, one does not bid dollars.  One bids paper bonds!  So to buy a 100-ounce gold bond, then one could bid for example $160,000 worth of paper bonds (assuming the price of gold is $1600 per ounce).  The government retires the paper bond and in exchange replaces it with a newly-issued gold bond.

The government should start with a small tender, to ensure a high bid to cover ratio.  And a series of small auctions will give the market time to accept the idea.  It will also allow the development of gold bond market makers.

With gold bonds, it would be possible to sell long durations.  With paper, there is no good reason to buy a 30-year bond (except to speculate on the next move by the central bank).  The dollar is expected to fall considerably over a 30-year period.  But with gold, there is no such debasement.  The government could therefore exchange short-duration debt for long-duration debt.

At first, the price of the gold bonds would likely be set as a straight conversion of the gold price, perhaps adjusted for differing durations.  For example, a 100 ounce gold bond of 30 years duration might be bid at $160,000 worth of 30-year paper bond.

But I think that the bid on gold bonds will rise far above “par”, for several reasons I will discuss below.

The nature of the dynamic will become clear to more and more people in due course.  In the present regime, there is a common misconception that the yield on a bond is set by the market’s expectation of how much consumer prices will rise (the crude proxy for the loss of value for the dollar).  But this is not true.  Unlike in a gold standard, in an irredeemable paper standard, people are disenfranchised.  They have no say over the rate of interest.  The dollar system is a closed loop, and if you sell a bond then you either hold cash in a bank, which means the bank will buy a bond.  Or you buy another asset.  In which case the seller of that asset holds cash in a bank or buys a bond.  This is one of the reasons why the rate of interest has been falling for 30 years despite huge debasement.  All dollars eventually go into the Treasury bond.

The price of the paper bond today is set by a combination of central bank buying, and structural distortions in the system.  But it is a self-referential price, in a game between the Treasury and the Fed.  The price of the bond does not really come from the market.  And this impacts every other bond in the universe, which all trade at varying spreads to the Treasury.

An alternative to paper bonds would be very attractive to those who want to save and earn income for the long term, pension funds, annuities, etc.  Not only will the price of gold continue to rise (i.e. the value of the paper currency will continue to fall towards zero), but also a premium for gold bonds would develop and grow.  The quality asset will be recognized to be worth more, and at the least people would price in whatever rate of the price of gold they expect to occur over the duration of the bond.

This dynamic—a rising price of gold, and a rising exchange value of gold bonds for paper bonds—will allow governments and other debtors to use the devaluation of paper as a means to repay their debts in nominal terms, but affordably in real terms.

This is impossible under paper bonds!  This is because the process of debasement is a process of the Treasury borrowing more money.  Debt goes up to debase the dollar.  This path leads not to repayment of the debt cheaply, but to exponentially growing debt until a total default.

So we have solved problem number one.  With a rising gold price, and a rising exchange rate of gold bonds for paper bonds, we have set up a dynamic whereby every paper obligation can be met in nominal terms.  Of course, the value of that paper will be vastly lower than it is today.  This is the only way that the immense amounts of debt outstanding can possibly be honored.

This also solves problem number two.  If every financial institution is repaid every nominal dollar it is owed, then they will remain solvent.  To be sure, pension payments, bank accounts, corporate payroll, and annuities etc. will be of much lower real value.  But there is a critical difference between smoothly losing value vs. abruptly losing everything, along with catastrophic failure of the financial system.

I want to address what could be a misconception at this point.  Does this work only for governments that have gold reserves in the vaults?  No, this is not about gold reserves.  While that may help accelerate a gold bond program, the essential is not gold stocks but gold flows.  The government issuer of gold bonds must have a gold income (or a credible plan to develop one quickly).

And this leads to problem number three.  Gold does not circulate today.  Who has a gold income?  That is where we must look to begin the loop.  There is one kind of participant today who has a gold income: the gold miner.  Beset by environmentalist lawsuits, regulations, permits, impact studies, fees, labor law, confiscatory taxes, and other obstacles created by government, these companies still manage to extract gold out of the ground.

The gold miners are the group to which we must turn to help solve the catch-22 of getting gold to circulate from the current state where it does not.  I think there is a simple win-win proposition to offer them.  In exchange for exemptions from the various taxes, regulations, environmentalism, etc. they have a choice to pay a tax in gold bullion.

There are other kinds of entities to consider taxing, but the problem is that they all would need to buy gold in the open market in order to pay the tax.  As the price begins to rise exponentially, this will be certain bankruptcy for anyone but a gold miner.

And now, look at the progress we’ve made on the problem of getting gold to circulate.  We have gold miners paying tax in gold to governments who are making bond coupon payments in gold to investors who now have a gold income.  We can see how gold bond market makers will enter the scene, and earn a gold income to provide liquidity for bonds that are not “on the run”.  These bond market makers could pay a tax in gold also.

And we have released other creditors from any restriction in lending and demanding repayment in gold.  And anyone else in a position to sign a long-term agreement involving a stream of payments over a long period of time, such as landlords, can incorporate gold clauses in their contracts.  And if the tenant has a gold income, perhaps from owning a gold bond, he can manage his cash flows and confidently sign such a lease.

Note that the lender, unlike the employee, the restaurant, or most other economic actors, is in a position to demand gold.  While everyone else would like to be paid in gold, they haven’t got the pricing power to demand it.  The lender can say: “if you want my capital, you must repay it in gold!”

If enough gold bonds are issued soon enough, we may reverse the one-way flow of gold from the markets into private hiding, that is inexorably leading to inevitable permanent backwardation and the withdrawal of all gold from the system.

One of the key points in my backwardation paper is that the value of the dollar collapses to zero not as a consequence of the quantity of dollars rising to infinity, but because of the desire of some dollar holders to get gold.  If they cannot trade paper for gold, then they will trade paper for commodities without regard to price and trade those commodities for gold.  This will cause the price of the commodities in dollar terms to rise to levels that make the dollar useless in trade (and collapse the price of commodities in gold terms).

If we reverse the flow of gold out of the markets, we may be able to prevent this disaster from occurring.  The dollar will then continue to lose value in a continuous (if accelerating) manner, as people migrate to gold.

This is the best outcome that could possibly be hoped for.  If it occurs along with a reduction in spending so that spending does not exceed (tax) revenues, we will avert Armageddon and be on the path to a proper and real recovery.  To be clear, times will be hard and the average standard of living will decline precipitously.

But this is infinitely preferable to total collapse.

It is now up to farsighted leaders, especially in government, to take the first concrete steps towards saving Western Civilization.

 

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Thu, 01/26/2012 - 19:29 | 2101194 cossack55
cossack55's picture

Who wants to prevent the coming disaster from happening.  Many of us are looking forward to it.  I'll stick to physical and not have to count on the goobermint to fork over the real thing.

Thu, 01/26/2012 - 19:35 | 2101212 MillionDollarBonus_
MillionDollarBonus_'s picture

“By this, I do not mean gold “backed” paper bonds.“

But why? This is a much better idea. Many US citizens are hoarding gold rather than investing in the economy. Why not let them pledge it as collateral for loans from our Federal Reserve? This would boost aggregate demand and facilitate credit expansion, which in turn would boost retail sales and stimulate the economy.

Thu, 01/26/2012 - 19:41 | 2101222 nmewn
nmewn's picture

lol...yes, clearly the problem is not enough debt & credit.

Thu, 01/26/2012 - 19:48 | 2101234 Zer0head
Zer0head's picture

Thank Obama and his Eurotrash counterparts for getting rid of that bastard Moammar Gadhafi, things are lookikng up for the good people of Libya

 

http://www.ajc.com/news/nation-world/medical-group-halts-work-1318147.html

Thu, 01/26/2012 - 20:10 | 2101292 trav7777
trav7777's picture

gold bonds are stupid and will make no difference.  Cantarell didn't care what standard we had and neither does any other oil well

Thu, 01/26/2012 - 20:16 | 2101304 akak
akak's picture

Kill yourself now --- avoid the post-Zombie Apocalypse rush.

Thu, 01/26/2012 - 20:25 | 2101322 rajat_bhatia
rajat_bhatia's picture

Or, lets just bomb the banks , destroy all history of credit

Thu, 01/26/2012 - 21:42 | 2101455 JW n FL
JW n FL's picture

 

 

Lets Bomb the Bankers and India for Buying Iran's Oil in Gold!

Thu, 01/26/2012 - 22:03 | 2101492 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There is no way that India is buying oil in gold.  No way.

Fri, 01/27/2012 - 00:01 | 2101655 Harlequin001
Harlequin001's picture

At first I skipped through this to see how long it was. Then I saw this. 'It is important to realize that gold is not “going up”.  Paper is going down.  There is no gain for the holder of gold; he has simply not lost wealth due to the debasement of paper.'.

Of course this statement relies on gold being fairly priced at all times which it isn't. We have 50 years and more of manipulation to be taken out of the gold price yet. This is a one in 400 year opportunity to take advantage of every shady deal undertaken by any banker in history when the ability of paper to contain gold is exhausted.

This is where gold finds its true value. This is where gold bullion investors either get wealthy, ripped off or taxed to oblivion...

But the gold price ain't going down.

Stunner....

Fri, 01/27/2012 - 00:10 | 2101659 Oh regional Indian
Oh regional Indian's picture

The age of oil is over. And Gold does not care. 

Definitely as we've known it. And Gold is no answer to anything. At all. Never has been. It is the ultimate cosmic joke. But then again, we all have to have beliefs we need top hand our hats on.

Everything a-new. Gold bonds are still bonds. Bonds only en-slave. Regard-less of what they are "backed" by.

ori

/watershed-day-may-this-pour-through-a-million-pairs-of-eyes/

Fri, 01/27/2012 - 00:30 | 2101689 AgShaman
AgShaman's picture

I disagree

The age of oil is far from over.

MSM has gone "full retard". I saw that douche Chris Mathews the other day get on the boob tube and "preach" to the unwashed masses that Amerikwans need to get back to becoming more patriotic....like buying War Bonds....and paying their taxes.

It was so over-the-top pathetic I had to laugh....soze I wouldn't puke

Their masters want to derail the competition in the ME so bad they've turned their mouth-piece minions into "foaming at the mouth" rabid War-mongers.

It felt like the Despot FDR was trying to drive a "guilt complex" into my brainbox with a Captive Bolt Pistola...

****ing MSM Wankers....oil is still in the driver's seat

Fri, 01/27/2012 - 00:38 | 2101697 Oh regional Indian
Oh regional Indian's picture

Ag, it IS over from every perspective you can think of.

1) Terribly expensive to extract, getting pricier by the day

2) God-awfully in-efficient usage 10-12%, 15% best case in majority of usage (Automotive, IC Engine, Military, Flight)

3) Tremendous human and environmental cost

4) Loaded with geo-politically de-stabilizing energy.

5) is where it is ONLY BECAUSE ALTERNATIVES HAVE BEEN SUPRESSED.

I could go on. Plus, I have the alternative.

Oil IS a curse upon us. 

ori

Fri, 01/27/2012 - 01:04 | 2101729 trav7777
trav7777's picture

It is impossible to suppress a superior alternative.

Fri, 01/27/2012 - 01:09 | 2101735 Oh regional Indian
Oh regional Indian's picture

I suggest you google Viktor Schauberger.

Or better yet, buy a book called Living Energies by him.

Wait a minute, didn't Fiat money suppress a superior aletrnative? 

;-)

ori

Fri, 01/27/2012 - 02:38 | 2101839 redpill
redpill's picture

Some say the end is near.
Some say we'll see armageddon soon.
I certainly hope we will.
I sure could use a vacation from this

Bullshit three ring circus sideshow of
Freaks

Here in this hopeless fucking hole we call LA
The only way to fix it is to flush it all away.
Any fucking time. Any fucking day.
Learn to swim, I'll see you down in Arizona bay.

Fri, 01/27/2012 - 10:21 | 2102293 trav7777
trav7777's picture

WTF did I JUST SAY, dipshit?

I don't have to google anyone to know that superior alternatives CANNOT be suppressed.

Fiat money IS superior to alternatives.   You really need to wrap your head around how evolution works, dude, and get that head out of your ass.

Fri, 01/27/2012 - 13:45 | 2102962 Oh regional Indian
Oh regional Indian's picture

Wow Trav, that ulcer in your stomach must make you a real douche to be around eh? 

Tech.

ori

Fri, 01/27/2012 - 10:43 | 2102366 Klaus Daimler
Klaus Daimler's picture

You have one of Schauberger's implosion devices? 

How's it working out for you?

In response to your earlier message, one, and the most important way in which the oil age isn't over, is that the successor to oil isn't here, isn't widely in use, and its identity isn't even clear. 

Oil is here, it's the champ, and until its benefit to cost difference is surpassed by another source, it will continue to be the champ, whether you, I, or anyone else like it or think it right or wrong.

Fri, 01/27/2012 - 01:10 | 2101736 AgShaman
AgShaman's picture

Your # 5 "sells it" and carries alot of weight from my vantage point.

Alternatives be damned....they'll usher in a neo-feudalism world of fighting with sticks and swords before they'll give up on the monopoly they're desperately clutching onto.

A hunger for power and control is insatiable within their inner circle.

Fri, 01/27/2012 - 01:20 | 2101748 Oh regional Indian
Oh regional Indian's picture

Absolutely AGShaman. I've been facing that resistance for over 7 years now. 

When the time is right, Goliath will crumble with the push of a finger. All great paradigms have binary collapses.

ori

Fri, 01/27/2012 - 01:21 | 2101751 lemonobrien
lemonobrien's picture

you clearly don't understand the tao, the useless is the most valuable.

Fri, 01/27/2012 - 01:28 | 2101764 Oh regional Indian
Oh regional Indian's picture

Lemon, in the Tao-ist sense, that use-less is not hoarded and protected with one's life either. 

The Hole in the wheel is No-thing. That is what makes it useful. 

Perhaps your grasp of the Tao is shallow and you mistake the finger for the moon.

ori

Fri, 01/27/2012 - 08:56 | 2102046 Pope Clement
Pope Clement's picture

Lemme see, Taoism was founded by the mythical Chinese emperor Huang-ti who has been identified as a certain planet that was also the primal god of India known by various names such as Brahma/Varuna etc. by the Incas as Huacha/Viracocha by the Romans as Saturn/Janus and so on with people all over the world. Please explain how I may be mistaking the finger for the moon ?

Fri, 01/27/2012 - 08:52 | 2102037 Raging Debate
Raging Debate's picture

Lemon, does the Tao state the first will be last and vice versa?

Thu, 01/26/2012 - 22:12 | 2101507 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or, lets just bomb the banks , destroy all history of credit

That's from that one movie....what's it called....

Thu, 01/26/2012 - 22:57 | 2101561 The Big Ching-aso
The Big Ching-aso's picture

 

 

Gold bonds?   Holy shit.   Denninger's head gonna explode out his ass if this kind of talk continues.

Thu, 01/26/2012 - 23:00 | 2101565 A Lunatic
A Lunatic's picture

Why isn't the FED using worthless FRN's to buy up as much gold as they can get their hands on?

Fri, 01/27/2012 - 00:04 | 2101658 Harlequin001
Harlequin001's picture

Because it is the end of them. They prefer to print more FRN's to short the gold price and see how long it lasts...

Fri, 01/27/2012 - 00:59 | 2101722 sitenine
sitenine's picture

Haven't you heard?
Gold is a barbarous relic; not money.
Benny the Bucks Bernank said so himself.

Fri, 01/27/2012 - 02:22 | 2101827 cranky-old-geezer
cranky-old-geezer's picture

 

 

Why isn't the FED using worthless FRN's to buy up as much gold as they can get their hands on?

Because they're actively suppressing gold's price (via proxy) to keep the public from seeing how fast they're debasing the dollar.

...and so their banker owners can buy gold cheap.

...but we can too, so carry on Fed, keep suppressing gold, knock yourselves out :)

 

Fri, 01/27/2012 - 04:59 | 2101907 BlackVoid
BlackVoid's picture

Because that would skyrocket the gold price and collapse confidence in paper.

Thu, 01/26/2012 - 23:25 | 2101600 DaveyJones
DaveyJones's picture

"Lots of things will occur that should not occur".  ...that about sums it up

Thu, 01/26/2012 - 20:44 | 2101366 Bastiat
Bastiat's picture

It was always about Oil and Gold and the preservation of the USD as the standard for oil trade . . . and nothing else.   They got away with the crap in Iraq so now they barely bother to pretend otherwise.

Fri, 01/27/2012 - 04:38 | 2101901 AnAnonymous
AnAnonymous's picture

http://www.ajc.com/news/nation-world/medical-group-halts-work-1318147.html
////////////////////////////////////////////////////////

Take a bad place. The worst you can imagine.

Yet it is the talent of US citizens to turn it worse.

Not every human being is gifted with such talent.

Makes them the best extorter of the weak, farmer of the poor who has ever been.

Fri, 01/27/2012 - 07:35 | 2101965 akak
akak's picture

Just how many times are you going to engage in jousting with that particular strawman anyway?

Fri, 01/27/2012 - 07:42 | 2101968 AnAnonymous
AnAnonymous's picture

What strawsman?

Fri, 01/27/2012 - 16:41 | 2103687 akak
akak's picture

The strawman of your own creation, and which exists only in your tortured and confused mind, that you like to call "US Citizenism" --- which you still have yet to define or explain to even the slightest extent.

 

PS: "Citizenism", of any variety, is meaningless gibberish on the face of it, as there is NO philosophical nor ideological theory associated with the mere existence as a citizen of any particular nation-state. But do continue to jabber away in your blind, bigoted hatred --- it is most entertaining!

Thu, 01/26/2012 - 21:19 | 2101419 Silver Bug
Silver Bug's picture

It is a great idea, but you know just as well as I do, that the government is not going to do this. They are too stupid.

 

http://goldisking.blogspot.com/

Thu, 01/26/2012 - 21:46 | 2101462 DoChenRollingBearing
DoChenRollingBearing's picture

Correct, they will never do it.  

But, I don't think it is because they are too stupid, I think they fear that the bonds would be popular, and that they would be a burden paying back.  Too much discipline required by government if the gold bonds were sold in quantity.

"Gold is King" would have earned you the + 1 just for the name of the blog.

Thu, 01/26/2012 - 22:16 | 2101517 francis_sawyer
francis_sawyer's picture

But, I don't think it is because they are too stupid, I think they fear that the bonds would be popular, and that they would be a burden paying back

Like they really fucking think that far ahead... Get a grip...

Thu, 01/26/2012 - 22:25 | 2101528 anonnn
anonnn's picture

 

Unfairness breeds chaos.

Any Monetary System, without a working, effective Fairness System, breeds chaos.

 Arbitrary privileges ,or literally "private laws", is what has been mistaken for "justice".

Any fair and effective "justice" system would seem to  cause any monetary system to become more nd more workable. The current system has a history of trending less workable.

Thu, 01/26/2012 - 19:44 | 2101225 HamyWanger
HamyWanger's picture

Good idea, but this "pledge" should be coerced, otherwise it has no chance to succeed. 

It is indeed true that the massive amounts of capital ridiculously stacked away out of psychosis and anti-bank paranoia in useless rocks is harming the U.S. economy though, you're spot on.

Thu, 01/26/2012 - 20:12 | 2101293 MillionDollarBonus_
MillionDollarBonus_'s picture

Glad you agree. I would also add that silverbugs are doing particular damage to the economy by hoarding a purely industrial metal. Hoarding silver causes the cost of living for many hard-working Americans to rise by keeping prices artificially high. 

Thu, 01/26/2012 - 20:17 | 2101303 akak
akak's picture

"Hoarding" = privately owning that which the government lusts for itself, and will steal by any means necessary.

Thu, 01/26/2012 - 20:41 | 2101352 nmewn
nmewn's picture

akak...I've been waiting for this moment of desperation to arrive.

The denial is over, the anger is over.

Now comes the bargaining and the attendant "you're unpatriotic" if you don't allow us to screw everyone over again.

Next up, depression & acceptance. Same as it ever was.

Thu, 01/26/2012 - 20:59 | 2101392 Bastiat
Bastiat's picture

Yeah, the "H" word is out now -- "Hoarders"   that's the next stage after the evil "speculators" driving up prices.  It's never the evil money printing ponzi fiat central bank theives and the congressional/executive/judicial  whores who empower them.    

Bennie's inflation target is 2% and if he fails it's your fault for owning Silver Eagles which are ONLY minted by the US Mint because of that terrorist Ron Paul made them do it.  Can I be a troll too? 

 

Thu, 01/26/2012 - 21:43 | 2101459 nmewn
nmewn's picture

Its incredible isn't it?...the mindset of the boiler room econ-trolls...lol.

The economy is something that must be controlled and massaged according to them & their masters. We?...why, we're just mere cogs, the grazers, instead of the actual ones comprising it. Protecting ones self from the looting and pillaging of them has become more than just a distraction and irritant.

Its a good day ;-)

Thu, 01/26/2012 - 22:13 | 2101509 francis_sawyer
francis_sawyer's picture

I loved this...

It is now up to farsighted leaders, especially in government, to take the first concrete steps towards saving Western Civilization.

BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!

Thu, 01/26/2012 - 22:47 | 2101553 Transformer
Transformer's picture

Hamy and MDB, I couldnd't agree more.  You guys are some of the sharpest on ZH.  I love it.

Fri, 01/27/2012 - 00:42 | 2101705 Stax Edwards
Stax Edwards's picture

I hope we get to watch Krugman eat a pile of dog shit on live television before they take him to maximum confinement.  I would take pleasure in kicking his fucking teeth in.

Fri, 01/27/2012 - 01:10 | 2101738 trav7777
trav7777's picture

thing is...silverbugz ARE actually hoarders who are hoping to get rich off of a scarcity play on a primarily industrial metal.

What a bunch of rabble.  People with class buy gold.  Silver is for peasants.

There's NOTHING WHATSOEVER patriotic, noble, altruistic, or even decent about silverbugz.  Every last one has announced NOT his intent to "preserve wealth," but to try to strike it rich off of a price spke.  The King of the Retards, mosely-claven, has said silver will go to 10x that of gold.

WTF...people cheering FOR a bubble...while at the SAME TIME bitching over margin hikes to prevent such a thing.

Silverbugz are NO DIFFERENT from housing ponzi speculators or .com ponzi speculators or debt bubble ponzi speculators.  They're just trying to hit a homerun of unearned wealth off of a DIFFERENT bubble.

Fri, 01/27/2012 - 01:28 | 2101761 lemonobrien
lemonobrien's picture

true dat; silver is gold's bitch.

Fri, 01/27/2012 - 01:58 | 2101794 akak
akak's picture

Funny how virtually the EXACT same words and thoughts have been cast at every owner of gold --- "Radical Goldbug Extremists" in Nadlerese --- by every virulent, malicious, dishonest, spineless, pro-Establishment lackey and disinformation agent.  Every sentiment you just expressed against "silverbugz", Bob, can be precisely leveled at all those "goldbugs" out there as well. 

So man up and tell us, point-blank: Are you equally condemning all the "goldbugs" out there as being merely "hoarders" and "parasites" as well? 

If so, you reveal yourself as just another disingenuous, PM-hating, pro-bankster Nadler clone.  If not, then you are a complete hypocrite and irrational idiot.  Take your pick, but either way, you are hoist by your own petard.

Fri, 01/27/2012 - 02:19 | 2101816 Ignatius
Ignatius's picture

"Every sentiment you just expressed against "silverbugz", Bob, can be precisely leveled at all those "goldbugs" out there as well. "  -- akak

 

Except, of course, then, they'd be wrong.

 

The 'best and highest use' for gold is as savings.

Fri, 01/27/2012 - 02:40 | 2101823 akak
akak's picture

That is an opinion, not a fact, as much as I might agree with it --- although many would argue that gold's best value lies in it being not savings, but money.

Nevertheless, if one chooses to put their savings (or more reasonably and likely, just part of their savings) into silver instead, by what right do YOU, or anybody else, condemn them for it --- much less fly into an irrational, hypocritical, foaming-at-the-mouth hydrophobic rage as Bob Moriarty, er, "Trav", did above?

Fri, 01/27/2012 - 03:00 | 2101844 Ignatius
Ignatius's picture

Right, everything hinges on whether my assertion that the "best and highest use" of gold is as savings.  As a wealth reserve asset. I'm not saying that gold is the only wealth reserve asset. I'm saying that gold itself is perfect as a wealth reserve asset.  Gold is virtually, universally recognized and accepted for payment.  If one doesn't agree nor  comprehend why that is so, well, I can't help them.  There's a fundamental difference between gold and just about everything else in this world.  It's 'wealth in your pocket.'  It's 'wealth, to go.'

Fri, 01/27/2012 - 03:01 | 2101855 akak
akak's picture

Silver can be that, too --- and has been an equally valid, and useful, "wealth reserve asset" for most of recorded history.  In fact, the case can be made that silver may very well, in the near-term future, be a relatively BETTER store of value (or generator of profit) than gold, going forward from today.  I am agnostic on that issue, but I do see the differences between gold, silver and platinum as relatively minute in that regard; yes, gold may very well be the best value preservation asset, but silver and platinum are only slightly less ideal, if at all.

Fri, 01/27/2012 - 03:35 | 2101868 Ignatius
Ignatius's picture

Ok, now let's take the logic a little further.  What if there's a famine on and one's neighbor has stored his wealth in wheat.  You have offered to buy his wheat to feed your starving family.  You can meet his price, but not his timing.  See, he's 'saving' his wheat and doesn't want to sell till next Fall when his daughter enters college and he needs the money. 

By matters of degree across a variety of commodities it can be argued that saving in gold is the best choice for all concerned.  With only one exception I can think of and that being if there is no food for sale at any price (then, of course, one would have been remiss not to have saved or 'hoarded' some food).

 

Fri, 01/27/2012 - 11:35 | 2102528 DaveyJones
DaveyJones's picture

As I've argued and as you demonstrate, food or more precisely, seed is not the ultimate store of value until it is... and Monsanto is the most evil banker of all

Fri, 01/27/2012 - 02:33 | 2101832 AgShaman
AgShaman's picture

Perhaps you are alot like Trav....and you know very little about gold and silver.

And even less about SilverBugs.

Of course I could give you some excellent reasonings behind the whole event....and the "what 4's"

But it's more fun to keep the "jealous" uninformed in the dark...where they are deserving and belong

Fri, 01/27/2012 - 02:37 | 2101837 akak
akak's picture

+1 from me, old buddy!

Fri, 01/27/2012 - 02:52 | 2101842 cranky-old-geezer
cranky-old-geezer's picture

 

 

Every last one has announced NOT his intent to "preserve wealth," but to try to strike it rich off of a price spke. 

You're such a DUMBASS.

There's NOTHING EVIL about buying something hoping to make a profit selling it later on. 

Home, classic car, Harley, Rolex, undervalued stock, treasury bonds, supertankers of oil, silver, gold, platinum, copper, scrap aluminum, cotton futures, pork belly futures, orange juice futures, WHATEVER.

YES people hope demand will rise and the price goes up. It's the LIFE BLOOD of the WHOLE DAMN FINANCIAL SECTOR, holding some asset hoping to make a PROFIT on it later on.

But you single out silver investors as some sort of "evil hoarders".

Like I said, you're a STUPID DUMBASS.

Fri, 01/27/2012 - 02:54 | 2101847 akak
akak's picture

Absolutely correct, COG, there is not only nothing evil about "hoarding" ANYTHING at all --- "speculating", as economists call it, in an entirely neutral sense --- but it is in fact an essential part of the beneficial "invisible hand" of the free market, and is utterly VITAL to the smooth funtioning of an economy, keeping supply and demand in balance, and providing necessary supply during times of shortage. 

By maliciously and irrationally attacking "hoarders", Trav just (once again) demonstrates his utter ignorance, and blind hatred, of everything that a free market, and liberty, truly represent.  But we must thank him for proving once again what an evil, malevolent, freedom-hating troll he really is.

Fri, 01/27/2012 - 07:08 | 2101843 akak
akak's picture

Trav7777 declared:

There's NOTHING WHATSOEVER patriotic, noble, altruistic, or even decent about silverbugz.  Every last one has announced NOT his intent to "preserve wealth," but to try to strike it rich off of a price spke. 

Wow trav!  You mean you personally met with and interviewed EACH AND EVERY silver investor in the world?  All several hundred MILLION of them?  Clearly you must have done so, to be able to make such a profoundly definitive statement!  How truly impressive your dedication to the truth clearly is --- and how surprising that each and EVERY one of them has the EXACT same gameplan in mind regarding silver!  Talk about coincidences!

 

PS:  It must have been rather time-consuming to travel to all those tens of thousands of Indian and Chinese villages, among so many others, to conduct your exhaustive interviews with each and every silver owner in the world.  And the language barrier!  Clearly, Trav, you are a genius in the linguistic realm in addition to being a precious metal savant par excellence.  We lowly silverbugz and shameless silver pumpers (and each and every holder of silver is obviously one or the other, with NO exceptions) dare not even aspire to the lofty and rarefied heights of Olympian accomplishment among which you so effortlessly and routinely soar, only dipping down to the silver-befouled earth to inspire and enlighten us "tears of the moon"-deluded peons with your oracular words of warning against argentummania in the most selfless and Promethean acts of noblesse oblige .

Fri, 01/27/2012 - 10:26 | 2102304 trav7777
trav7777's picture

chinks and dotties don't hoard silver. Even they have more class than you.

You are speculators trying to strike it rich in a bubble.  Period.

STFU already acting like you're the saviors of the fucking financial system when you are speculative parasites like any other.

Fri, 01/27/2012 - 11:51 | 2102589 ronin12
ronin12's picture

The parasites use OTHER people's money to lever up and get bailed out when they blow up. A J6P trying to protect his purchasing power exhanging toilet paper FRNs for something of intrinsic value is not a parasite.

 

Fri, 01/27/2012 - 11:51 | 2102590 ronin12
ronin12's picture

The parasites use OTHER people's money to lever up and get bailed out when they blow up. A J6P trying to protect his purchasing power exhanging toilet paper FRNs for something of intrinsic value is not a parasite.

 

Fri, 01/27/2012 - 15:44 | 2103296 akak
akak's picture

.

chinks and dotties don't hoard silver. Even they have more class than you.

Is that because they are failed races too, like the blacks whom you loathe and collectivistically despise?  But who am I to rely on several thousand years of well-known financial and monetary history of silver in any case, particularly as regards the historic silver-valuing and silver-holding Chinese and Indian populations, when I have trav's blithe and sweeping assertions to the contrary?

By the way, "chinks and dotties" --- nice enlightened views and sentiments you have there on other cultures, Bob.  At least you are not harping about the manifest racial inferiority of niggers in this particular instance, as you usually are.

STFU already acting like you're the saviors of the fucking financial system when you are speculative parasites like any other.

I guess it is now abundantly obvious that you also despise the free market and individual liberty.  By your "logic", we need to organize a march on every grain silo in the world as well, and destroy each and every one of them, because clearly their owners are nothing more than "speculative parasites".  And all the owners of every warehouse of any sort in the world?  "Speculative parasites!"  How DARE they "hoard" valuable goods of their own accord!

Really, Bob, you have gone completely over the top here, and become a complete travesty of yourself.

Thu, 01/26/2012 - 23:35 | 2101618 DaveyJones
DaveyJones's picture

the word game is just as important as the others

Thu, 01/26/2012 - 23:37 | 2101622 UnpatrioticHoarder
UnpatrioticHoarder's picture

Speak of the devil.... here I am!

Thu, 01/26/2012 - 20:37 | 2101345 S.N.A.F.U.
S.N.A.F.U.'s picture

Children, avert your eyes!

When did this homospecies troll-on-troll action start?!  You know very well it is not considered even remotely socially acceptable to do this shit in private, much less in public!  President Santorum will soon be stopping this disgusting intercourse and setting you two straight!

Thu, 01/26/2012 - 20:49 | 2101378 Bastiat
Bastiat's picture

/chuckle

Thu, 01/26/2012 - 21:54 | 2101477 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's not funny.  It's been going on all day.

Fri, 01/27/2012 - 10:53 | 2102405 Bastiat
Bastiat's picture

I'll take a chuckle where I can find it.

Thu, 01/26/2012 - 21:11 | 2101404 Calmyourself
Calmyourself's picture

Because we all care so much about what you do with another adult and your teeny peepi.. Really you do whatever you want as long as we cut government in half.  You and Reggie can double team your hero in a limo on the way to the nomination for all I care..

Fri, 01/27/2012 - 00:03 | 2101641 S.N.A.F.U.
S.N.A.F.U.'s picture

"you do with another adult and your teeny peepi"

Adult trolls?  Ever heard of oxymoron?

And you're telling me that these trolls are doing this with their members?  That's even more disturbing!  And I have to wonder, how is it that YOU happen to know they are hunt-and-pecker typists?  Hmmm?

"You and Reggie can double team your hero"

You think Santorum is my hero?  Humor fail much?

And Reggie is for Santorum?  I wouldn't know due to my lack of desire to swallow Reggie's tl;dr masterbatory cum shots.  If true, that is unfortunate.  Anyone being for Santorum, including Frothy himself, is a tragedy -- Santorum's sense of morality is about as well developed as your sense of sarcasm.

Fri, 01/27/2012 - 09:07 | 2102063 francis_sawyer
francis_sawyer's picture

Trolls don't have peepi's...

just saying...

Dr. Peter Venkman will confirm this fact... "It's true, this man has no penis"...

Thu, 01/26/2012 - 21:04 | 2101399 lasvegaspersona
lasvegaspersona's picture

Precisely why it is gold  and gold alone (and not silver) that is THE monetary metal. 

Thu, 01/26/2012 - 22:27 | 2101535 PhilofOz
PhilofOz's picture

Read the article a little bit better than you have done so....

(Wherever I refer to gold, I also mean silver. For the sake of brevity and readability I will only say gold in most cases.)

Fri, 01/27/2012 - 00:22 | 2101683 Nage42
Nage42's picture

Gold is generally chosen because it generally is otherwise useless, whereas all other metals are in contrast quite critical/useful to industry.

I suggest we NOT use Silver because industrially it is extremely useful for it's many great properties. Could say ditto for Pt/Pd.

Fri, 01/27/2012 - 00:46 | 2101709 AgShaman
AgShaman's picture

Not useless to the elite families that are hoarding it in their private vaults...or the Central Bankers...or the Govts. of the world.

But yeah...should they ever run outta silver...the Syndicate may have to consider giving up on the "Endless Wars For Profit"....under the guise of spreading Democracy

Fri, 01/27/2012 - 01:16 | 2101744 Nage42
Nage42's picture

Did I need to expand "otherwise" in this context?

Gold is ONLY useful for its perceived psychological anchor value to the concept of wealth. It does have some useful properties around non-oxidization, is highly ductile, high conductivity, etc... but other metals do this better and "cost" less.

Given that it is "otherwise" useless, this is PRECICELY why it should be chosen as a monetary/wealth-store metal over others metals [which should not be in competition that removes them from industry].

Fri, 01/27/2012 - 01:40 | 2101776 AgShaman
AgShaman's picture

Thanks...but no, not for me you don't....I'm pretty well versed in what the Group 11 metals have to offer.

Perhaps it didn't look as though I was adding to your post....in that the PuppetMasters hoarding it are losing their "cloaking" abilities of "tradition" and "barb's relics" or whatever is the latest catch phrase to dissuade the proles from gaining exposure.

Fri, 01/27/2012 - 01:13 | 2101740 trav7777
trav7777's picture

no; gold is not useless.  People desire it.  Bitches give up the pussy for it.

It's frickin GOLD, ok?  It is special because of its color along with that density...doesn't really need any utility to be desired. 

that said, gold does have some uses but it is very expensive compared to substitutes.

I dunno how the fuck the US would pay back silver bonds...do we have any fkin silver?  Is the US gonna go MINE it? 

Fri, 01/27/2012 - 01:21 | 2101752 Nage42
Nage42's picture

Hey trav, when did you change your colors?

I thought you were in the RoboBoat of "it only costs five'dola" and "you guys are barbarious relics" et al.

... I'm just surprised that we typed the same thing and posted within 3 seconds of eachother...

Fri, 01/27/2012 - 07:10 | 2101945 Element
Element's picture

er ... it is actually possible to get pussy for free ... never needed gold ... not a great sales-pitch ... jus sayin

Fri, 01/27/2012 - 07:29 | 2101956 akak
akak's picture

Perhaps you are more attractive and desirable as a sexual partner than the above poster?

Given the vast number of loutish, Moby Dick-ish, repulsive sub-humans roaming any given WalMart at any given moment, I have to wonder if even 50% of the population has had sex within the last five years.

Fri, 01/27/2012 - 03:00 | 2101854 cranky-old-geezer
cranky-old-geezer's picture

 

 

I suggest we NOT use Silver because industrially it is extremely useful for it's many great properties. Could say ditto for Pt/Pd.

COPPER is extremely useful in industry too, but you dumbasses aren't against someone "hoarding" copper.

NOBODY FUCKING CARES what YOU think people should "hoard" or not "hoard". 

FUCK OFF DUMBASS.

Thu, 01/26/2012 - 21:04 | 2101400 KickIce
KickIce's picture

What happened to the people that trusted their government and held currency rather than gold under FDR?

Thu, 01/26/2012 - 22:13 | 2101508 Fred Hayek
Fred Hayek's picture

Um, they realized they were being treated like chumps by their government?

Thu, 01/26/2012 - 22:42 | 2101546 KickIce
KickIce's picture

Meant to add when the government revalued gold from 20 to 35.  But yeah, those that held currency lost wealth over night.

Thu, 01/26/2012 - 23:35 | 2101619 UnderDeGun
UnderDeGun's picture

Uh, they turned it in so they wouldnt go to jail? Yeah, I believe that wasss the case!

Thu, 01/26/2012 - 21:16 | 2101410 BLOTTO
BLOTTO's picture

Those same 'hard-working' Americans you speak of - can buy it too!

Just like those hard-working Chinese...

hard-working Canadians (me)...

hard-working Indians...

etc...On sale for anyone and everyone - good times!

Still cheap too...good price...

In response to MDB: Glad you agree. I would also add that silverbugs are doing particular damage to the economy by hoarding a purely industrial metal. Hoarding silver causes the cost of living for many hard-working Americans to rise by keeping prices artificially high.

 

Thu, 01/26/2012 - 23:07 | 2101560 TrulyBelieving
TrulyBelieving's picture

Hoarding silver causes the cost of living to rise for many hard-working Americans...yea right...And the government using the monetary system as described above is good for the hard-working Americans. And the part concerning welfare and the debt incurred in payment of this welfare system is especially good for those hard-working Americans. Of course there are many who  agree this system is good for the hard-working American people, like Ivy League economist, and probably MDB.

Fri, 01/27/2012 - 00:11 | 2101670 Harlequin001
Harlequin001's picture

Hey MDB, of course the good thing about your posts is that after all this time it becomes too easy to see the holes in the government spin once the commenters get to you. Keep it up...

You do more for golds' cause than the gold bugs...

Fri, 01/27/2012 - 01:16 | 2101743 Al Gorerhythm
Al Gorerhythm's picture

MDB, are you hoarding any dollars in a bank? You are, you bastard. You are not helping circulate dollars. I spent all of mine on a usless rock. I'm doing my bit to keep the currencies ticking over. Get out there and spend you unpatriotic douche.

Fri, 01/27/2012 - 03:41 | 2101778 JOYFUL
JOYFUL's picture

Good to see some commentators here are able to grasp the essentials long understood & adhered to by top-flight economists, financial professionals, and their hard working counterparts in the government arena.  Hamster and Boner clearly recognize that it all boils down to jobs - get Amerika working again! Bingo!  And to see the two of them working together is a sign that Amerikans are once again joining forces to work towards a common goal!

If it's not too presumptous of me to anticipate the next step in this juggernaut of common-sense solutions posed by our resident patriot enthusiasts, let me briefly outline what I imagine their next suggestion will be, once we have acceded to a proper recognition of their hard-boiled wisdom:

Just as essential as identifying hoarders and recividist anti-social types is the cutting out of waste in our economy:  Those milions of Amerikans who can no longer afford to live in homes or commute to low paying employment should be housed in special purpose-built facilities as guests of the State - their useful employment in communitarian ventures will restore their dignity and purpose, and by driving them to their work in MADE IN AMERIKA buses we will effectively spare ourselves dependence on unreliable foreign energy hoarders whose lust for our dollars and hatred of our freedoms has nearly enough bankrupted us.

And, as ancillary benefit, the communal spirit of this newly organized group living experience will no doubt bring out the best of Amerikans talents for creative group leisure activities in their non-working hours...and return us to those halycon days of shared values and happy togetherness now so sorely missed!

Mr. Ham & Mr. Bone....Creative solutions to vexing socal issues. Problem solved. Next?

Fri, 01/27/2012 - 07:26 | 2101955 Motley Fool
Motley Fool's picture

" I would also add that silverbugs are doing particular damage to the economy by hoarding a purely industrial metal. Hoarding silver causes the cost of living for many hard-working Americans to rise by keeping prices artificially high."

 

Holy shit. I never thought the day would come I'd agree with MDB. You are off your game man, the above is actually true.

Fri, 01/27/2012 - 19:05 | 2104180 Random_Robert
Random_Robert's picture

"I would also add that silverbugs are doing particular damage to the economy by hoarding a purely industrial metal."

There is another word for Hoarding.... that word is "owning"- Funny how no one accuses me of "hoarding" dry spaghetti noodles when there are people in Asia that are starving and would love a big plate of pasta.

The point behind this is simple: my property (be it silver or spaghetti) is MINE - you may offer to BUY it from me (at a price that I agree is fair), or beg me to give it to you (which I may or may not depending on how charitable I feel); or you can steal it from me via burglary, or shoot me dead and take it from me...

Only one of these 4 alternatives is morally superior. One is morally inferior, and the other 2 make YOU a worthless human being.

So, which one is it going to be, MDB...?

I know you're a troll, and I know you do this for effect, but I need to make sure people are able to rationalize the difference between sovereignty and coercion.

What you are discussing is coercion, and it is WRONG.

If you want my silver, and you can't afford my price, and you can't find it cheaper anywhere else, then you had better come up with something I would value MORE than my silver in a fair trade...

 

Thu, 01/26/2012 - 21:17 | 2101414 ThaBigPerm
ThaBigPerm's picture

How much (REAL!) money would it cost to send agents hither and yon to pry such useless objects from the hands of their (PARANOID!) owners?  Considering "useless" = zero benefit, any cost at all results in returning an error when doing a cost/benefit analysis....

I presume you know what "useless" means, and further presume your proposal is sincere and not the product of ulterior motive ...  but it is a contradiction... *scratches head*

Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong
=Ayn Rand

Thu, 01/26/2012 - 21:33 | 2101446 DosZap
DosZap's picture

Hamy,

WHAT is the difference in people holding their wealth in real money, and those holding (not spending),fiat into the economy?.

NOTHING, zero, nada, zilch. The end results according to you and the Monopoply Man, are nill.

Who are the worst culprits, and who is holding the most BennyBux?.............his minions.

And getting paid to do it.Your boxing the wind.

Fri, 01/27/2012 - 03:33 | 2101542 cranky-old-geezer
cranky-old-geezer's picture

 

 

It is indeed true that the massive amounts of capital ridiculously stacked away out of psychosis and anti-bank paranoia in useless rocks is harming the U.S. economy...

Like those trillions of dollars TBTF banks have parked at the Fed?

God, what a MO-ron.

Thu, 01/26/2012 - 19:51 | 2101242 akak
akak's picture

Trillion(Zimbabwe)DollarAnus strikes again!

Thu, 01/26/2012 - 19:56 | 2101255 1100-TACTICAL-12
1100-TACTICAL-12's picture

@ MDDumbass Just what we need , GMAFB !

Thu, 01/26/2012 - 20:42 | 2101358 niktamere
niktamere's picture

I thought you had to be logged on some kind of register to obtain physical gold. If this is the case, it's not a very "safe" investment. 

Thu, 01/26/2012 - 21:01 | 2101393 ThaBigPerm
ThaBigPerm's picture

WhaddawhaddawhaddaWHAT?

You, of all people, want those loans to be undercollateralized by folks posting a worthless, "barbaric relic" as collateral?  Worthless rocks?  To underpin expansion of credit?

You remind me of the schoolyard shark who would trade younger kids nickels for their dimes.  "Dimes are so much smaller! You don't want those!"  :0)

Thu, 01/26/2012 - 21:26 | 2101431 DosZap
DosZap's picture

MillionDollarBonus_

You are not a dork, your a Troll,an agent provacateur here. Always stirring the pot,when you know all it does is get you feedback, all negative.

First, there is no way there is ANY economy to invest in.We have become a nation of LAWLESS & Contractual thieves.

You would trust your last dimes to THIS Gov???.Or the Banks, or anyone in THIS financial sector??.

WHO in their right mind would (as you so ignorantly say) invest their lives savings into a Crooks economy?.

You would have to be a dolt.

Secondly, the writer of this is in la la land , for one, WHERE does he get we could EVER come up with enough gold in physical form, to pay off bond holders in physical gold?.The price would be so far off the charts, a Gram would be thousands upon thousands, if indexed to the debt.

You think the 1% Elite rich can pay off the debt, by taxing them at 100%?.........hell no.

Same with physical PM holders,1-2% MAX hold ANY.

Much less enough to back bonds, payable to the holders in physical when they matured.

Remember, we have allowed, and continue to allow the East to steal all the real wealth, while we continue to lead the world in pulp, and ink use.

WTFU.

Thu, 01/26/2012 - 21:44 | 2101461 smiler03
smiler03's picture

He/She does actually get some positive feedback because some of us have a sense of humour and recognise sarcasm.

Fri, 01/27/2012 - 07:31 | 2101951 akak
akak's picture

If I greeted you (anonymously) every day for a year by calling you a "God-damned cocksucking son of a bitch faggot", and NEVER said anything else to you, would it still be sarcasm for the 366th time, or would you interpret it to at least be verging on abuse?

Another way to look at it: Go tell your wife, every day from now on, at least twice or three times a day, that she is "fat and ugly", and NEVER comment on her appearance aside from that statement.  Then, after a year of this, try telling her "Oh, I was just kidding".

Thu, 01/26/2012 - 21:41 | 2101453 Snidley Whipsnae
Snidley Whipsnae's picture

MDB... "Many US citizens are hoarding gold rather than investing in the economy. Why not let them pledge it as collateral for loans from our Federal Reserve."

.................................

Because the 'many Americans hoarding gold' that you refer to do not trust the Fed Reserve as a counter party.

Why would any sane person that is holding physical gold turn it into paper that has counter party risk with a Fed that has expanded it's balance sheet by three times it's size in 2005? The Fed and all central banks are not trustworthy. Would you enter into a business transaction or parternership with a know liar and cheat? ... If so, buy TIPS or 2s and 10s or longs... but don't be coming around here offering up bull shit advice about who we should trust as a counterparty.

Ask those that lost over a billion dollars when MF Global went tits up this question... "If you had it to do over again would your hold your physical PMs in your own vault or leave them with MF Global and assume that your warehouse receipt would be honered if a bk occured?"

 

Thu, 01/26/2012 - 23:15 | 2101583 Triple A
Triple A's picture

Joke or no joke MDb is a troll who loves when people down or up voting him. I say stop feeding the troll

Thu, 01/26/2012 - 23:15 | 2101584 Triple A
Triple A's picture

Joke or no joke MDb is a troll who loves when people down or up voting him. I say stop feeding the troll

Fri, 01/27/2012 - 06:45 | 2101934 Element
Element's picture

You need to cut back on the MMT fantasy thing.

Thu, 01/26/2012 - 19:41 | 2101221 midtowng
midtowng's picture

The only thing that matters is that Da Boyz on Wall Street, who own our politicians, don't want to change the rules of the game.

  Thus this idea is nothing but a "what if"?

 

Thu, 01/26/2012 - 20:32 | 2101337 YBNguy
YBNguy's picture

Anyone saving pics of banksters so after the collapse we can make 'Wanted' Posters and hunt them down?

Fri, 01/27/2012 - 00:39 | 2101698 Nage42
Nage42's picture

From a priorities perspective it's silly to wait for something to act when that something will force all of your available time to focus on self-survival.

So, in a nutshell:

"Why put off till tomorrow what you can do today?"

or, alternatively:

"Get 'er Duuuun!"

N.B. As it seems ZH cannot afford https, I'd like to advise the "we don't need no stinkin' NPAA" screeners that I am not advising anyone to see action against those who have stolen their cheese, I am posing a strictly _theoretical_ thought-exercise question as part of a hypothetical situation that may, or may-not come to pass. All parties/characters in this work are fictitious and do not represent any person in real life, nor do they represent the thoughts, morals, feelings, or recommendations of any person, company, deity et al. of anyone, direct or associated, with anyone on this corporal plane of existence we call "reality." No animals were harmed in the typing of this mail. {tm}{c}{r}{wtf?}{omg!}{etc.}

Fri, 01/27/2012 - 07:06 | 2101942 Raging Debate
Raging Debate's picture

Nope YBN. I and several others have something more interesting in mind. I'll take the Island of Misfit toys, in our new competition I mentioned above. The rules can't be bent, it is mind power against mind power.

Thu, 01/26/2012 - 20:35 | 2101338 ACP
ACP's picture

Absolutely right. Everyone on Wall St, everyone who is skimming money off the govt, all these college grads who are living off their parents...everyone is in "fuck it" mode, so just let it fall apart. That's the only way to build it right from the bottom up.

When the shit hits the fan, I'll volunteer to help build the gallows.

A couple hundred 2X4s and 4X4s, a thousand feet of rope...

Thu, 01/26/2012 - 21:14 | 2101411 MoneyScraper
MoneyScraper's picture

Hope you've got 7 billion bullets--and a keen shooting aim...  Otherwise--DOOMED!

Thu, 01/26/2012 - 21:17 | 2101416 defencev
defencev's picture

I would call the proposal "back to the caves". Historically, there was a period where money actually were gold and silver coins.

And so what? Did it prevent rise and fall of empires and civilizations? Money is simply the mechanism of exchange. It does not matter what convention is used whether it is gold or something else. It is just important to have a strict mechanism preventing printing of excess of money. That is it. The Dollar is probably as good as anything else as long as Fed does not print it. For example, there are well developed scenarios under which US enters so-called deflationary spiral and collapse but the Dollar remains the most valuable asset (in this scenario Fed refuses any kind of monetization of debt). Gold bugs surely will try to promote the idea that the gold standard is the only way out. In reality, the right way to go is to severely restrict Feds ability to print money and, of course, to take care of unfunded entitlement programs. Obviously, only people like Ron Paul or Mitt Romney are capable of moving in this direction.

Thu, 01/26/2012 - 21:51 | 2101473 Snidley Whipsnae
Snidley Whipsnae's picture

defencev..." Money is simply the mechanism of exchange. It does not matter what convention is used whether it is gold or something else. It is just important to have a strict mechanism preventing printing of excess of money."

..............................................

If this is so then how do you explain the enormous rise in both private and public US debt since Nixon closed the gold window? While you're at it, explain the huge rise in debt to GDP in the last two administrations. And, explain how the Fed could blow serial bubbles if a gold backed currency existed.

It is true that a gold backed or purely gold currency can be manipulated... but not nearly to the extent that a pure fiat currency can be manipulated. Gold acts as a brake on expansion and, therefore, mismanagement of capital.

Money should always be somewhat scarce, otherwise we end up exactly where we are now after nearly 40 years of unchecked monetary expansion ... Which has been the dream come true for US politicians and the military industrial complex and the remainder of the FIRE sector.

Who are you trolling for? and... are they paying you enough to cover your tuition?

Thu, 01/26/2012 - 22:09 | 2101502 defencev
defencev's picture

In reality I agree with you. You simply do not understand what I am saying. My point is quite simple: there should be a limited supply of money. You are saying it somewhat differently : money should always be somewhat scarce. The rise of public and private debt in US  can be partially attributed to excessive money supply (i.e. ultimately to money printing) but also partially to US ability to borrow. As long as there  are people or entities who are willing to buy US debt, US is capable to borrow. To some extent it again can be partially attributed to certain inertia, since historically after second world war, US indeed was a strongest economy producing sizable surpluses and, indeed was in position to repay their debts (e.g. it repaid their war debts). I do not like to be called troll and I am far beyond the age (regrettably) where I need to worry about tuition. The brainwashed, simplistic people like yourself are simply not capable to think rationally and independently and therefore have difficult time to understand things which are in the end of the day quite obvious but perhaps not that popular in certain circles

who promote concrete selfish interests.

Thu, 01/26/2012 - 22:21 | 2101522 AUD
AUD's picture

there should be a limited supply of money

Rubbish, the demand for money is all but infinite, that's why it's money. If money can be supplied infinitely, then it is just meeting demand.

The crux of the biscuit is the quality of the money supplied. Government debt is poor quality & cannot have infinite demand indefinitely, thus the rising gold price.

Thu, 01/26/2012 - 22:52 | 2101558 defencev
defencev's picture

you are fucking idiot and you simply do not understand what money is. Just read my posts, motherfucker. It is not that difficult. Whatever, it should be obvious to anybody that the proposal in the article is totally unrealistic and will never materialize, however long gold bugs salivate over the idea. The limiting of printing machine in Fed can be legislated and relatively easily implemented if there is a political will. Just think about the obvious: as long as Bernanke does not print (even

with ridiculuos zero interest rate) the Dollar is strengthening and the GOLD does not move. This is THE FACT, motherfuckers.

Of course, it is a function of current economic environment and it would change if the economy would start improving. But, at least, it  should give you a pause: GOLD is not panacea.

Thu, 01/26/2012 - 23:30 | 2101608 captain_menace
captain_menace's picture

Is that you Samuel L. Jackson?  I loved you in Deep Blue Sea.

Fri, 01/27/2012 - 00:06 | 2101660 AUD
AUD's picture

Oh yeah, that's right, I just don't understand what money is, even though I just defined it for you. /sarcasm

No, I won't read your posts because you don't know what the fuck you are talking about, last I looked the $ price of gold had  been rising for the last 12 years.

Fri, 01/27/2012 - 01:00 | 2101725 AgShaman
AgShaman's picture

Agreed....lovers of fiat do not understand the differences between currency and money. They can at times be the same. Currently...they are not....hence Gold's performance in the last 12 years...or put another way, the underperformance of the Dollar currency.

Fri, 01/27/2012 - 10:45 | 2102373 Archduke
Archduke's picture

+1.  AUD you need to avoid italics in the first 2 lines

(a bug renders reputation upticks/downticks unusable).

 

assuming demand is legitimate.

by quality of money, you no doubt mean the quality of the

asset exchanged for it, ie the author's counterfeit credit thesis.

 

 

Thu, 01/26/2012 - 23:12 | 2101575 Snidley Whipsnae
Snidley Whipsnae's picture

Defencev... from your original post... "It is just important to have a strict mechanism preventing printing of excess of money. That is it. The Dollar is probably as good as anything else as long as Fed does not print it."

................................................

The Greeks were debating how to put in place a government of honest and honorable men about 400 BC. The Greeks and their democracy ultimately failed, as have all other groups of people that have sought to put in power honest and honorable men. In fact, groups of people that sought to put into power dishonest and dishonorable men have failed just as frequently. Empires collapse... always.

So, what you are requiring is a change in the hard wiring of human nature... human nature, the one thing that has remained constant over time, and you want to change it by simply saying "it is just important to have a mechanism preventing printing excess money printing"... Like, there may exist somewhere in the universe a magic wand that one could wave over a human head and transform that human into a greedless being.

Well, good luck with that little task. Let me know when you have come up with a mechanism to prevent the printing of excess money... because you will also have solved the problem of modifying human nature to exclude greed.

BTW, apoligies for calling you a troll. I'm so used to encountering trolls on gold threads on various sites that my response is a bit to quick sometimes.

Fri, 01/27/2012 - 07:18 | 2101950 Raging Debate
Raging Debate's picture

Good man you are Snidely. My longer reply back to you is now irrelevant.

Fri, 01/27/2012 - 07:16 | 2101949 Raging Debate
Raging Debate's picture

Snidely, I liked your comment back to Defence on PM standard being a brake in a capitalist economy.

Then you accuse Defence of being a troll because he has a salient, yet differing view? I won't indict a man for his opinions even if I disagree with some or realize they are talking their own book.

There are some amazing minds here at Zero Hedge speaking up, exercisizing the 1st Amendment. The Republic still stands (in peril). Can we stop with the 'troll' nonsense?I want to hear what someone has to say before judging the value of the content and if I agree or disagree. Or should we begin restricting choice? I prefer choice. Isn't that what we are discussing, potential choice of currency, even government model?

Fri, 01/27/2012 - 01:16 | 2101742 trav7777
trav7777's picture

lol....u got 8 downvotes for speaking the truth?  Maybe it was the Mitt Romney thing, bc that's just fkin stupid

Fri, 01/27/2012 - 07:15 | 2101948 Element
Element's picture

I have a theory ... that I'll most likely get through life for the next 30 or 40 years without requiring a personal stash of gold.

Hard to prove it though.

Thu, 01/26/2012 - 23:05 | 2101571 mofreedom
mofreedom's picture

When I was seven years old I wanted to end the pending disaster of having to go to school and be publicly trashed by communist nuns (not all were commies just the younger ones) for my conservative beliefs by confronting them in the public sphere only to sent to the brig.

But the pending disaster of riots in the streets by these same commies, the stink will overwhealm our ability to shoot straight and even our gold will tarnish from the fumes and thus be rendered useless as a currency.

Thu, 01/26/2012 - 23:50 | 2101642 ISEEIT
ISEEIT's picture

I hate too agree. Not one chance in a million that the American sheeple will grow up by choice. We will not stop pretending untill that is the only choice we have. As for so long as we are allowed to play games imagining that reality is ours to play with for personal gain: So it shall be. Until it be no more.

Being awake bites. I despise the sickness of our culture. I despise the twisted and evil nature of our politics. I despise the hatred that poses as 'fairness'. I despise the evil that proclaims itself the ability to alleviate suffering and the ability to help those who in fact will suffer most greatly under the yoke of the extremist deceivers A.K.A. 'progressives'.

These criminal gangs who have assumed control of OUR world are sick beyond the average human souls comprehension..

I apologize for being such a depressive. I don't apologize for telling the truth.

Barack insane obama and the evil sycophants who establish themselves in cooperation with his fantasies represent the single greatest threat to Liberty and freedom faced in our lifetimes. He is the representative of THE lie. He is choosen to complete what H.W. Bush began.

I despise Romney. I despise Ginchrich.

I suggest that you consider buying some time though by choosing either over obama.

That is likely the best we can do.

Buy some time.

Fri, 01/27/2012 - 00:12 | 2101672 tarsubil
tarsubil's picture

Exactly. I'm supposed to believe that they are going to consistently fork over the gold? I'd have to be totally out of my ever fucking mind!

Fri, 01/27/2012 - 02:36 | 2101836 narnia
narnia's picture

This humpty dumpty warfare/welfare state is not going to come to an end on adult terms.  It needs to crash. 

Thu, 01/26/2012 - 19:29 | 2101195 I think I need ...
I think I need to buy a gun's picture

obama is clear ,,,,,,jobs are coming back and vistors to disney world now all we have to do is find out what our money will buy us after its been the bankers oven,,,,,,,,,you will have oligarchs telling you what to do making 12 dollars an hour,,,,,Your first and last hour of work every day will go towards gas. You will be poor. Very poor.

Thu, 01/26/2012 - 19:33 | 2101205 falak pema
falak pema's picture

I know every body tries to avert it. Some pretend its not there. I say if its there lets treat it like those boobs of vicky B. One hatpin and kaboom no more boobs. Problem over. 

Fri, 01/27/2012 - 07:23 | 2101953 Raging Debate
Raging Debate's picture

Well Falak, more than a mouthful was always a waste to me but some like those huge double D's. Pains the back over time though with their weight and now the surgeon's attorney is demanding them back. Well...

Thu, 01/26/2012 - 19:36 | 2101207 SheepDog-One
SheepDog-One's picture

Gold Bond medicated powder for ball sack itch I bet would work better.

Thu, 01/26/2012 - 19:38 | 2101218 nmewn
nmewn's picture

Beat me to it...for getting rid of that itchy feeling between your toes when you step on contaminated fiat ;-)

Thu, 01/26/2012 - 21:58 | 2101480 Snidley Whipsnae
Snidley Whipsnae's picture

Gold Bond medicated cream works well too... It's rumored that Timmy uses it after his numerous visits to Chinese leaders. I don't know what he uses for carpet burns.

Thu, 01/26/2012 - 22:21 | 2101523 francis_sawyer
francis_sawyer's picture

KY

Thu, 01/26/2012 - 23:14 | 2101581 Snidley Whipsnae
Snidley Whipsnae's picture

:)

Thu, 01/26/2012 - 19:39 | 2101220 Ag1761
Ag1761's picture

Long article, could have just summed it up by saying:

 

Got Phyzz?

Thu, 01/26/2012 - 20:06 | 2101281 nmewn
nmewn's picture

I went back and skimmed it. What little I have, I won't be turning over to anyone outside family & friends.

From the author...

"There is no ultimate extinguisher of debt."

Yes there is, you pay it off or default on it.

I paid my taxes (more than my fair share)... and with after tax fiat I chose & risked...and was right. They chose & risked and they are wrong.

They chose to spend like the drunken fascist pricks they are and run the government into bankruptcy. That was not a collaborative effort with you and I involved. People like us have been screaming at them to stop since I can remember.

They didn't. So, fuck em. 

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