Guest Post: Gold Bonds: Averting Financial Armageddon
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 This is because in times of stress the bid (but not the offer) is withdrawn.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:
- Repayment of all debts in nominal terms
- Keep bank accounts, pensions, annuities, corporate payrolls, annuities, etc. solvent, in nominal terms
- 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:
- Eliminate all capital “gains” taxes on gold and silver
- Repeal all legal tender laws that force creditors to accept paper
- Also repeal laws that nullify gold clauses in contracts
- 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.
(42 votes)
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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.
“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.
lol...yes, clearly the problem is not enough debt & credit.
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
gold bonds are stupid and will make no difference. Cantarell didn't care what standard we had and neither does any other oil well
Kill yourself now --- avoid the post-Zombie Apocalypse rush.
Or, lets just bomb the banks , destroy all history of credit
Lets Bomb the Bankers and India for Buying Iran's Oil in Gold!
There is no way that India is buying oil in gold. No way.
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....
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/
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
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
It is impossible to suppress a superior alternative.
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
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.
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.
Wow Trav, that ulcer in your stomach must make you a real douche to be around eh?
Tech.
ori
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.
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.
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
you clearly don't understand the tao, the useless is the most valuable.
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
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 ?
Lemon, does the Tao state the first will be last and vice versa?
That's from that one movie....what's it called....
Gold bonds? Holy shit. Denninger's head gonna explode out his ass if this kind of talk continues.
Why isn't the FED using worthless FRN's to buy up as much gold as they can get their hands on?
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...
Haven't you heard?
Gold is a barbarous relic; not money.
Benny the Bucks Bernank said so himself.
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 :)
Because that would skyrocket the gold price and collapse confidence in paper.
"Lots of things will occur that should not occur". ...that about sums it up
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.
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.
Just how many times are you going to engage in jousting with that particular strawman anyway?
What strawsman?
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!
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/
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.
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...
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.
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.
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.
"Hoarding" = privately owning that which the government lusts for itself, and will steal by any means necessary.
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.
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?
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 ;-)
I loved this...
It is now up to farsighted leaders, especially in government, to take the first concrete steps towards saving Western Civilization.
BWAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!
Hamy and MDB, I couldnd't agree more. You guys are some of the sharpest on ZH. I love it.
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.
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.
true dat; silver is gold's bitch.
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.
"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.
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?
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.'
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.
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).
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
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
+1 from me, old buddy!
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.
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.
Trav7777 declared:
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 .
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.
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.
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.
.
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.
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.
the word game is just as important as the others
Speak of the devil.... here I am!
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!
/chuckle
It's not funny. It's been going on all day.
I'll take a chuckle where I can find it.
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..
"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.
Trolls don't have peepi's...
just saying...
Dr. Peter Venkman will confirm this fact... "It's true, this man has no penis"...
Precisely why it is gold and gold alone (and not silver) that is THE monetary metal.
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.)
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.
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
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].
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.
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?
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...
er ... it is actually possible to get pussy for free ... never needed gold ... not a great sales-pitch ... jus sayin
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.
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.
What happened to the people that trusted their government and held currency rather than gold under FDR?