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Guest Post: Our Money Is Dying

Tyler Durden's picture


Submitted by Chris Martenson of Peak Prosperity,

A question on the minds of many people today (increasingly those who manage or invest money professionally) is this: How do I preserve wealth during a period of intense official intervention in and manipulation of money supply, price, and asset markets?

As every effort to re-inflate and perpetuate the credit bubble is made, the words of Austrian economist Ludwig Von Mises lurk ominously nearby:

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner, as the result of a voluntary abandonment of further credit expansion, or later, as a final and total catastrophe of the currency system involved.


Because every effort is being made to avoid abandoning the credit expansion process -- with central banks and governments lending and borrowing furiously to make up for private shortfalls -- we are left with the growing prospect that the outcome will involve some form of "final catastrophe of the currency system"(s).

This report explores what the dimensions of that risk are. It draws upon both historical and modern examples to try to shed some light on how the currency collapse process will likely unfold this time around. Plus, we'll address how best to avoid its pernicious wealth destroying effects. 

When Money Dies

In the book When Money Dies by Adam Fergusson, which details Weimar Germany's inflation over the period from 1918 to 1923, the most riveting parts for me were the first-hand accounts from the people caught in the storm. 

So many people left their wealth in the system only to watch it get eroded and utterly destroyed over time.  The reasons were many: patriotism, inertia, disbelief, and denial cruelly fed by hope every time prices moderated or even retreated momentarily.

The simple observation is that many people had a blind belief in the money system. They lost their wealth because they were unable or unwilling to allow reality to challenge their beliefs. It's not that there were numerous warning signs to heed -- in fact, they could be seen everywhere -- but most willfuly ignored them.

Most mysterious is the fact that in Austria and Germany, where the inflation struck most severely, there were numerous borders and currencies into which people could have dodged to protect their wealth. That is, protecting one's wealth was a relatively straightforward and simple manner.  And yet…it did not happen.

The Many Types of Inflation

As always, the landscape of inflation needs to be carefully mapped before we can begin to hope to have a conversation with a destination.  Where the symptom of inflation is rising prices – in fact, rising prices are the only things tracked by the Consumer Price Index, or CPI – the causes of rising prices are many, but they always boil down to the overexpansion of money and/or credit.  Knowing the cause is essential to knowing what to do next.

Here are the main flavors of rising prices that we need to keep in mind:

Non-inflationary price increases – These are caused by demand exceeding supply.  It happens all the time.  A poor harvest driving up the price of corn is not inflationary, but it will show up in the CPI.  These sorts of price movements reverse themselves as markets respond by chasing the price and delivering more of whatever was in short supply.  The only exception is when there is some essential, non-renewable natural resource in sustained depletion -- which means that demand will always exceed supply and prices will rise and then rise some more.  Excessive speculation can also lead to price rises and, as long as the speculation centers on the item(s) involved and not on excessive money/credit expansion, it, too, can be (and eventually will be) reversed.

Simple inflation – This is the 'textbook' case of inflation where too much money and/or credit is created relative to goods and services.  Print too much money or make credit too cheap/easy and prices will rise roughly in proportion to the excess.  Simple inflation operates in the low single digit percentages.  Central banks openly target simple inflation in the 2%-3% range as that level of expansion allows banks to have healthy profits, prevents past loan errors from swamping the system, and generally keeps the exponential money system operating well. 

Loss of confidence in money – A more severe stage of simple inflation takes over when enough people lose faith in the money and seek to actively spend their money on something, anything, before that money loses value.  This type of inflation operates in the high single digits to low double digits, somewhere between 8% and 15%.  This is just simple inflation on steroids.  Not everybody participates in this game yet, as the loss of confidence has not yet reached criticality, but enough people do to keep this process locked in a self-reinforcing spiral that requires aggressive money tightening to halt.  Think 'Volker' and '21% interest rates' and you get the picture. 

Hyperinflation – Further along the inflationary spectrum is what happens when a critical mass of people within a society lose faith in their money and the monetary authorities are incapable of reducing the money/credit supply, either because there’s already too much of it out there to ‘call in,’ or because they lack the political will to do anything but print more money in response (i.e., there are no Volkers around).  Once this critical mass is reached, every corner of society is participating, and it is no longer socially taboo to talk about the hyperinflation or how to escape its effects.  Everyone is wheeling and dealing, speculation runs rampant in everything from stocks to pineapples, and you cannot possibly spend your money fast enough to avoid the ravages of inflation.  The annual percentage rates for hyperinflation range from medium double-digits into the hundreds of millions. 

Currency destruction – There is another type of inflation that happens when your state currency is shunned by the rest of the world.  While there may be no additional money creation and credit may even be dropping, inflation is still a very serious problem as everything imported goes up in price.  There are many reasons that a currency may be shunned.  It could be that other countries lose faith in the currency due to mismanagement and overprinting.  It could be due to acts of war.  Or it could happen at the end of a very long period of excessive credit and money expansion, when that bubble finally bursts and confidence in the associated currency unit(s) is lost.  There is really very little that local authorities can do to fix things unless the country imports nothing, a condition that applies to exactly nobody.  Prime candidates to experience this form of inflation are the US and Japan; the former because of massive imbalances fostered by its several decades of reserve currency status, and the latter because of persistent and massive over-printing enabled by domestic savings and a once-robust export surplus.  The dynamic of currency destruction is for imported items to rise sharply in price first, with everything else soon following in upward price spirals.  Policy responses are quite limited and are usually ineffectual at preventing a massive amount of economic destruction and wealth loss for the holders of the stricken currency.

It is this last type of inflation – currency destruction – that we’ll explore here, because it represents a severe risk and is very rarely talked about or analyzed.

Spinning In the Water

A modern case study of a shunned currency is Iran.

For a variety of reasons Iran finds itself the subject of a very sustained effort by the US to subjugate its nuclear program to international inspection and curtailment.  Already the target of many overt and covert efforts to bring it to heel -- ranging from two highly destructive and invasive computer worms (Stuxnet and Flame), to stealth drone overflights, to an international ban on oil exports -- Iran now finds that its currency, too, is being internationally shunned.

The impacts are obvious and the lessons instructive. 

Already Plagued by Inflation, Iran Is Bracing for Worse

Jul 1, 2012

TEHRAN — Bedeviled by government mismanagement of the economy and international sanctions over its nuclear program, Iran is in the grip of spiraling inflation. Just ask Ali, a fruit vendor in the capital whose business has been slow for months.

People hurried by his lavish displays of red grapes, dark blue figs and ginger last week, with few stopping to make a purchase. “Who in Iran can afford to buy a pineapple costing $15?” he asked. “Nobody.”

But Ali is not complaining, because he is making a killing in his other line of work: currency speculation. “At least the dollars I bought are making a profit for me,” he said.

The imposition on Sunday of new international measures aimed at cutting Iran’s oil exports, its main source of income, threatens to make the distortion in the economy even worse. With the local currency, the rial, having lost 50 percent of its value in the last year against other currencies, consumer prices here are rising fast — officially by 25 percent annually, but even more than that, economists say.


There are several factors feeding into the current Iranian currency crisis, including mismanagement of the economy that has left Iran even more exposed to imports than it otherwise could or should be, and it is on the cusp of tipping over the line into outright hyperinflation.  Ever since the revolutionary war when the British printed and distributed cartloads of Continental scrip, currency debasement has been a useful tool of war.  All is fair in love and war and whatever corrodes your opponent’s strength is a potentially useful tool.

Note that in the above quotes we find that both the speculation already in evidence plus the 25%+ price increases support the idea that Iran has already tipped past simple inflation.  Whether it can prevent a worsening condition is unclear at this point, whether or not international sanctions are soon lifted. 

More from the same article:

Increasingly, the economy centers on speculation. In this evolving casino, the winners seize opportunities to make quick money on currency plays, while the losers watch their wealth and savings evaporate almost overnight.

At first glance, Tehran, the political and economical engine of Iran, is the same thriving metropolis it has long been, the city where Porsche sold more cars in 2011 than anywhere else in the Middle East. City parks are immaculately maintained, and streetlights are rarely broken. Supermarkets and stores brim with imported products, and homeless people are a rare sight on its streets.

But Iran’s diminishing ability to sell oil under sanctions, falling foreign currency reserves and President Mahmoud Ahmadinejad’s erratic economic policies have combined to create an atmosphere in which citizens, banks, businesses and state institutions have started fending for themselves.

“The fact that all those Porsches are sold here is an indicator that some people are profiting from the bad economy,” said Hossein Raghfar, an economist at Al Zahra University here. “Everybody has started hustling on the side, in order to generate extra income,” he said. “Everybody is speculating.”

Some, like Ali the fruit seller, who would not give his full name, exchange their rials for dollars and other foreign currencies as fast as they can. More sophisticated investors invest their cash in land, apartments, art, cars and other assets that will rise in value as the rial plunges.

For those on the losing end, however, every day brings more bad news. The steep price rises are turning visits by Tehran homemakers to their neighborhood supermarkets into nerve-racking experiences, with the price of bread, for example, increasing 16-fold since the withdrawal of state subsidies in 2010.

“My life feels like I’m trying to swim up a waterfall,” said Dariush Namazi, 50, the manager of a bookstore. Having saved for years to buy a small apartment, he has found the value of his savings cut in half by the inflation, and still falling.

“I had moved some strokes up the waterfall, but now I fell down and am spinning in the water.”


All of the important lessons you need to avoid a currency destruction are contained in those passages above. 

  1. Savings are for losers. 
  2. The more exposure you have to food and fuel price hikes the worse off you are. 
  3. First movers have the advantage. Get your wealth out of the afflicted currency as fast as possible and then trade back in when needed to make purchases.
  4. Paralysis is a wealth destroyer. 
  5. Fending for oneself is a wealth saver and so faith in authority is best shucked as fast as possible. 

Be prepared to follow those rules and you will do better than most. 

Barter, speculation, and wildly-gyrating prices as formerly expensive things are traded for basic necessities are all typical features of the end stages of a currency.  Crime, social unrest, and sometimes war are handmaidens that accompany the death throes of money.

The basic strategies to protect one’s wealth are deceptively simple.  As soon as the process of money destruction has begun, if not before, all savings have to be moved out of the afflicted currency and into things, especially things that those with wealth or barter items are most likely to want. 

Turning our attention back to the Weimar episode for a moment, the Amazon summary for When Money Dies reads:

When Money Dies is the classic history of what happens when a nation’s currency depreciates beyond recovery. In 1923, with its currency effectively worthless (the exchange rate in December of that year was one dollar to 4,200,000,000,000 marks), the German republic was all but reduced to a barter economy.

Expensive cigars, artworks, and jewels were routinely exchanged for staples such as bread; a cinema ticket could be bought for a lump of coal; and a bottle of paraffin for a silk shirt. People watched helplessly as their life savings disappeared and their loved ones starved. Germany’s finances descended into chaos, with severe social unrest in its wake.

The parallels to the Iranian situation are obvious. 

Those without the gift of foresight to identify what is coming, coupled to an inability to take decisive action that cut against the social grain (at least early on), will simply lose their wealth and not be in a position to buy or exchange anything but their own time and labor in the future.  This leads to the assessment that owning or producing things that people need or want is a good strategy.

Food is always a good play.  In the early stages we’d also lean towards highly socially desirable real estate and away from middle and lower income housing as ability to pay always get shredded from the bottom up.  Gold performs well in terms of protecting purchasing power.   According to the article above, Porches work too.  That is, owning things that wealthy people will desire offers better chances than not.

I know this sounds harsh, elitist, and not terribly egalitarian, but it also happens to be how things tend to work out.  Since I have a desire to be in a position to be helpful and of assistance in the future, protecting my wealth is a matter of both self and selfless interest.   So I study what works and begin there, while also seeking a better future.

The cruelest part of a currency destruction is that it will sneak up on most people, their baselines will shift, and they will be confused by false hopes along the way.  This is completely understandable and to be expected.  There's a good chance you're well acquainted with the chart of the value of German Marks against gold during the Weimar hyperinflation.  I want to take a closer look at it by focusing on the wiggles instead of the rise:

Imagine yourself there in that time, getting all of your information from the newspapers and your personal rumor network.  Note that from the early part of 1920 prices fell, by a lot, over the next six months (note that this is a log chart, so even a little downward movement in the line represents a big price drop). 

Headlines reported that the corner had been turned, that the government programs had been successful and brought inflation under control and people wanted to believe that story and so they did. 

It wasn't until the end of 1921 that prices began to rise again spiking into early 1922 before stabilizing again for approximately 8 months.  Again people were calmed by the apparent success of the authorities in controlling the inflation. 

Because there were three pauses and rescues along the way the price spike from late 1922 and into 1923 caught many off guard.  It was truly shocking.  This is when the critical loss of faith finally happened.  Yet far too many remained paralyzed certain the government would again get things under control soon.  After all, three times before there had been a recovery, why not this time too?  One must have hope after all.

In the middle of 1923 with very aggressive government intervention there was a three month dip in prices and a pause in the hyper-inflationary process.  Again, another hopeful moment, but it was the final trap for the unwary.

To put this in context, imagine if next month (August) gasoline prices shot up by 300% to roughly $10/gal.  But then, between August 2012 and May of 2013 the price of gasoline fell back to $5/gal.  I'd be willing to wager that many of your friends would be telling you that everything was fine and that 'they have everything under control.'  Perhaps your continued concern would be ridiculed or dismissed. 

Then, when prices finally did again breach the old $10/gal highs some 19 months after the first price spike (in Feb 2014 in this example), many would have been habituated to the new prices, routines would have been altered, and many would have already inserted a rationalization process into their thinking that would have all of this make perfect sense, albeit uncomfortably.

While not tracking the percentages closely, this example tracks the time frame. 

An important insight here is that baselines will shift, rationalizations will be formed, and explanations adopted principally by those unable to accept that their money is in the process of dying.  Avoiding this yourself will require tuning those people out and trusting yourself.

In Part II: Positioning Yourself For When Our Money Dies, we identify the most probable markers for identifying when a full-blown currency collapse is imminent.

What indicators should you watch for? Where should you place your capital to best preserve its purchasing power? What will a collapse of the US dollar look like and what will the likely aftermath be? These and other implications are explored.

Click here to access Part II of this report (free executive summary, enrollment required for full access)


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Tue, 07/10/2012 - 12:37 | 2602532 Clueless Economist
Clueless Economist's picture

Who is this Ludwig Von Mises chap you speak of.

Did he not clean the shit out of the Archduke's stables?

Tue, 07/10/2012 - 12:44 | 2602554 theMAXILOPEZpsycho
theMAXILOPEZpsycho's picture

What this article is insinuating is sickening. People with agendas continually try to undermine the heard's confidence in governments and central banks, so as to get them to buy horrible investments: gold, silver, mining shares - all of which have performed horribly. Meanwhile people with integrity, trust in our leaders, continue to stack up on treasuries, and are rewarded handsomely!

It certainly does seem to be a kind of natural karma at play; pathetic outcasts of the system get slaughtered; those striving to uphold it, get rewarded.

Tue, 07/10/2012 - 12:49 | 2602576 bigdumbnugly
bigdumbnugly's picture

my money may be dying but its going to a better place.

gotta try to see the silver lining here.


Tue, 07/10/2012 - 13:47 | 2602763 sunaJ
sunaJ's picture

A main point I would add to this great article, is that the economic velocity in which we are living is much faster, which means "fixes" can be implemented more quickly (digital vs. printed money, instant communication, high-speed production, etc).  It will always hold true that "history does not repeat itself, but it will rhyme."

We will face this same macro destruction, but it will play out on a time scale, and perhaps on a volatility measure far beyond anything that we have ever seen.  Up to this point in the current crisis, the velocity has benefitted the status quo.  The economy has been zombified for a long time, but once that criticality of distrust is reached, the speed of the global chaos and economic destruction will be unprecedented. 

Also, people in the OECD, and especially the United States, are much less prepared to transition to an essential-based barter system.  The cognitive dissonance and madness will be much more intense, imo, and we will be forced to survive or die in a world far more poplulated and depleted of resources than what was encountered 90 years ago.

Tue, 07/10/2012 - 13:47 | 2602821 Manthong
Manthong's picture

Interesting to note that one of the lessons in that book is that the middle class in Germany took the pipe first and it was only after the “working class” was dragged into the ditch that the Marxist/socialist movement was repudiated and that the authoritarianism of the Nazis was embraced as a matter of desperation.

Nothing to stop it from playing out that way here, too.  

Tue, 07/10/2012 - 14:21 | 2602915 Manthong
Manthong's picture

Oh, and did any of you history buffs catch the latest Presidential “Enabling” Order?

Tue, 07/10/2012 - 21:28 | 2604347 Thomas
Thomas's picture

The other speed issue is that decision making becomes like playing a game of Tetris, wherein each decision becomes increasingly hard to make with any real thought. Eventually, you crash and burn.

Tue, 07/10/2012 - 18:07 | 2603732 Snidley Whipsnae
Snidley Whipsnae's picture

"Marxist/socialist movement was repudiated and that the authoritarianism of the Nazis was embraced as a matter of desperation."

You make it sound as if the Nazis/Hitler were swept into power on a huge wave of popular support. Not so. The Nazis never received over 43% of the popular vote until they had seized power and the Nazis were the only party on the ballot.

If you read 'Der Furher', 'Mein Kamph', and 'The Rise and Fall of the Third Reich', etc, you will have a clearer understanding of the very complex political environment surrounding the Nazis seizure of power after the Reichstag fire...which most historians believe that the Nazis started. 

I don't believe that Hitler was a true populist for his rise did not exhibit the usual trajectory of a populist coming to power; he certainly did not have the majority of the German people behind him.

Tue, 07/10/2012 - 19:11 | 2603968 Manthong
Manthong's picture

True.. "repudiated" is not the right word.

My understanding is that the attitude of the time was of confusion and desperation and that enough of the people acquiesced to the Nazi’s extreme activities including  the suppression of the Marxists after the fire.


Wed, 07/11/2012 - 08:39 | 2605440 Ar-Pharazôn
Ar-Pharazôn's picture

loooks like majority of Germans had nothing to say about Hitler


BUT this is not an excuse or an extenuating circumstance.


if you see a burglar doing what he does and you say nothing you're his accomplice

Thu, 07/12/2012 - 11:47 | 2610053 Manthong
Manthong's picture

Radicals and socialists understand leverage..  get it in the right spots and you can realize tremendous gain.

We are not too far removed from early thirties Germany, although the economic effects of the CB and Government malinvestments have not yet  inflicted tremendous pain.

Tue, 07/10/2012 - 14:33 | 2602961 gaoptimize
gaoptimize's picture

Logged in to vote sunaJ up.  Your last paragraph - I call that SHTF.

Tue, 07/10/2012 - 13:44 | 2602805 Peter Pan
Peter Pan's picture

Money is not just dying but thanks to MFG , PFG, and the social security trust fund, it is also disappearing before it can die.

In the process of dying fiat money is also destroying the economy.

Tue, 07/10/2012 - 16:30 | 2603460 shovelhead
shovelhead's picture

This is true.

Keep your sunnyside up. We won't really be in trouble until they leave the bodies in the streets for more than 2 days.

That's when it's going to get tense.


Tue, 07/10/2012 - 12:52 | 2602585 fuu
fuu's picture

You forgot to change your login again MDB_.

Tue, 07/10/2012 - 12:53 | 2602592 5880
5880's picture

Krugman? Is that you?

Tue, 07/10/2012 - 13:06 | 2602642 AlaricBalth
AlaricBalth's picture

Nope. Krugman has taken a "vacation" to recover from the ass whooping he took in Spain the other day.

Tue, 07/10/2012 - 14:26 | 2602930 Doña K
Doña K's picture

Funny! As the same Krugman was critisizing Japan in the 90's on liquidity trap articles and diagrams.

Check his unofficial web page. Supposedly is written by students who love him. click on Japan tab

Tue, 07/10/2012 - 13:02 | 2602620 Irene
Irene's picture

People with agendas continually try to undermine the heard's [sic] confidence in governments and central banks,

Heard?  Try herd.  Go back to school.  You haven't even managed to master the basics.  

Tue, 07/10/2012 - 13:23 | 2602722 takinthehighway
takinthehighway's picture

Not to mention that "agenda" is already plural...

Tue, 07/10/2012 - 13:38 | 2602790 TheCanadianAustrian
TheCanadianAustrian's picture

I think it's time to update that entry in the dictionary. In my entire life, I don't think I've heard anyone say "we have agenda" or "we have an agendum".

Tue, 07/10/2012 - 13:37 | 2602782 aerojet
aerojet's picture

You should be happy--at least the idiots who post online self-identify.

Wed, 07/11/2012 - 08:41 | 2605447 Ar-Pharazôn
Ar-Pharazôn's picture

wow we got a badass over here. the only thing you can dissent with him is grammar? so STFU

Tue, 07/10/2012 - 13:15 | 2602691 Jack Sheet
Jack Sheet's picture


Tue, 07/10/2012 - 13:16 | 2602695 LowProfile
LowProfile's picture


Meanwhile people with integrity, trust in our leaders, continue to stack up on treasuries, and are rewarded handsomely!

It certainly does seem to be a kind of natural karma at play; pathetic outcasts of the system get slaughtered; those striving to uphold it, get rewarded.

LOL, MDB has competition!

Tue, 07/10/2012 - 14:09 | 2602884 Toolshed
Toolshed's picture

A very weak effort there trollboy. -1

Tue, 07/10/2012 - 14:19 | 2602909 runlevel
runlevel's picture

lol this guy..

Tue, 07/10/2012 - 14:56 | 2603067 ATM
ATM's picture

What the fuck is some Obama stooge doing here? Go fuck yourself asshole. Junking you is not enough.

Wed, 07/11/2012 - 08:35 | 2605428 Ar-Pharazôn
Ar-Pharazôn's picture

PLZ tell me when gold has failed?

Tue, 07/10/2012 - 12:58 | 2602613 THECOMINGDEPRESSION

I howled when I read that Turd is going on "vacation" because the posters hurt his feelings.. poor baby. He couldn't handle it so the Turdites are donating more money! Zerohedge how come you don't vacation? Aren't your feelings hurt too?

Tue, 07/10/2012 - 13:34 | 2602771 quasimodo
quasimodo's picture

Your just pissed because your blog has been sucking ass for over four years.

Tue, 07/10/2012 - 13:59 | 2602859 THECOMINGDEPRESSION

funny, which blog is THAT loser? Are you a member of the turd cult following?

Tue, 07/10/2012 - 13:31 | 2602760 Gringo Viejo
Gringo Viejo's picture

It's been proven to my satisfaction that everything, from LIBOR, Commodity Brokerage Accounts, Stock Markets, Bond Markets......EVERYTHING concerning global economics is a rig job. That being said, preservation of capital (forget capital appreciation) is paramount. IMHO, there's only one way to do that.

Tue, 07/10/2012 - 20:10 | 2604127 Dr. Sandi
Dr. Sandi's picture

While history's not repeating,

It certainly does rhyme.

Fortunately for all of us

It's different this time.

Wed, 07/11/2012 - 08:44 | 2605460 Ar-Pharazôn
Ar-Pharazôn's picture

yeh much different and at the same time much worse ;)

Tue, 07/10/2012 - 12:38 | 2602534 Precious
Precious's picture

"Peace on earth would mean the end of civilization as we know it."  - Joseph Heller

Tue, 07/10/2012 - 12:39 | 2602537 prains
prains's picture

.......And we're fucked

Tue, 07/10/2012 - 13:03 | 2602626 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

All of your in/de flations are belong to us.

Tue, 07/10/2012 - 12:42 | 2602547 drink or die
drink or die's picture

what, me worry?


Tue, 07/10/2012 - 13:38 | 2602548 LouisDega
LouisDega's picture

Where is my counselor Robo?

Tue, 07/10/2012 - 12:46 | 2602563 erheault
erheault's picture

It wont be much longer for massive inflation to arrive especillly with the failing american grain and corn  crops  time to stock up on the food front. 

Tue, 07/10/2012 - 12:50 | 2602571 GeneMarchbanks
GeneMarchbanks's picture

Chris Martenson is a retarded person.

Tue, 07/10/2012 - 13:33 | 2602770 Gene'sMom
Gene'sMom's picture

Are you really one to talk boy?

Wed, 07/11/2012 - 13:30 | 2606684 stacking12321
stacking12321's picture

chris martenson is a brilliant man, well educated, phd in chemistry, and has worked tirelessly and selflessly to prepare people for the coming financial collapse.

what, exactly, is your criticism of him?

resorting to ad hominem attacks and calling him "retarded", really says more about you than about him - that you are not able to formulate a coherent statement putting forth an intelligent viewpoint.

if you have nothing worthwhile to contribute to the discussion, just don't post.

Tue, 07/10/2012 - 12:50 | 2602575 i-dog
i-dog's picture


"Porches work too. That is, owning things that wealthy people will desire"

Why would wealthy people desire porches? Once you've got a back porch and a front porch, you're basically fixed for porches!

Tue, 07/10/2012 - 13:18 | 2602702 Stuck on Zero
Stuck on Zero's picture

You need to be more stoic about it. 

Tue, 07/10/2012 - 16:26 | 2603450 catacl1sm
catacl1sm's picture

I prefer wrap-around porches myself.

Tue, 07/10/2012 - 20:12 | 2604130 Dr. Sandi
Dr. Sandi's picture

I saw one of those on the Santa Monica Freeway one time. Wrapped that Porch around a big old sign post.

Tue, 07/10/2012 - 12:52 | 2602591 Silversinner
Silversinner's picture

Germans will soon rediscover the difference

between 10 euro silver coin and ten euro

paper note.Glad to be ahead of the curve.

Weimar 2.0

Tue, 07/10/2012 - 12:55 | 2602603 crawldaddy
crawldaddy's picture

if you really believe we are about to become weimar 2.0.  Why not go buy houses and cars and everything else on credit.  Since inflation will make these things incredibly cheap to pay off.

Thought so.


Tue, 07/10/2012 - 13:30 | 2602732 Sophist Economicus
Sophist Economicus's picture

Uhm, that is what some very savvy folks are doing right now.    Notice how western farm land and ranches have been increasing in price - contrary to your 'housing deflation' theme? 

Why is it that residential real estate has dropped while farms and ranches have sky rocketed?  Well, on reason might be:

The typical residential home is a malinvestment phenomenon -- too many built, built on leverage, requires 'weak hands' to qualify for leverage to buy - a perfect candidate for a price correction DOWNWARD.

Ranches and farms are productive assets that are now fairly to OVER valued, purchased for the most part by folks with deep pockets, with prudent leverage, as a hedge againt the dollar -- i.e, the perfect long-term dollar short  WITH the added benefit of a tax haven that will defeat most taxing schemes (that tend to be conveniently blind to inflation)


Most great answers are counter-intuitive....

Tue, 07/10/2012 - 13:49 | 2602826 AustriAnnie
AustriAnnie's picture

The fact that farmers and ranchers receive gov't subsidies has nothing to do with the boom in agricultural regions of the U.S.?

"Folks with deep pockets"?  Or folks with a Congressman or two in their lobbyist's pockets?

Tue, 07/10/2012 - 14:20 | 2602913 Sophist Economicus
Sophist Economicus's picture

Government twists everything in the real world and facilitates all sorts of 'poor' behaviors.    Buying cash-flow generating properties like farmland and ranches is a strategy to take advantage of insanely low subsidized interest rates (thank you government), positions one with a leveraged Dollar short position without the insane swings of the FX market (thank you government), allows one to generate cashflow (yes, subsidies and conservation grants count as cashflow -- again, thank you government), avoid taxes based on current real-estate rules (thank you government) and allows for an inflation play in agricultural commodities based on either increased demand or a currency event....

Tue, 07/10/2012 - 14:32 | 2602949 AustriAnnie
AustriAnnie's picture

I'm not saying its a bad investment move.

I'm just saying there is a lot of money flowing through the hands of farmers/ranchers, so that has an effect in that market.  You might make an offer for land and find that you are easily out-bid by someone with free money to throw away.  

The market for ag land is as distorted as all the other markets, and it is possible that certain regions may experience a reversal if gov't money flows stop.  It is not uncommon for localities to boom and then bust as gov't money flows from one constituency to another according to changes in political power.

Tue, 07/10/2012 - 15:52 | 2603315 g speed
g speed's picture

farm price supports will be the first handouts to go.

Tue, 07/10/2012 - 13:26 | 2602734 LawsofPhysics
LawsofPhysics's picture

Two reasons stupid. First of all, you can't pay them off because the currency is worth nothing. Second, if you can't defend the asset, you won't keep it. Possession is the fucking law.

Tue, 07/10/2012 - 13:37 | 2602785 Silversinner
Silversinner's picture

You do not get it do you. You will be broke and all your

wealth conficated long before hyperinflation starts.

Timing is a bitch and my gold and silver are very



Tue, 07/10/2012 - 13:40 | 2602792 JebusKhrist
JebusKhrist's picture


Tue, 07/10/2012 - 14:59 | 2603085 ATM
ATM's picture

Hey, I agree. with trates this low and debt so high this is the perfect time in my life to go all in, lever up get things that will always be worth something. I'm doing it.

Tue, 07/10/2012 - 16:11 | 2603395 Dr. Kenneth Noi...
Dr. Kenneth Noisewater's picture

There was a chart a little while back showing the real banking liability curve crossing the shadow bank liability curve: 

As shadow banking has been used as an inflation sink, we may be at the point of seeing it kick in.  Plus, bad pricing acts as a velocity killer (velocity slows when prices are out of whack), so if inflation causes prices to look less ridiculous (buy now or be priced out forever ;)), velocity will increase, and then you get a self-reinforcing inflation spiral.  Given that incomes in the US from federal payouts are 33% or more, there's already plenty of conduits for the Feds to inject money at the consumer level, though IIRC Weimar payouts were more like 50% of incomes.

Tue, 07/10/2012 - 20:52 | 2604224 Vesuvius
Vesuvius's picture

Seems like inflation, and deflation, work in a positive feedback fashion, until they somehow pop, or money pops eventually.

The link does not work, I think you meant to link this Intel chip pic excellent ZH article:

Tue, 07/10/2012 - 13:01 | 2602594 crawldaddy
crawldaddy's picture

what inflation?  We are looking at deflation here folks.  For inflation to hit we would have to see across the board increases for all types of services and products?  we arent seeing it, we are seeing it localized in a few sectors ( healthcare) and no where else.

Second for inflation to hit, the average joe would be seeing their take home pay rising, its doing the exact opposite. If inflation was here, home pricing would be rising, they aren't.

Sure the govt is flooding the banks with cash, but its not leaving the banks, its just going into the black spreadsheet never never land.

As another article pointed out today, this world economy is built on leverage, without  it, it is all collapsing,. If inflation was here, capital would be abundant, and leveraging would be doing its last decade like, crazy ass bubble making dance.  Not happening.

Deflation folks, lost decades coming.  Japan has been stuck in this for over a decade, now the world is joining them.


Problem with deflation, noone really understand how to tame it.  Its a beast unto itself.

Tue, 07/10/2012 - 13:15 | 2602683 Sophist Economicus
Sophist Economicus's picture

what inflation?  We are looking at deflation here folks.  For inflation to hit we would have to see across the board increases for all types of services and products?  we arent seeing it, we are seeing it localized in a few sectors ( healthcare) and no where else.


Have you checked the Continuous Commodity Index (CCI)?   Point out the deflation in that chart please.


Have you checked the price of insurances (any), food, gasoline, heating oil, restaurant meals, tuition, state and local taxes, business licenses and fees, utility bills, etc -- point out the deflation there

As for the wage effect, have you read any Hemmingway?   Here's a snipet from an article he wrote:


There were no marks to be had in Strasburg, the mounting exchange has cleaned the bankers out days ago, so we changed some French money in the railway station at Kehl.  For 10 francs I received 670 marks.  Ten francs amounted to about 90 cents in Canadian money.  That 90 cents lasted Mrs. Hemingway and me for a day of heavy spending and at the end of the day we has 120 marks left!

Our first purchase was from a fruit stand beside the main street of Kehl where and old woman was selling apples, peaches and plums.  We picked out five very good-looking apples and gave the old woman a 50 mark note.  She gave us back 38 marks in change.  A very nice-looking, white-bearded old gentleman saw us buy the apples and raised this hat.

‘Pardon me, sir,’ he said, rather timidly, in German, ‘how much were the apples?’

I counted out the change and told him 12 marks.

He smiled and shook his head.  ‘I can’t pay it.  It is too much.’

He went up the street walking very much as white-bearded old gentlemen of the old regime walk in all countries, but he had looked very longingly at the apples.  I wish I had offered him some.  Twelve marks, on that day, amounted to a little under 2 cents.  The old man, whose savings were probably, as most of the non-profiteer classes are, invested in German pre-war and war bonds, could not afford the 12 mark expenditure.  He is a type of the people whose income does not increase with the falling purchasing value of the mark and krone.


Yup -- Funny that....


Tue, 07/10/2012 - 13:32 | 2602764 pods
pods's picture

Deflation first shows it's ugly head in the things that are leveraged.  It ain't gonna show up in apples until you do not see them on the shelves anymore.

Think about the economy grinding to a halt due to the inability to expand the aggregate debt.

That is where we are.
Call it disinflation, deleveraging, deflation, defacation, I don't care.

We end up arguing about the solid like jello definitions all day long, as the price we pay for things we need go up, and the prices for the things we own go down.

Yet we as humans have to have our "theories" proven to be accurate, so we fight all day about the word used to describe it.

We have had credit expansion greater than GDP for most of my life.

That won't end well, no matter what word you try to use to describe it.




Tue, 07/10/2012 - 14:16 | 2602905 michael_engineer
michael_engineer's picture

Your deflation/inflation comments are supported well in this analysis :

Tue, 07/10/2012 - 14:25 | 2602933 OutLookingIn
OutLookingIn's picture


Deflation in the things we own (houses) and inflation in the things (food,fuel, etc.) that we need.

Each dollar that is brought into existance is debt. Connected to this debt is the interest owed.

Except more debt dollars must be brought into existance, to not only attempt to pay down the existing debt, but to pay the interest owed on the origional debt, to say nothing of the new debt! 

Exponential growth of the money system through the growth of debt is required, for the fiat currency system to continue to function. One problem with exponential growth that is mathmatically proven ~ eventually the growth stops. End point is thus reached. Full stop. "Total catastrophic collapse of the currency system involved."   

Tue, 07/10/2012 - 14:45 | 2603013 pods
pods's picture

Absolutely.  And that is why there will be no printing.  I think the FED actually did "print" up Maiden Lane and some other small instances.    When I say printing I mean creating reserves to buy existing debt, not new issuance.  But there will never be a concerted effort to print.  Printing cannot happen, as any unbacked currency will rip through the debt world futher exacerbating our dire situation of needing debt to increase.

Printing unbacked currency will destroy the system quicker than it is imploding right now.

When Ben said he would drop FRNs from helicopters he was bluffing.  Because deep inside he knows that if a certain percentage of the people catching the FRNs use it to pay off debt (deleverage) it will futher the problem of not enough debt in the system.  Debt is an asset to a certain class, and is our currency.

Ben will gladly print if it is to buy up new issuance of Treasuries or other debt, but raw printing would be FED suicide.

Bottom line is that Ben would do a helicopter drop, as long as someone borrowed the FRNs from him to create them in the first place.



Tue, 07/10/2012 - 15:04 | 2603117 ATM
ATM's picture

Printing is exactly what they are and will do. 

How can the purchase of worthless "assets" off bank balance sheets by the Fed be considered anything other than flat out printing, or are you buying into the whole, "those assets have value" lie?

Print, print and more print. That is a 100% certainty. 

Tue, 07/10/2012 - 15:15 | 2603160 pods
pods's picture

I did say that the FED printed up Maiden Lane, etc.

Tarp?  Not printing.  Stimulus?  Not printing.

It is not about whether they have value, it is whether the "printing" is for new debt issuance.  If they create reserves for purchasing existing debt, it is printing. 

What the system requires is NEW debt.  

The FED only printed to rescue the banks because they were caught with their pants down.  

Now there is no need for them to print, as the banks now have repaired their balance sheets (according to the new FASB rules).

The aggregate debt of the system needs to go up, and printing will not accomplish that.


Wed, 07/11/2012 - 00:55 | 2604959 Vesuvius
Vesuvius's picture

Thanks for the CCI, looks like it's the pre-1995 version of the CRB.

I've been looking at the CRB at

but I like the CCI much better; new inflation measures always get more inacurate because of manipulation I think.  The CRB was something like 474 highest in 2008, this is much higher than it was in 2011.  The CCI looks more accurate to me:


Tue, 07/10/2012 - 13:28 | 2602741 JR
JR's picture

Here is price inflation:

The average national gas price for regular on June 4, 2012 was $3.16, that’s $.17 cents below the price this time last year, according to Consumer  In November of 2000 a gallon of regular averaged $1.51.

UC Davis Undergraduate Annual Fees and Tuition for California residents in 2000-01 was $4,072; for 2011-12 it was $15,123.  For Non-California residents the 2011-12 tuition is $38,001.

The Senior Citizens League in May said seniors have lost more than one-third of their buying power since 2000. “Since 2000, the Social Security Cost of Living Adjustment (COLA) has increased benefits just 36 percent while typical senior expenses have jumped 82 percent, more than twice as fast.

The IMF’s index of internationally traded food commodities prices increased 130 percent from January 2002 to June 2008 and 56 percent from January 2007 to June 2008.

 Employer-sponsored health insurance premiums have nearly doubled since 2000, a rate three times faster than wages. In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job.  Americans pay more than ever for health insurance, but get less coverage.

Airlines cost increased 91 percent since 2000: WASHINGTON (AP) -- An airlines' cost index rose slightly in the third quarter of 2007, but overall costs are up 90 percent since 2000, according to an industry trade group.


Energy Cost Impacts on American Familes, 2001-2012

In 2001, families with gross annual incomes below $50,000 spent

an average of 12% of their average after-tax income of $21,834 on residential and

transportation energy. By 2005, energy costs rose to 16% of their average aftertax

income of $22,682. In 2012, these households are projected to spend 21% of

their average after-tax income of $22,390 on energy.

In nominal dollars, average U.S. household expenditures for gasoline will grow by 136% from 2001 to 2012, based on EIA gasoline price projections for 2012.

Virtually all of the residential electricity price increases over the past two decades

have occurred since 2000.

In 2010, the median gross income of 25.4 million households

with a principal householder aged 65 or older was $31,408, 36% below the

national median household income.

Tue, 07/10/2012 - 13:43 | 2602802 aerojet
aerojet's picture

It's hard to say whether gas prices going up is truly inflation.  We know it's not demand, but I don't see how it has any direct relationship to money supply.  The best I can say is that all the liquidity that was added went into propping up stocks and bonds and led to outsized commodities speculation, which in turn caused prices to jump.  But that is not the same thing as inflation.  Gasoline prices have fallen recently, is that deflation?  Hardly!  It just means some big speculators had to cover. Inflation/deflation are such over-used terms.  We don't get politically unpopular tax increases anymore, we just get our purchasing power undermined.  It's very effective.

Tue, 07/10/2012 - 15:37 | 2603262 JR
JR's picture

Isn’t it time that the bankers’ age-old myth concerning inflation is finally retired; inflation is how they transfer wealth from the economy to their pockets, always did and always have and always will until they are stopped.

Inflation is a dilution of your purchasing power;  and anyone who says purchasing power has not been seriously diluted in America is delusional. It’s okay to be delusional, of course, but it’s not okay to know the truth and carry water for the bakers. There was a time when the banker lie was confusing; but now it’s front-burner criminal.

Yes, the increase in gas prices is inflation. Bernanke is not only pumping gas prices, he’ pumping even more cheap cash into a financial system already flush with trillions.

Anthony Mirhaydari wrote earlier this year: “The American Institute for Economic Research recently unveiled a new inflation gauge that better measures the actual day-to-day experiences of most people. We rarely buy a new house or a car, yet we are very sensitive to prices of ordinary purchases like food, fuel, phone services and personal care products. This new measure, dubbed the "Everyday Price Index," is running at 7.2%.

Said Mirhaydari on March 28, 2012 : “Inflation is nowhere as visible as at the fuel pump…”

Wed, 07/11/2012 - 00:42 | 2604805 Vesuvius
Vesuvius's picture

Yeah, inflation is visible for oil.  According to ZH article below, GoSa wash traded the price of oil in 2008, so it would not have gone over $90 a barrel without the wash trades.  I guess gas price inflation would have been relatively higher this year compared to 2008 if there were no wash trades in 2008.  Maybe there are shorts now before the election, I don't know.

Tue, 07/10/2012 - 15:10 | 2602882 cranky-old-geezer
cranky-old-geezer's picture



Another moron who doesn't understand what inflation is.

The money supply has increased 400% in the last few years, while the economy has treaded water or shrunk.  That's inflation.

Prices of every in-demand product and service have risen 150%  - 200% over that same timeframe.  That's not inflation.  It's just rising prices.

Salaries and wages have not risen in that same timeframe, and it's because demand for employees has dropped dramatically across most sectors.  That's not deflation.  It's just stagnant salaries and wages.

Rising prices with stagnant or falling salaries & wages is not "biflation".    "Biflation" is a bullshit term revealing someone's gross stupidity.

What we have now is inflationary depression.  Inflation of the money supply during an economic depression.

It's classic Keynes theory.  Increase government spending during an economic depression to keep it from getting worse.

Of course it doesn't work. Because it doesn't fix one single problem that caused the depresson.

Keynes' ideas are pure bullshit.  But they're used as a banner to justify massive currency printing and massive government spending during an economic depression.

Keynes said nothing about bailing out insolvent banks.  But Keynesianism is nonetheless used as justificaiton to print boatloads more currency to bail out insolvent banks.

Bottom line, Keynes' ideas are being used as a cover story for outright looting the economy and looting the people.

It's just flat out looting.  Stealing people's wealth, giving it to the government and Wall Street.

This is Econ 101 & 102 stuff folks.  Did you sleep thru those courses?

I didn't.  I had the highest grade in the class on both those courses.  I killed the curve on every test.

Tue, 07/10/2012 - 15:40 | 2603276 DosZap
DosZap's picture

what inflation?  We are looking at deflation here folks.  For inflation to hit we would have to see across the board increases for all types of services and products?  we arent seeing it, we are seeing it localized in a few sectors ( healthcare) and no where else.


Obviously you have not been shopping for FOOD lately.Or gone to a restaurant .

Food prices are up a minimum of 25% over a year ago, some more, some less.

Go to a restaurant, the portions are smaller and the prices have gone up 10-15%+.

Tue, 07/10/2012 - 12:58 | 2602598 Widowmaker
Widowmaker's picture

Money isn't wealth.  Easily confused but only one is confiscated through bullshit and is made out of cotton and linen.

Current "money" is long past it's prime, nothing but a hollow shell of bullshit lies, fraud and manipulated oppression.  All that is left in the current "system" is fraud rewarded, too big to fail, and moral hazard -- that ain't sound money.

Trust is restored at the muzzle of a gun or the accumulation of wealth by savers, not faggots in pinstripes draped in an American flag sucking the giant government mammary gland in the sky claiming God's work for suckers.  

Shoot to kill.

Tue, 07/10/2012 - 13:29 | 2602749 Shizzmoney
Shizzmoney's picture

Money isn't wealth.

+infinity.  Just like in poker, it's just a way to "keep score".

I hope one day, Anonymous or some other hacking collective just completely erases some banking server out there.  Every single digital zero that Dimon, Gensler, Corzine, and these other banking hacks around the world have "worked" for - completely gone.  Untraceable.  "Vaporized", if you will.

We will all then see where the real wealth, is.

Tue, 07/10/2012 - 13:45 | 2602808 aerojet
aerojet's picture

It wouldn't matter.  You would have to start machine-gunning elites to see anything change.  Although 9/11 appears to have erased certain irregularities that would have cause some public outrage.

Tue, 07/10/2012 - 14:51 | 2603040 cranky-old-geezer
cranky-old-geezer's picture



Money isn't wealth.

Actually money IS wealth.

But paper currency isn't money. It's a claim against money.  Like a claim check. 

A claim check has no value of itself.  The only value is the thing it's a claim check for.  Like a claim check for your clothes at the dry cleaner. 

But now our paper currency isn't even a claim check on something of value.  You can't take it to a bank and redeem it for anything.  So it's worthless technically.

Fortunately you can take it to a grocery store and redeem it for groceries.  And gas at a gas station.

But that's only because federal law requires those merchants to accept it.

If that law wasn't there, they wouldn't accept it.  

So we have a worthless paper currency that we can use like it was money because federal law requires merchants to accept it.

And it's conditioning too.  Sheeple Americans have been conditioned to viewing worthless paper currency like it has value.  If it spends, that's all they care about.

But it won't have value much longer.  When the rest of the world drops the US dollar as world reserve currency, that's it, game over for the dollar.

Tue, 07/10/2012 - 12:55 | 2602602 QQQBall
QQQBall's picture


If a someone wants to post a commentary fine, but ZH should not be used as a teaser site. Pretty soon it will be 1/2 a sentence and pay $30 a month for the rest of the article.

Tue, 07/10/2012 - 12:58 | 2602611 crawldaddy
crawldaddy's picture

you know its bullshit when you see such things,  Worlds gonna end, pay me 30 bucks to find out how to survive. Its garbage



Tue, 07/10/2012 - 13:15 | 2602693 CosmicDebris
CosmicDebris's picture

Agreed.  And even if he is correct in every single thing he says, he is still asking that people use their extra money (i.e., the $30 he wants from us) to stock up on this or that.  If he really cared, I'd imagine he'd give the information to us for free so we could use that $30 to buy said goods.  Doesn't he author books? Doesn't he make a living elsewhere? I don't know.  Maybe it's not his website (don't really know for sure) but he is still participating in making money off of the readers so it might as well be his.

Tue, 07/10/2012 - 13:56 | 2602854 AustriAnnie
AustriAnnie's picture

Yes, there should be a law made that he has to do hours of research and writing and then give the fruits of his labor away for free.

How dare he ask payment for the fruits of his labor?!  

Heaven forbid you have the right to (or not to) exchange your money voluntarily for what he is selling!  Free trade is so unfair.

Tue, 07/10/2012 - 15:24 | 2603206 CosmicDebris
CosmicDebris's picture

Point taken...still, don't you feel like you're dealing with a crack dealer a little bit?  Just sayin'.

Tue, 07/10/2012 - 20:17 | 2604144 Dr. Sandi
Dr. Sandi's picture

Buying crack or buying facts. Just a personal choice.

Wed, 07/11/2012 - 13:42 | 2606738 stacking12321
stacking12321's picture

i don't.

a stable person doesn't get crack addicted by reading part I of an article, the part I by itself is worth reading whether or not one goes on to read part II

when i come across a pay-for article or subscription, i make a rational economic choice, as to whether or not i view the content as being worth the $ cost.

i happen to be a chris martenson paid subscriber, and i'm happy to support his work.

Tue, 07/10/2012 - 13:51 | 2602832 Fukushima Sam
Fukushima Sam's picture

Chris Martenson's "teasers" have been appearing here as long as I can remember.

Tue, 07/10/2012 - 14:10 | 2602885 AustriAnnie
AustriAnnie's picture

As has information from wealth managers and many other sources who usually charge for their services.  We all benefit by some of the free information because we are subsidized by those who pay fees.

If people are willing to pay for such information because they value it more than spending hours a day doing the research themselves, then these professionals earn a living.  If the information they provide is worthless, they won't earn a living selling it.  

This isn't a hobby for some of these people it is a full time job.

To all the people whining about the fees: Do YOU work for free?

Wed, 07/11/2012 - 21:28 | 2608545 stacking12321
stacking12321's picture

well put.

i think they just want free government cheese to go with their whine.

Tue, 07/10/2012 - 14:02 | 2602836 LouisDega
LouisDega's picture

Why is asking for money if its dying?  Im confused.

Tue, 07/10/2012 - 15:26 | 2603221 CosmicDebris
CosmicDebris's picture

This should have been my comment.  You put it into words better. 

Tue, 07/10/2012 - 15:53 | 2603317 LouisDega
LouisDega's picture

Oops, I left out the word he.. Should read  Why is he asking for money.

Tue, 07/10/2012 - 20:18 | 2604146 Dr. Sandi
Dr. Sandi's picture

He quickly swaps money for something of longer lasting value. As we all should do whenever possible.

Tue, 07/10/2012 - 14:24 | 2602928 michael_engineer
michael_engineer's picture

Here's a freebie for you then. But there is a link to the crash course mentioned, which is another freebie.

Tue, 07/10/2012 - 13:06 | 2602604 Yardfarmer
Yardfarmer's picture

causes of rising prices are many, but they always boil down to the overexpansion of money and/or credit.  

It appears to me rather that the contraction of credit and the subsequent freezing of interest rates in negative numbers when inflation adjusted and which seems hallmark of a deflationary depression creates the need for the massive injections of liquidity which in turn lead steadily to inflation and possibly hyperinflation. the impossible war reparations added to the already crippling mlitary expenditures of WWI forced upon Germany after Versailles, decimated industrial production burdened with onerous state taxes thus acted as a blackhole into which money evaporated upon printing.

in today's economic miasma in addition to all of the above we have the added and overarching debility of a quadrillion$ of OTC derivative contracts and their counterparty contractural obligations many orders of magnitude higher than total world GDP. Weimar will look like the proverbial sunday school picnic when all of these chickens come home to roost. got gold? storable food? arable land? and the wherewithal to defend it?

Tue, 07/10/2012 - 12:56 | 2602605 Bohm Squad
Bohm Squad's picture

We've moved from Chemical Warfare to Currency Warfare.  Maybe the Dead Kennedy's could do a remake?

Tue, 07/10/2012 - 13:19 | 2602698 Sweet Chicken
Sweet Chicken's picture


Is my cock big enough? Is my brain small enough?

Tue, 07/10/2012 - 13:23 | 2602717 toady
toady's picture

Fresh Fruit for Rotting Vegetables

Tue, 07/10/2012 - 12:57 | 2602607 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Gold, silver, and platinum are money; nothing else is.

Does someone need money to be happy?  No, but it is important to understand what money is.

Tue, 07/10/2012 - 12:59 | 2602616 crawldaddy
crawldaddy's picture

no, they are metals. If the person across from you prescribes no value to them, then they are worth nuttin.  There is no such thing as a "true" currency.

Tue, 07/10/2012 - 13:06 | 2602643 GeneMarchbanks
GeneMarchbanks's picture


Tue, 07/10/2012 - 13:35 | 2602776 Gene'sMom
Gene'sMom's picture

This is a grown up conversation, stay out of this boy.

Tue, 07/10/2012 - 13:23 | 2602726 Yardfarmer
Yardfarmer's picture

I am put in mind by this comment of Mark Dice some years ago strolling the oceanfront boardwalk in San Diego, trying to sell an ounce of gold valued at that time about $1200 for the face value of $50. No one would buy. What does that say about value and the "person across from you"? eh?

Tue, 07/10/2012 - 14:23 | 2602927 traderjoe
traderjoe's picture

That was such an absurd situation to put people in. There's a coin shop in virtually every medium-sized town that will trade metals for cash. And lots of vendors will accept metals for the right person/relationship.

Tue, 07/10/2012 - 13:26 | 2602735 toady
toady's picture

There is only force and capitulation.

Tue, 07/10/2012 - 21:29 | 2604349 Unique Snowflake
Unique Snowflake's picture

For a financial blog a lot of people don't seem to understand the basics, unless you're getting junked cos metals are the historical unit of currency and so are money for practical purposes. People should do some homework though.

Tue, 07/10/2012 - 13:03 | 2602630 GeneMarchbanks
GeneMarchbanks's picture

Also palladium, sea shells(in some cultures), Poprocks, paper notes, Whiskey, semi-precious stones and whatever the hell Aussie dollars are made from.

Money is whatever.

Tue, 07/10/2012 - 13:30 | 2602755 toady
toady's picture

They bought Manhattan for a box of trinkets. Depends on who is across the table.

Tue, 07/10/2012 - 13:56 | 2602856 Winston Churchill
Winston Churchill's picture

Money is a store of value.

FRN's are a store of debt.

Which do you want ?

Tue, 07/10/2012 - 20:20 | 2604152 Dr. Sandi
Dr. Sandi's picture

I'll have as much of each as you want to hand over. And by the way, thank you!

Tue, 07/10/2012 - 13:12 | 2602676 LowProfile
LowProfile's picture


Gold, silver, and platinum are money; nothing else is.

At least you've finally got them in the right order of importance to preserve wealth.

Tue, 07/10/2012 - 13:38 | 2602787 LowProfile
LowProfile's picture

Evidentially there's some people here that disagree, but don't bother to give an opinion on what the best course of action is, lol!

Tue, 07/10/2012 - 14:23 | 2602926 marathonman
marathonman's picture

You forgot lead as a semi-precious metal.  In a lot of ways its the ultimate wealth preserver.

Tue, 07/10/2012 - 13:12 | 2602677 MeBizarro
MeBizarro's picture

Never understood the fixation on currency soley based upon metals let alone idiots who advocate a system based upon only metal transfers as the only means of official trade. 


Tue, 07/10/2012 - 13:30 | 2602759 oddjob
oddjob's picture

Paper currency requires trust which has been broken. All you have left is hegemony imposed by force.

Tue, 07/10/2012 - 15:46 | 2603296 DosZap
DosZap's picture

Never understood the fixation on currency soley based upon metals let alone idiots who advocate a system based upon only metal transfers as the only means of official trade. 

Maybe you do not understand soverign purchasing.

If it's held at the NYC Fed bank, gold is separated by country, and when payment for goods are made, they move the bars back and forth.

This is how it works at the top.( or used to)

Tue, 07/10/2012 - 17:47 | 2603686 shovelhead
shovelhead's picture

Because the supermarket will not trade you a box of Wheaties for your neighbors dog?

Tue, 07/10/2012 - 20:23 | 2604160 Dr. Sandi
Dr. Sandi's picture

Metals are just another item in the toolbox of value.

Gold, silver, shotgun, hammer.

(Never pound nails with a loaded shotgun, it's bad for the shotgun.)

Tue, 07/10/2012 - 12:59 | 2602610 silvermaister
silvermaister's picture


buy silver !!!


Tue, 07/10/2012 - 14:21 | 2602914 ironmace
ironmace's picture

buy lead !!!

Tue, 07/10/2012 - 12:58 | 2602612 midgetrannyporn
midgetrannyporn's picture

In the usa j6p is perfectly positioned for inflation with loads of asset backed debt but the money isn't coming so he's screwed. Inflation for the fatty maggots, depression for the rest.

Tue, 07/10/2012 - 13:01 | 2602621 zuuma
zuuma's picture

Money Dying?

Well, the joke sure is on Corzine and, now, Wasendor.

Wonder where they put it? You'd think big PM buys would show up.

If it's cash in some digital mattresses, it'll mature worthless like all the rest.

Pass the popcorn!

Tue, 07/10/2012 - 14:29 | 2602946 michael_engineer
michael_engineer's picture

Hope Corizine had his money at PFG. Isn't it ironic, don't you think?

Tue, 07/10/2012 - 13:03 | 2602625 Tao 4 the Show
Tao 4 the Show's picture

Good vanilla intro for beginners, but it is difficult to imagine that events would play out like those in either Weimar or Iran. The inflations we know of (including Argentina, Zimbabawe, etc.) generally happen in isolation, against the backdrop of a more or less stable ROW. We are talking the big boys here - U.S., Europe, etc., which are an integral part of the underlying financial structure.

Tue, 07/10/2012 - 13:53 | 2602842 Winston Churchill
Winston Churchill's picture

You are so right.These are totally uncharted waters we are sailing into

here.A total collapse of every financial system almost at once in historical

terms.I'm thinking 6 month once it starts,from Europe through Japan,China and

then the US.

Interesting times indeed.

Tue, 07/10/2012 - 13:07 | 2602638 Bastiat009
Bastiat009's picture

Has anyone else noticed that the US$ has been rallying against the euro and gold for months now?

Once again, I don't know what will happen in 6 months but I know that the US$ died last summer, or at least I was told it was about to die. Today the same amount of US$ is buying a much larger apartment in Paris than it did last august ... and a lot more gold too.

Tue, 07/10/2012 - 13:17 | 2602700 Yardfarmer
Yardfarmer's picture

just because the herd has been steered into Treausry bond debt instruments is not a testimony of the strength of the USD but rather the inflating of yet another speculative bubble. The longterm trend of the USD index remains unchanged. it has been in a slow death spiral since the founding of the Fed in 1913 and the establishement of the Exchage Stabilization Fund a few decades later. long term cyclic trends manifest in sudden, irreversible, and catastrophic consequences once they have run their course.expect the same with the US$. it is inevitable.

Tue, 07/10/2012 - 17:56 | 2603699 youngman
youngman's picture

But the Chinese want a strong dollar for several we have to buy their stuff...and so they can spend our dollars on comodities.....and they are...then when they have enough under control.....farmland in Africa...oil and factories that we built in their country...they can pull out the gold backed yan and demand all payments in their currency....many countries will jump ship....we will fight it until we can´t...because we have nothing...

Tue, 07/10/2012 - 13:20 | 2602708 fuu
fuu's picture

And here come the chorus singers.

Tue, 07/10/2012 - 13:29 | 2602746 jimmyjames
jimmyjames's picture

Once again, I don't know what will happen in 6 months but I know that the US$ died last summer, or at least I was told it was about to die. Today the same amount of US$ is buying a much larger apartment in Paris than it did last august ... and a lot more gold too


Always looking at one side to try and make yourself look right-

Did you also notice that it takes much less ozs. of gold to purchase a larger apartment in the land of surrender monkeys?




Tue, 07/10/2012 - 13:59 | 2602860 Bastiat009
Bastiat009's picture

Maybe but the story was about the dying US$. 

And it's not about me.

Tue, 07/10/2012 - 13:08 | 2602655 kevinearick
kevinearick's picture

The Bible: Gardening vs. Farming (Alastair I. MacKay)

Do you really want the Gates Foundation planning parenthood globally? Do you really want Monsanto planning Agriculture globally? Do you really want NS* planning technology globally? Do you want to live in a sterile world?

“Is it not lawful for me to do what I will with mine own?” Is it really a choice between central social and economic control and patriarchal religious and political control, intellect or emotion? Do you really want to spend 40 years in the desert arguing over gold?

“By little and little I will drive them out before thee, until though be increased, and inherit the land.” “Prepare thy work without, and make it fit for thyself in the field; and afterward build the house.” The divine providence, central control Pavlov swap has been going on since the beginning of recorded History. Manifest destiny has always been the mantra of the tyrant, on both sides, converting spiritual control of the many into material wealth for the few. Where do you find privacy in such a world?

There is nothing new about granting monopolies and thereby creating artificial scarcity to the end of central government control, with nothing more than a vague promise of equal entitlement to the so-willing majority. “The eastern Sheppard leads his flock, and encourages and controls them by addressing the leaders by name, the rest of the animals dociley following these ‘principal of the flock.’” The only difference in the latest ponzi is the nature of the science forcing productivity and variety at the expense of quality and vitality.

Joseph stripped the Egyptians into serfdom and granted them seed in return for 1/5th share to the pharaoh, which granted the priests their 10% tithe, with a bureaucratic system of licenses and permits, inspectors and fines, ensuring that periodic famine would drive the people into the cities, leaving refuge migration through the intermediary killing fields for proper conditioning, new methods, and their derivative wealth, stripped of family origination. Babylonia, remember, was an ‘intellectual’ center of leadership.

The majority always prefers easy rewards. Politics is all about assigning scapegoat status to economic idea-holders, separating the wheat from the shaft, within ‘home rule,’ to ensure empire growth at least cost. The Garden of Eden, among trees for atmosphere, water for transport, and soil for nutrients, is the stage upon which the knives are inserted. Time and time again, the totalitarian employs democracy to liquidate the democrat, and “down the slope of diminishing returns the nation slides.”

An honest man and a discreet woman are of God, neither of which the empire can tolerate for long. All others say one thing and do another, to some degree of separation, as the expected example to empire offspring. Keep your distance relative to their ambition. “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.”

“Moab hath been at ease from his youth, and he hath settled on his lees, and hath not been emptied from vessel to vessel, neither hath he gone into captivity; therefore his taste remained in him, and his scent is not changed.” “The tree of the field is man’s life,” and “all flesh is grass.” “Shall I leave my wine, which cheereth God and man, and go to be promoted over the trees?” “No man putteth new wine into old bottles; else the new wine doth burst the bottles.”

“Weeds are plants whose virtues have not been discerned,” and life is all about discernment, which the majority naturally takes for granted. Beware the false jubilee, to stagnate the land and enslave the level population to it, in the name of preserving the status quo. Tithing “shall be for the stranger, for the fatherless, and for the widow.”

An economy cannot prosper without trust, faith in the ability to adapt, to the unknown, whether one chooses to call it God or not. CO2 is a symptom, of the inability of institutions to adapt. A slogan about manifest destiny is great for homogeneous, good vs. evil, simple event horizons, amidst an unsympathetic empire majority, but it is grossly inadequate for the natural world. Adjust accordingly.

A corporation is a piece of paper, a myth, a fiction, of false assumptions, and nothing more. It exists only to the extent that you choose to breathe life into it, as a point of reference, in your quantum development. Ratchet up the law with leverage, and cut the line, once your children are properly seated. So, the masters and their co-dependent majority assume they know better…

David beat Goliath, with skills learned leading his flock through the killing field. Jesus is the one and only way, to life. The city on either side leads only to death, at various rates of speed. Whether a Sheppard is a terrorist or not depends upon your frame of reference. Don’t knock on the door with ill-intent and expect a happy outcome. If you are of goodwill, however, and experience anxiety, step forward, not backward. God, and physics, ensures the outcome. History is littered with corpses, of good and evil.

What did Nixon say? If the President does it, it’s legal. Welcome to the United States of California; get them before they get you. Flip it, and drop the bridge, when all the robots have arrived.

Beware the anger of a patient man.

Tue, 07/10/2012 - 13:16 | 2602699 takinthehighway
takinthehighway's picture

For those interested in the usage of weeds (no, not that kind):

Tue, 07/10/2012 - 14:45 | 2603011 tip e. canoe
tip e. canoe's picture

that's a fantastic link, grassy-ass.

just made myself a dandelion/burdock/lambsquarters/purslane/garlic mustard/wood sorrel/barley grass/red clover/mint/stevia smoothie this morning and dosed it with some magic mushroom powder (no, not that kind).   pretty darn tasty...

Tue, 07/10/2012 - 15:32 | 2603250 1Inthebeginning
1Inthebeginning's picture

On youtube the eattheweeds channel has over 136 videos on wild edibles.  I became interested in wild foods after learning that dandelions were originally imported from Europe and were one of the most nutritious foods on earth.  Dandelions contain vitamins A through K, but they have a bitter taste.  Wild foods grow easily, have minimal imputs, and produce sometimes superior nutrition.  

The next time you are driving down the street please imagine every lawn or open area growing some sort of fruit tree or edible something.  If everyone in USA got rid of the lawn grass and grew some edibles (if they wanted to) that would be an enormous amount of better quality, locally grown food.

The answers seem so easy.  We are truly blessed.

Tue, 07/10/2012 - 20:44 | 2604205 Dr. Sandi
Dr. Sandi's picture

Thanks for the link. I think we have several of those nutritional supplements flourishing in the side yard.

Tue, 07/10/2012 - 13:34 | 2602774 aerojet
aerojet's picture

"separating the wheat from the shaft"

I quit reading right there because you're a fucking moron.  And *that* was generous.

Tue, 07/10/2012 - 14:35 | 2602972 tip e. canoe
tip e. canoe's picture

have fun getting the chaff :)

Tue, 07/10/2012 - 15:19 | 2603178 krispkritter
krispkritter's picture

I thought he went off on a tangent about Obama and his golf game...

Tue, 07/10/2012 - 22:12 | 2604463 kevinearick
kevinearick's picture

you may want to avoid elevators...

but good luck in any case...

striking chords...

Tue, 07/10/2012 - 14:27 | 2602939 tip e. canoe
tip e. canoe's picture

"Do you really want to spend 40 years in the desert arguing over gold?"

Tue, 07/10/2012 - 13:09 | 2602657 RunningMan
RunningMan's picture

I think this article provides a good reminder of how human behavior plays a role in what happens next in the crisis, as much as the banks and the machines we lament are running the stock market.

I see a bizarre period of relative stability having formed, despite clear signs of a potential next leg of this crisis. The markets are clearly broken, so trading volumes have collapsed, even if the market valuation seems stuck in neutral. Fair value should probably have hit 6K on the Dow but never made it because of intervention. Maybe now it is 9K, but same reason we aren't there: Fed. I get that.

Money - printed lots of it, but velocity has plunged. There is literally nowhere to park savings to earn a return right now. Safest and most liquid spot for now is UST. Say what you will, but gold is illiquid and impractical unless you own your own Ft. Knox for material sums. Thus, the currency hasn't collapsed because people who have savings are just parked for the time being. Markets, not going down, US still a country albeit with tons of debt. Wait and see.

Europe and the Euro...there is a currency in crisis. When that pops, the USD will go vertical up, and markets vertical down. Maybe they buy another 12-18 months. I've been consistently surprised at the ability to kick the can since 2008. But we could be waiting for a while longer.

But then do we get a currency collapse? Only when the UST starts getting killed, with China unloading, and all the pain that brings them and the US, will there be a USD crisis. And that will require WW3... shall we play a game?


Tue, 07/10/2012 - 13:10 | 2602664 battlestargalactica
battlestargalactica's picture

For weeks I've had the Talking Heads on the brain...

And as things fell apart
Nobody paid much attention
you got it, you got it

It's broke beyond repair. It's been broken. It's getting more broken. By design and with the collusion of the gov, media and banks readying UN oversight of water, land, carbon farts from chickens, taxing us to wipe our ass. Meanwhile my fellow country have become idiotic, masturbation-centric, dumbed-down, GMO-fattened sheep.

Sh#t that I thought was tin-foil hat basement dweller BS is now, real... Current events.

And my answer, poor as it is... Far away piece of land? Big garden? Solar? Well? Practical skills? Barbarous relics? Good books? Check-a-roo.

Likely irony: Drones ready to drop some heavy shit on me for no f$cking reason while I'm minding my own business and picking heirloom tomatoes in BFE.

Failed State, here we come.

Tue, 07/10/2012 - 13:19 | 2602671 TheObsoleteMan
TheObsoleteMan's picture

This has always been their plan, currency destruction on a global scale, so they can introduce a single global electronic currency. This way, there is no way to avoid a tax, it is deducted from your credits right off of the top. They can also regulate your buying habits this way;"Sorry sir, I am going to have to ask you to put back that case of pop, as you are over your monthly limit, set by the Dept. of Agriculture." They will also know everything you have sold; taxes will be collected every time you sell something at your yard sale, family used car, etc, etc. When it does come here in it's full force, you will see plenty of crying americans, walking around like lost children in a store. Few even understand what money is, so how can they see any of this coming? Reminds me of a wild life  show I seen years ago. A baby elan was standing in the river just watch a hugh croc floating ever closer. It had never seen one before, and it was trying to figure out what it could be. Right up to the second the croc had it in it's jaws, pulling it under the water. That will be a similar fate to 80% or more of the 'mercun sheeple in the coming US$ devaluation.

Tue, 07/10/2012 - 13:30 | 2602756 aerojet
aerojet's picture

I hate to tell you this, but I see the world going in exactly the opposite direction.  The grand centralization scheme sputtered and died.  We are now living in the aftermath. 

Tue, 07/10/2012 - 14:13 | 2602896 Paul Atreides
Paul Atreides's picture

Long grey and black markets with silver as a primary settlement mechanism.

Tue, 07/10/2012 - 14:35 | 2602969 the tower
the tower's picture

I agree. De-globalization in full effect. Everyone is trying to get out without losing face.

Tue, 07/10/2012 - 20:27 | 2604169 TheObsoleteMan
TheObsoleteMan's picture

No aerojet, I hate to tell you we are simply going into another gear in centralized planning. Until recently, we have been in "velvet chains" for much of the past 100 years. Those are soon to be replaced with iron ones. We are transitioning from a "soft" socialism to the real thing, the hard variety, and on a global scale at that.

Tue, 07/10/2012 - 13:12 | 2602674 takinthehighway
takinthehighway's picture

Survivalblog had a great article some time back about what to stockpile for barter after your beans, bullets and Band-Aids were squared away. Because of my extensive background in maintenance, I am going with adhesives, sealants and lubricants. Newton's Second Law of Thermodynamics (rough synopsis - if you don't prop it up, it goes all to heck) doesn't look to be repealed anytime soon.

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