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The Implications Of A Failed Monetary System

Tyler Durden's picture


Santiago Capital has put together a concise and highly informative 10 minutes video, which explains in the amount of time that a traditional economics professor takes to prepare their coffee, virtually everything that is at risk, and fundamentally flawed, with the current monetary system. While this presentation will not be news to regular readers, we suggest it is watched with recent revelations elsewhere (certainly not here: this has been the default assumption here since day one), that it is flow, not stock that matters to price formation. Which means the exponential curve discussed below will only get ever steeper to asymptote, if the true purpose of the Fed is simply to ramp stocks come hell or high water, in its artificial pursuit of "price stability."


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Mon, 04/16/2012 - 16:52 | 2349763 Spitzer
Spitzer's picture

This is like the housing bubble in 2006...

When does the bond bubble blow ?

Peter Schiff was close in 2006. He figures we have 2 years or less

Mon, 04/16/2012 - 17:21 | 2349820 Pladizow
Pladizow's picture

"The abscence of gold as an intrinsic part of our monetary system today, makes our century, the one that has just passed, unique in several thousand years...." Robert Mundell, Accepting the Nobel Peace Prize in 1999.

"Anybody who believes exponential growth can go on forever in a finite world is either a madman or an economist." - Kenneth Boulding, 1910-1993.

Mon, 04/16/2012 - 17:37 | 2349863 markmotive
markmotive's picture

There's no such thing as a free lunch. Especially a 30-year free lunch.

Folks, what you thought was free turned out to be destroying your standard of living. Yes, even the returns on your 401k are a sham on an inflation-adjusted basis.

Mon, 04/16/2012 - 17:56 | 2349914 redpill
Mon, 04/16/2012 - 17:59 | 2349922 iDealMeat
iDealMeat's picture


Growth at 7% doubles every 10 years..   Simple math.

Mon, 04/16/2012 - 18:57 | 2350008 MunX
MunX's picture

It is amazing to me how many people in the bis don't know a thing about limits.

Mon, 04/16/2012 - 19:20 | 2350052 Seer
Seer's picture

But, but... they MAY know, it's just that they don't CARE.  I suspect the reason being is that they require others (majority) to NOT know in order for them to make their way (live off of others).

Mon, 04/16/2012 - 20:52 | 2350205 AldousHuxley
AldousHuxley's picture

what's up with the seashell Brett?


Are you proposing we move away from Bernanke bucks to seashells as medium of exchange?


gold will follow M2 but beware of special tax implications of this "collectible".  plus to get wealthy and not just keep up with inflation, you must double down on gold with leverage. Otherwise in the long run, you are just holding on to inflation.



Mon, 04/16/2012 - 21:01 | 2350219 lasvegaspersona
lasvegaspersona's picture

To double down means paper gold. If you think there are 'problems with gold' just wait til you see the problems in store for paper gold.

Tue, 04/17/2012 - 10:01 | 2351212 engineertheeconomy
engineertheeconomy's picture

the GLD will seperate from GOLD

GLD will go to ZERO

GOLD, well, see ZIMBABWE... for all practicall purposes GOLD has not even begun to go up in price YET

At the current prices, all Precious Metals are being subsidized heavily

Mon, 04/16/2012 - 18:05 | 2349927 blu
blu's picture

Read the story. Interesting.


I think this probably has less to do with Mr. Heywood and a lot more to do with one hi-level ChiCom wanting to nuke the political aspirations of a different hi-level ChiCom. Because honestly, they would never investigate this if it would bring down one of their own, unless of course bringing down one of their own were the very point.

Mon, 04/16/2012 - 18:33 | 2349978 redpill
redpill's picture

Pretty sure Mr. Heywood doesn't care what the actual motive was :)

Mon, 04/16/2012 - 18:46 | 2349993 AgShaman
AgShaman's picture

They should exhume the body and do an autopsy...

Oh wait...nevermind

Mon, 04/16/2012 - 17:46 | 2349888 Zero Govt
Zero Govt's picture

Pladizow  -  didn't junk you but both those statements are crapology

Money can be anything, including Gold or based on Gold, but also including notches on wood, Airmiles, credits at a whore house etc. 

Secondly growth (productivity) is infinite because it's based on knowledge, not a finite resource. There is no limit to our knowledge and therefore no limit to growth

Stop listening to academics and people that win Nobel Prizes ...they gave one to that Marxist President for 'Peace' ...enough said

Mon, 04/16/2012 - 19:11 | 2350032 iDealMeat
iDealMeat's picture

Sure...  makes perfect sense..  Because I know various ways to get oil out of the ground I'll be infinitely productive in that endeavor...


I junked you..

Mon, 04/16/2012 - 19:26 | 2350060 Seer
Seer's picture

"Secondly growth (productivity) is infinite because it's based on knowledge, not a finite resource. There is no limit to our knowledge and therefore no limit to growth"

Ugh!  Show me anywhere in NATURE where this hypothesis holds, that "growth" is about "knowledge."

Just what IS "knowledge?"  I'm sure that you've heard of the term "intellectual trashcan" before.  I'd argue that "knowledge" without action is pretty much meaningless (or just plain philosophy).  Wisdom, on the other hand, is the application of "knowledge."  No matter, reality lies in APPLICATION of thought, not just thought itself.  And it's APPLICATION that is growth, not thought (well, not until we can do mental telepathy of such).

BTW - Didn't junk you.

Mon, 04/16/2012 - 20:10 | 2350135 The Alarmist
The Alarmist's picture

So, you are or are not a subscriber to new growth theory?

Mon, 04/16/2012 - 20:12 | 2350136 sunaJ
sunaJ's picture

ZG - on your first point, you are correct, on your second, you are wrong:

"There is no limit to our knowledge and therefore no limit to growth"

There is a limit to our knowledge. Mathmatically explained as the overlapping sum of knowledge of all humans on the planet.  Its limits are expressed in the unintended consequences of drilling 5 miles below the surface of the ocean, or pumping chemicals and fresh water through boiling sand to get oil.  There IS a limit to human knowledge, and wisdom is gained when you realize we do not know as much as we think we know.



Tue, 04/17/2012 - 00:18 | 2350536 DaveyJones
DaveyJones's picture

well said

Tue, 04/17/2012 - 00:33 | 2350570 malek
malek's picture

First draw the conclusion and then bend the facts accordingly?

There is conceivably no limit to how much much new (and significant) knowledge can be discovered. There might be a limit how much information humans can make use of, even with all the help by IT etc., but to state we are getting close to that only displays your ignorance.

Tue, 04/17/2012 - 08:26 | 2350923 tarsubil
tarsubil's picture

There's a limit to knowledge because there is a limit to oil production? What if there are other places to get energy like that great big ball of fire in the sky?

Tue, 04/17/2012 - 17:13 | 2352738 FrankDrakman
FrankDrakman's picture

There is a limit to our knowledge

Rushing off to work, so no time to google for quotations, but the guy running the US Patent around 1900 thought they'd have to close it soon as "everything that can be invented, has been invented" (approx.). 

Mon, 04/16/2012 - 20:21 | 2350156 Acet
Acet's picture

Actually the value of knowledge is in what it allows us to do, and in any human endeavour knowledge suffers from diminishing returns. For example there are theoretically an infinite number of ways of extracting oil (i.e. knowledge) and yet as the complexity of those ways increases, the cost (measured as energy spent) of actually implement them increases exponencially (and eventually overcomes the energy that can be obtained from the oil extracted).

Or in Mathematical terms, a infinite sum of values can still add up to a finite result. For example:

- Assume knowledge is represented by n, which is between 0 and infinity

- Assume that the return on said knowledge is 1/2n

In that situation, the total return on all possible knowledge (from 0 to infinity) adds up to 1.

Infinite knowledge, finite returns.


Mon, 04/16/2012 - 20:55 | 2350212 Withdrawn Sanction
Withdrawn Sanction's picture

Whether or not knowledge is an infinite resource, the problem overlooked by the exponential curve advocates, like Prof Bartlett is they are assuming a fixed function and then linearly (albeit in exponential fashion) extrapolating it.

Trouble is, functions are not fixed.  150 years ago, for example, most homes were heated with wood, a renewable but depleting resource.  Then we moved on to coal, then oil, and nat gas.  Yes, any one curve will reach a point where it no longer makes sense (vertical) but we move on if the vested interests don't interfere and new knowledge is applied.

It's the same thing in the monetary sphere.  Sure, the base has gone vertical and it will collapse under the weight of its own contradictions, but we'll move on...if the vested interests don't interfere and we choose a sound monetary system.

In this connection, yes, it is true that technically we could use anything (seashells, cigarettes, barrels of oil, electrons) as money.  The key w/the monetary system, however, hinges on who has to be trusted w/its operation?  In other words, how easily is the "standard" manipulated? If it's easy, it's not sound, and by that measure, our current standard is unsound.

The virtue of a gold coin/real bills standard on the other hand is its built in regulator.  Its soundness rests in the ability of ordinary people to control the effusion of credit.  If credit is too liberal, depositors seek redemption forcing banks to curtail credit and raise rates.  As rates move higher the better returns begin attracting gold back to the system and so there's an in-built regulator that harnesses everyone's self-interest in a positive way. This is obviously abbreviated, but is it perfect?  Hardly, but then what product of the mind of man is?  A precious metal standard does however have the virtue of long history of soundness when its principles are adhered to, and vengeance when they are not.  (We are currently experiencing a vengeful period...)

Mon, 04/16/2012 - 21:51 | 2350310 earleflorida
earleflorida's picture

Nobel Economic Award Prize,... c.1969 *{Rockefeller/ Rothschild [[[ RR ?]] Muppets!!!}     **[1971 ?]

Important: basically a incestuous pool of groupthink ***[eg. Kennedy/ Johnson,...McNamara via the "Culprit"?]


Mon, 04/16/2012 - 22:51 | 2350402 cranky-old-geezer
cranky-old-geezer's picture



Money can be anything ...

Yes in theory, but takes a really sheepish society to accept something with no intrinsic value as money. 

Intrinsic value is the key.   Throughout history societies have naturally selected one or more commodities with universally recognized value as money.

The key is "naturally selected".   What a society selects naturally, of their own free will, without being coerced one way or another by some law. 

Societies have naturally selected gold as money as far back in history as you care to look.  

A paper currency that isn't redeemable for anything is not something a society would naturally select as money, so laws have to be enacted forcing the society to accept it as money, along with requiring every government controlled business to accept the currency.

But a society is vulnerable to long-term conditioning.   The "greenback" dollar was redeemable for gold (or silver) for decades, plenty long enough to get Americans conditioned to those "greenbacks", then gold & silver redeemability was withdrawn, but by then Americans were so conditioned to "greenbacks" they paid little or no attention.

Wana make people beleive a worthless paper currency has value?   Simply make them use it a while, say 20 - 30 years, and they're "hooked", they'll never question it.

It's just like voting.  Voting used to have some value, and people got accustomed to it.  Then they started rigging elections and voting was meaningless.  But people were conditioned to voting, still beleiving it's worthwhile.

The reason governments and central banks can make worthless paper currencies work is the people are sheep, doing whatever government says, never questioning.

And Americans are so sheepish today, long term conditioning isn't needed anymore. The Fed could issue a new currency tomorrow, different color, red, yellow, blue, whatever, and 99% of Americans would accept the new currency without question. 

...the same 99% that bitches about the 1%. 

Let's face it, the 99% are dumb sheep.

Tue, 04/17/2012 - 00:33 | 2350571 malek
malek's picture

Ding, ding, ding - we have a winner!

Tue, 04/17/2012 - 12:24 | 2351813 narnia
narnia's picture

Time is finite. 

When the cost of everything you need & virtually anything you want deflates to almost free, productivity hits a very hard ceiling.  It can grow at a very fast rate from nothing to everything, but it cannot keep an infinite growth rate.

This monetary system is not about providing the necessary currency to keep our biological economy from maturing.  It's an entirely different set of goals & limitations.

Wed, 04/18/2012 - 05:25 | 2354041 narapoiddyslexia
narapoiddyslexia's picture

Zero Govt-

There is a limit to the growth Ben Bernake needs for his system to survive. He characterizes it as "growth" but what he actually means is "increase in consumption of physical goods," and even with 100% recycling this is doomed.

Therefore growth as we currently manifest it is doomed, as are we if we do not cease growth.

Mon, 04/16/2012 - 17:50 | 2349896 Max Fischer
Max Fischer's picture



The absense of gold in our monetary system is what enabled the US to fight the Revolutionary War and gave us our independence. Fiat money was the seed of our liberty; our nation was FOUNDED on and FUNDED by paper money (Continentals) not backed by anything other than faith. Had we been anchored to the rigidity of the gold supply, we would never have been able to fund the war.

All the doomer libertardians dragging their knuckles through this forum owe their very freedom to paper money. *LOL*

Max Fischer, Civis Mundi

Mon, 04/16/2012 - 18:08 | 2349934 Dapper Dan
Dapper Dan's picture

From you know where,

During the American Revolution, the colonies became independent states; freed from British monetary regulations, they issued paper money to pay for military expenses. The Continental Congress also issued paper money during the Revolution, known as Continental currency, to fund the war effort. Both state and Continental currency depreciated rapidly, becoming practically worthless by the end of the war.

Try again!

Don’t borrow money at interest.

This lesson was so ingrained that 2 of the west's major religions banned it for centuries. The other significant major western religion has it as an affirmative commandment to use usury against members outside the ethnic clan.

The wisdom here is in both cases is that people of ordinary intelligence cannot understand compound interest. They just can't. They're incapable of it. Therefore, it is consistent with public policy that it should be banned.



Mon, 04/16/2012 - 18:28 | 2349966 Spastica Rex
Spastica Rex's picture

You say there are no easy answers?! Well, I say you're not trying hard enough!

Nah, +1 for you.

Mon, 04/16/2012 - 18:40 | 2349985 hadriansnightmare
hadriansnightmare's picture

And the speculators fleeced the soldiers who had to sell them at 10 cents on the dollar just to get home-  your a kook-

Mon, 04/16/2012 - 19:34 | 2350073 FlyPaper
FlyPaper's picture

Max: I disagree with your assertion.    The absence of gold sent us begging France for funds (Mr. Adams, Mr. Franklin).   The wealth of the American colonies was drained by a tax called INFLATION to pay for the war, and in effect conscripted the savings of everyone that held the paper money.  The paper money didn't pay for anything.

Same exact thing  G "dub-yuh" Bush and his post-cessor did.  Create money, pay for it with a tax called inflation.  This is how we fought and will pay for our Middle-eastern mal-adventures.  This is also the same way WWII was paid for.

Good grief...  :+(

Mon, 04/16/2012 - 20:34 | 2350179 piceridu
piceridu's picture

Throughout history, how many galleons and ships sunk trying to get need funding to war fronts?...they didn't transport phoney-paper-fiat was gold, silver and gun powder you imbecile.

Mon, 04/16/2012 - 21:08 | 2350234 lasvegaspersona
lasvegaspersona's picture


have you read FOFOA?

His take is that fiat will always be with us because we love it. We need to borrow without the constrictions of gold backed money. The problem is with saving that same fiat as our store of value...failure 100% of the time. monetary system confined by the use of gold as the store of value. It is a solution that satisfies the saver and the debtor in all of us.

Mon, 04/16/2012 - 22:51 | 2350411 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Well stated.  If I could + 2, I would have for mentioning FOFOA.  We need fiat.

Tue, 04/17/2012 - 00:23 | 2350551 DaveyJones
DaveyJones's picture

fofoa is one of the best out there

Mon, 04/16/2012 - 21:14 | 2350241 NidStyles
NidStyles's picture

I find your knowledge or rather lack of normal and still disturbing.

Tue, 04/17/2012 - 00:04 | 2350505 Lednbrass
Lednbrass's picture

Yes of course, that currency worked fabulously well and the Continental Congress was able to purchase all manner of supplies for its armies with them. That "not worth a Continental" was a common expression was due to its stunning success as a trusted form of exchange, and the European powers backing the rebels freely accepted wheelbarrows full of them for gunpowder and other materials.

Congrats on pushing the envelope of absolutely jaw dropping ignorance yet again.

Mon, 04/16/2012 - 17:35 | 2349868 been there done that
been there done that's picture

I noticed that Tyler posted this at 16:51 and there were comments on it at 16:52 and it is 10 minutes long, so my math tells me that people comment before they even hear, see or read this stuff??????

Too fast to comment bitches.....

Mon, 04/16/2012 - 17:47 | 2349890 Sockeye
Sockeye's picture

Are you saying someone is front running the comments section?

Mon, 04/16/2012 - 20:03 | 2350122 prains
prains's picture

ZH readers can fold space and time, you just need the spice

Mon, 04/16/2012 - 21:01 | 2350221 WolfePaq
WolfePaq's picture


Tue, 04/17/2012 - 00:21 | 2350412 Paul Atreides
Paul Atreides's picture

Spice for sale!

Acceptable forms of payment: Gold or Silver

*Harkonnens need not apply

Mon, 04/16/2012 - 22:57 | 2350419 AgShaman
AgShaman's picture

Someday I'll watch that movie sober....then maybe it will be clear

Mon, 04/16/2012 - 21:56 | 2350316 IToldYouSo
IToldYouSo's picture

nah, HFR (high frequency readers)

Mon, 04/16/2012 - 17:46 | 2349891 SilverIsKing
SilverIsKing's picture

ZHers are the smartest people in the world.

Mon, 04/16/2012 - 17:49 | 2349899 Zero Govt
Zero Govt's picture

Yes we're speed readers too

..but memories of Goldfish (it's official, Tyler said so . . . i think!)

Mon, 04/16/2012 - 19:52 | 2350116 francis_sawyer
francis_sawyer's picture

I knew WTC7 was gonna fall before it even happened...

Mon, 04/16/2012 - 20:44 | 2350184 i-dog
i-dog's picture

Ah-hah! ... another BBC viewer! ... "The broadcaster with clairvoyant reporters".

Mon, 04/16/2012 - 20:26 | 2350166 poor fella
poor fella's picture

Thank you for that link! I knew there was something to my philosophy of life...

Will wear that URL on all my shirts like a LaCoste gator or Polo dude. The embroidery for scrappers, intellectual sages, and skeptics. When the SHTF, I'm having a toast, and then with sharpened mind, will go forth with other like-minded humans and make the best of the New World Odor..

Mon, 04/16/2012 - 21:53 | 2350312 IToldYouSo
IToldYouSo's picture

lol, if you ever fancy going out for a night of sharpening your senses then can I be your wingman?

Mon, 04/16/2012 - 18:03 | 2349925 GeezerGeek
GeezerGeek's picture

Some of us refuse to be enslaved by facts. Why listen before commenting, when our own halucinations are so much more interesting?

Mon, 04/16/2012 - 18:14 | 2349943 11b40
11b40's picture

That's the way I paly golf, too.  Approximate golf is what I call it.  First you decide what you should shoot for the day, then you fill out the card & stick it in your bag.  After that, you can relax and play away.  Take mulligans, leave balls in the rough, play hazards any way you want - it's great!  Why tie yourself to facts when opinions will do? 

Mon, 04/16/2012 - 19:32 | 2350072 Seer
Seer's picture

That's how the "esteemed" members of the US Congress do things, they vote before they actually read a bill (and then they probably never go back and actually read the bills anyway).

Tue, 04/17/2012 - 06:23 | 2350798 boogerbently
boogerbently's picture

...and after passing a bill, never revisit it or document/qualify the applicants.

You apply, you, we TRUST you!

I hear Tim Geithner is STILL collecting Disability from an old college skateboard injury.

Mon, 04/16/2012 - 20:12 | 2350137 The Alarmist
The Alarmist's picture

"... my math tells me that people comment before they even hear, see or read this stuff??????"


Mon, 04/16/2012 - 22:31 | 2350380 been there done that
been there done that's picture

"... my math tells me that people comment before they even hear, see or read this stuff??????"

aaaaaahhhh, sarcasm. DUH!!!!   I used to like ZH more in the early days. I just don't want to see it turn into Yahoo Finance message board territory. There used to be much more ON TOPIC and thoughtful discission. That's all.  DUH!

Mon, 04/16/2012 - 20:37 | 2350185 piceridu
piceridu's picture

You're saying black box algos..aka: HFC- High Frequency Comments..holy shit

Mon, 04/16/2012 - 23:36 | 2350472 cranky-old-geezer
cranky-old-geezer's picture



Why read the article when you already know the topic?

Does anyone here still need education on what's wrong with our monetary system?  Really? 

Most of us here could write a better article about the ills of our monetary system. 

But why beat a dead horse?  It's been reported and analyzed and discussed from every possible angle over and over again till we're sick of it. 

Fiat currency is a scam to loot the nation, simple as that.

Mon, 04/16/2012 - 17:54 | 2349909 4realmoney
4realmoney's picture


Mon, 04/16/2012 - 18:30 | 2349972 bobola
bobola's picture

Shiffs dad is in prison for tax evasion.

His projected release date is October 7, 2016.

If he behaves himself, I figure he has 2 years or less

Mon, 04/16/2012 - 20:15 | 2350144 The Alarmist
The Alarmist's picture

There is a reason why that statue of Justice is blind-folded ... she is being held hostage.

Mon, 04/16/2012 - 19:31 | 2350070 kridkrid
kridkrid's picture

Could someone provide a clickable link to the viideo? My phone can't see what I assume to be a thumbnail of some sort.

Tue, 04/17/2012 - 00:21 | 2350544 i-dog
i-dog's picture

You need the iPhone5. Not long to wait....

Mon, 04/16/2012 - 22:56 | 2350418 tempo
tempo's picture

History proves Govt dependence means short term benefits offset by long term pain and control. Stalin, Hitler, Chinese Great Leap Forward, Cambolia dictatorships started with promises to provide for the people and resulted in the death of over 20 million citizens as purge after purge was used to gain more and more control over the lives of the the average citizen. We are at a tipping point. Most people living on earth today have not studied history and have no idea what happened in the 1930 to 1950 period. We seem never to learn from history.

Mon, 04/16/2012 - 23:49 | 2350480 tempo
tempo's picture

Since there is no alternative but Govt control of our life, family beliefs, health, etc. let hope and pray that the central bankers can inflate. Foxconn is getting alot of media attention about the $1.25/hr wages and terrible health/environmental damage that is being done in the name of everyone having a smartphone, digital TV, facebook, etc. Change is coming to the progressives, particularly those in CA.

Mon, 04/16/2012 - 16:53 | 2349765 SillySalesmanQu...
SillySalesmanQuestion's picture

Failed fiat system....

Mon, 04/16/2012 - 16:53 | 2349767 PSEUDOLOGOI

Exponential growth bitchez!

Mon, 04/16/2012 - 17:47 | 2349889 Peter Pan
Peter Pan's picture

The pursuit of exponential growth was fun while it lasted. I wonder though if people have considered the possibility of exponential shrinkage in a world where debt and multinationals have created a Gordion knot of international interconnectedness.

There is this horrid feeling that the bridge is about to collapse and we are too far from either end for a possible escape.

Mon, 04/16/2012 - 18:08 | 2349936 blu
blu's picture

Nice visuals there.

Except now I'm totally freaked out. Thanks.

Mon, 04/16/2012 - 18:29 | 2349970 Spastica Rex
Spastica Rex's picture

Why do you hate Jesus, capitalism, and the petrochemical industry?

Mon, 04/16/2012 - 19:32 | 2350069 donsluck
donsluck's picture

Why not?

Mon, 04/16/2012 - 19:36 | 2350079 Seer
Seer's picture

"I wonder though if people have considered the possibility of exponential shrinkage"

Economies of scale in REVERSE!  Just imagine how NON-affordable things will become, how industry will collapse as a result of the loss of "economies of scale [increasing]."

Mon, 04/16/2012 - 20:07 | 2350131 FEDbuster
FEDbuster's picture

That Ipad would take a while to build in your garage from scratch?

Even producing the "basics" water, food, clothing, heat, first aid, etc... is impossible for the average American.   A successful EMP attack would take us back to the "Dark Ages" overnight.  Over dependence on "the system" to provide for our daily sustenance will come back to haunt us one of these days.

IMHO, gold is for optimists.

Mon, 04/16/2012 - 21:15 | 2350240 lasvegaspersona
lasvegaspersona's picture

I gave you green but I am not optimistic and yet see a place for gold. The EMP would be a real back to nature event (it will really suck here in Vegas) but if there is 'just' a collapse of the monetary system and society holds its center gold should be fantastic.

Mon, 04/16/2012 - 21:44 | 2350300 Acorn10012
Acorn10012's picture

The EMP event could be a world-ender. If I were Prez, the hounds of hell would be unleased if the US was incapacitated by an attack.

None of us are promised tomorrow.

Mon, 04/16/2012 - 21:49 | 2350305 Acorn10012
Acorn10012's picture


Mon, 04/16/2012 - 23:07 | 2350431 wakey
wakey's picture

I'm with FEDBuster.  IMHO:

Why would gold be a good investment in a total monetary collapse?  What percentage of the US population owns physical gold?  Or, more realistically, what percentage of the US population will actually have gold on hand post monetary crisis?  Optimistically you're talking about less than .2% of the population (excluding jewelry, which has a lot of problems if you wanted to convert it into pure gold that could be exchanged by weight,  but assuming that's not the case, I'd guess you're still looking at less than 5% of the population with more than a quarter ounce of pure gold on hand.  Of course, I'm just guessing, so if anyone can point me to some facts that say otherwise, please do.  I certainly would agree that the pragmatic realization of gold as a domestic currency medium grows exponentially as those numbers increase...).  The market simply isn't sizable enough to be traded as a currency medium for local interactions or facilitate barter. 

Moreover, in the event that the next financial crisis takes form in deflation, gold will be sold off to pay debts denominated in fiat currencies.  I love zero hedge, and I'm greatful for the Tyler Durdens of the world giving us a window to the key events of our ever-more globally-financialized and manipulated/irrational economy, but I think they've got the gold and inflation thing all wrong.  I suppose if we are in fact looking at a hyperinflationary context that does not amount to a monetary collapse, I can see how gold would be a good investment, though.  But I just don't see serious inflation coming - banks were never reserve constrained in the first place.  As a practical matter, since 1994 they have always and only been capital constrained by requiring a risk attenuated return for their assets in excess of the cost of their liabilities. If they were haven't been reserve constrained for nearly 2 decades, why should we suppose that just now, all of a sudden, that a few more deposits are going to result in an exponential increase in the total supply of money plus credit when those deposits were never necessary to allow parabolic growth in the first place?  (As I commented earlier we are not in a fractional reserve system...  The simplest way to think about it is - though it doesn't dive into operational details - that deposits don't drive loans, rather loans drive deposits.  E.G. if we first assume, as is the true, that a bank does not need to meet its reserve requirements until the end of the day and it may do so by borrowing from the excess reserves of other banks - not to mention the reserve requirement of 10% is only applicable on checking deposits that are not swept into money market funds overnight - and then we assume a bank makes a loan to a customer and credits his account, then a deposit is made simultaneously with the loan - that is to say, because the loan itself was itself a deposit at said bank before the time at which their reserves must be met, they were never constrained by their reserves in the first place as they are one and the same.  This has huge effects on the operational reality of QE and its diminishing effectiveness (which IMHO is at least as much psychological as fundamental, becoming moreso the former with diminishing returns if we're only talking about TSY purchases.)

Finally, if we assume that fiat currencies collapse and there's a return to the gold standard, then the implied value of gold is multiples higher than its current valuation.  Do you really think we're going to go to the grocery store and pay in gold dust?  Assuming a $7500 per troy ounce valuation (which I think is a conservative estimate if we assume gold and silver absorb the total value of assets denominated in fiat currencies), ~.0042g of gold would be the current equivalent of a dollar.  

Ok, so since we can't slice and dice it that fine in any standard way (assuming you don't have the whole world trying to game the system and make little flakes look like gold), lets say we leave it to an electronic banking system.  Well, then whats the difference?  It's only a matter of time again until the banking system finds a way to extend credit beyond the supply of money and either the gold peg moves or you go back to fiat currencies.  I don't see how gold can win in the long run. 

And, to you gold bugs, I'm not trying to deny the relative merits of a gold standard.  But, on the flip side of that, fiat currencies have the power to redistribute wealth for the greater good, while reverting to a gold standard (assuming that there is not enough gold left in the ground to pull it out faster than the total percieved value of economic production) would remain a perpetually appreciating asset begging the potential for wealth to accumulate to the haves vs the have nots.  I think the problem here is that the power to do good has corrupted those who hold the keys to do so; the elite of our society in both the banking and political world have both (i) deluded themselves into believing the lies they sell and/or, on a sliding scale, (ii) have turned the power to do good on its head to achieve their own means.  Granted, they'd have far greater systemic resistance were *the world in whole* tied to a gold standard.  (Europe may not use gold, but look what happens when you can't print your own money while the rest of the world can...  You end up being overly reliant on your financial sector, who'll get all sorts of government guarantees and what not because they need their banks to extend enough credit to devalue their currency enough to remain competitive with fiat currencies of trading partners who can print their own; or, if you're germany, you'll feed this process in the EZ debtor nations in order to keep them buying from you and thereby maintain an artificially low currency value).  That is to say, you'll end up being conquered by Germany, who finally has a 'moral justification' to do it.  History certainly does rhyme.)

Sorry to ramble, I just love thinking about this stuff and no one to share it with. 

Tue, 04/17/2012 - 00:55 | 2350597 FEDbuster
FEDbuster's picture

Thanks, and I do own some precious metals.  I think they are a great way to try and perserve wealth given the crazy fiat currency world we find ourselves in. 

But if the SHTF and the system goes down, I doubt that I will trade two AK 47s and 2K of 7.62x39 for your 1 oz. Gold Eagle (which is a current trade).  I sure hope it doesn't get to that point, but who knows for sure?

Tue, 04/17/2012 - 06:32 | 2350812 boogerbently
boogerbently's picture

I can see where it is the one asset/currency with value, but hard to trade and few would have it, not making it MORE valuable, but less likely to bbe useful as a medium of trade.

I'm buying cases of tuna!!!

Tue, 04/17/2012 - 08:23 | 2350910 TK69
TK69's picture

Your right about a monetary collapse.

Many People assume falsely, (including the sales people who produce this presentation) that gold would be used as a medium of exchange in an economic collapse. But most people have no idea of what they are talking about. Why? Because, in order to sell (trade) something, there needs to be a buyer. And the buyer must have money. With no money there is no trade. And historically, money has been silver, not gold, that has been used as a medium of exchange for thousands of years although gold has been around a long time. Money is nothing more than a medium of exchange and all economies are barter with money being a "universal barter card". The real question is to what extent are people allowed to trade and who owns the resources..

Unless forced to do otherwise, through legal tender laws, people will only trade for things in the money of their choice. But this poses a problem for government, for how can it collect taxes if people can trade anything? How can it maintain control and enforce law? For example, at one time tobacco was the main currency in the early US colonies. This meant that local governments almost always got inferior tobacco which it could not trade very easily rendering many enforcement actions obsolete. This is why legal tender laws are in place. They are in place so that government can control the "universal barter card", create laws that can be enforced, and get paid so it can spend money for political capital.

But how could the world be on a gold standard unless people in mass were trading it? In order to sell something you must have buyers. And in order to have buyers the sellers must accept their currency (gold in this case). Many people in the world today do horde gold and even some nations are starting to use gold in oil trade but it is subjective as the more people use it, the less power their governments have over the populations and mercantile economies. Mercantile economies which do not work which is why they rely on debasing the currency. The real question is what restrictions are these governments placing on their population.

Gold prices will go up with demand for it. However, without demand prices will fall even for gold. But where does this demand come from? From people who have money. Governments themselves cannot drive enough demand because without the masses trading for it, there is no realistic demand. And once it is spent by the government, it is in circulation and is difficult to recapture. Demand is drive by people who have money and this currently means that there must be enough new money in circulation to grow the economy. And this means there must be a lot of new loans. When the economy recovers ( and it will at some point) and people start borrowing again.

But how likely is it that enough people borrow enough money to support the current economy. Do these same people really think that the population will go back to borrowing again in mass? No, but at some point there will be a balance. However, as less borrowing there is less money in circulation which means less money to purchase things like Gold.  OF course this also depends on what currency you are using as other nations increases of currency will also increase demand on consumer goods (IE China). SO, I do not mean to say that gold prices will come down. But in the long run, unless there is more borrowing in mass inflating the currency how do you value it? Do you value it in terms of deflated dollars or in terms of consumer trading capacity both in which seems negative.

There world has been operating beyond its means for a very long time. There will be a big correction unless people start to borrow in mass, there are huge cuts in regulations, and taxes are abolished. There is not enough money to go around and too much debt on all side. And why is this? Why have money created from debt in the first place? Because the main beneficiary is the government. With more loans Governments receive more tax revenue which means more spending. Remember tax cuts increase revenue? This is how it is done, through consumer borrowing.

Many people assume that if Oil was priced in Gold than everyone would be forced back to a Gold standard. Of course this would also mean foreign governments would be destroyed too. Why? Because they too could not exist without debasing the currency. This is the dirty little secret in the room. Inflation and Wealth distribution destroys economies. But the destruction can be hidden with inflation, not without it. Socialism, communism, and Nazism were only brought about because of the massive inflation incurred in order to pay for W.W.1. Under sound money, they could not exist because such things could not be paid for including the war. This is also why the need for inflation as these things cannot be paid for. The whole world is a washed in a lie. The time value of money is a lie. Normally ones purchasing power increases as markets without restrictions more effectively reduce prices and raise living standards.  What is needed is a lassie faire economy.

The real problem is the role of government, regulations, and the violation of property rights. It really does come down to whether rights come from God or Man (humanism). Money is nothing more than a medium of exchange. If you have less restrictions on money then money will flow and circulate, if more restrictions it will slow and be horded. It is that simple. The real disparity is caused by regulations, restrictions, and wealth redistribution.



Mon, 04/16/2012 - 20:05 | 2350129 kridkrid
kridkrid's picture

They are called preppers.

Mon, 04/16/2012 - 17:53 | 2349908 Sam Clemons
Sam Clemons's picture

I think he misses that the rate remains the same.  2%, 5%, 10% all lead to exponential growth functions - the only thing that changes is the amount of time and the numerical value of the change to make the 2%, 5% or 10% change.

Good presentation overall. 

Mon, 04/16/2012 - 16:53 | 2349769 bank guy in Brussels
bank guy in Brussels's picture

« This past Thursday, a Modesto, California, man whose house was in foreclosure shot and killed the Sheriff’s deputy and the locksmith who came to evict him from his condominium unit. Modesto authorities responded by sending 100 police and SWAT snipers to counter-attack, and it ended Waco-style, with the fourplex structure burning to the ground with the shooter inside. ...

The shooter who died was 45 years old and he appears to have lost his condominium over a $15,000 home equity loan he took out almost a decade ago, owed to Bank of America. The condo was sold at an auction for just $12,988 to a shady firm, R&T Financial, that doesn’t even have a listed contact number. »

Mon, 04/16/2012 - 17:11 | 2349807 lemonobrien
lemonobrien's picture

how ya gonna go...

Mon, 04/16/2012 - 18:06 | 2349830 LowProfile
LowProfile's picture

I ain't goin' like THAT, but I bet a lot of others will.

Makes you wonder how many more deputies have to die before the Sheriffs say "fuck this!".

Also makes you wonder what happens when somebody puts 2 + 2 together and takes out a bankster (like the puke in the article linked by BankGuyInBrussels).

THAT will start a shitstorm...  Ugh...

Mon, 04/16/2012 - 20:13 | 2350142 francis_sawyer
francis_sawyer's picture

So I guess he was mad as hell & decided he wasn't gonna take it anymore...

Mon, 04/16/2012 - 21:22 | 2350255 lasvegaspersona
lasvegaspersona's picture


the sheriff will see the light when the guy sets up an ambush for the 100 responders...and gets away...I don't know how..underground tunnel? gas bombs? friends with fire power? robots that kill? I said I don't know...whadda think I am some sick psycho who sits arround all day and dreams this shit up??

(the above was sarcasm and irony and strictly for entertainment purposes...and not necessarily the opinion of lasvegaspersona or his affiliates)

further disclaimers on request

Mon, 04/16/2012 - 22:43 | 2350395 Silver Alert
Silver Alert's picture

OK, we're requesting.

Tue, 04/17/2012 - 03:41 | 2350718 StychoKiller
StychoKiller's picture

Here's a whole bouquet for ya:

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Mon, 04/16/2012 - 19:06 | 2350023 Acorn10012
Acorn10012's picture

...out shooting.

Hardcore style..."bitchez"

Mon, 04/16/2012 - 19:28 | 2350062 X.inf.capt
X.inf.capt's picture

no wonder DHS ordered 2712 MRAP armoured vehicles in january....

civil unrest...



Mon, 04/16/2012 - 20:01 | 2350123 Chump
Chump's picture

The alphabet soup agencies are going to have enough problems preventing desertion when this shit gets started proper.  I think they know they're not ready for true civil unrest, hence headlines like this.  Gotta keep up appearances.

Mon, 04/16/2012 - 21:38 | 2350289 The Navigator
The Navigator's picture

no wonder DHS ordered 2712 MRAP armoured vehicles in january....

AND 400,000,000 rounds of .40 cal ammo

Both sides are gearing up for an OK Corral ending.

Mon, 04/16/2012 - 22:07 | 2350346 i-dog
i-dog's picture


"no wonder DHS ordered 2712 MRAP armoured vehicles in january"

a) It was the Army ... not DHS

b) It was 2,717 ... not 2,712

c) It was to retrofit running gear to units returning from duty in the ME, not an order for new units.

Just sayin'....

Tue, 04/17/2012 - 02:46 | 2350685 q99x2
q99x2's picture

Mid-Easterners are not uncivil.

Mon, 04/16/2012 - 23:19 | 2350448 fourchan
fourchan's picture

guns of brixton

Mon, 04/16/2012 - 17:26 | 2349842 GeorgeHayduke
GeorgeHayduke's picture

"Modesto authorities responded by sending 100 police and SWAT snipers to counter-attack..."

I expect more and more overreaction to any of these types of incidents as "The Authorities" strive to prove their force and keep the sheep in line. There's a good supply of new cop recruits coming back from their training grounds in Iraq, Afghanistan, Libya and other such places for the municipalities to hire. What other jobs await them? Of course, desperate people may get more creative in how they decide to make their final stand.

Interesting times dead out for overshooting, ricochets, shrapnel and being part of the usual Collateral Damage involved with such incidents.

Mon, 04/16/2012 - 18:17 | 2349947 walküre
walküre's picture

The price tag for that response team was min. 10x the $15,000 debt that poor slob owed.

How can Modesto, CA afford the price tag for one such incident? They can't. They're broke.

100 police and SWAT ... sounds almost completely ridiculous and erronous. Can somone confirm that number?

Mon, 04/16/2012 - 18:31 | 2349974 blu
blu's picture

Modesto admits to having 286 sworn officers. And there are lots of other uniforms in the area. So while 100 might be high I can imagine it was at least 80.

SWAT usually rolls the whole squad so as not to be over run, as many as 20 in uniform show up. Another 40 (including State and County troopers) arrive in the area within minutes from active patrol to manage crowds and block roads, and another 20 off-duty pulled in from the on-call list.

Takes 20 minutes to no more than an hour to get that kind of throw on the ground.

Coming to a neighborhood near you.

Mon, 04/16/2012 - 19:42 | 2350096 Seer
Seer's picture

MANY years ago I traveled through Modesto and after my experience there I vowed that if I ever had a nuke I'd drop it on this place! (Note to Homeland Security: it's been nearly 30 years since I made this statement- hyperbole [look the word up!] meant to convey what a shitty episode I encountered there; no need to act as, as can be seen, karma manages to work its way [I need not do anything]).

Mon, 04/16/2012 - 20:15 | 2350147 francis_sawyer
francis_sawyer's picture

Wasn't Modesto where they filmed 'American Grafitti'?

Mon, 04/16/2012 - 20:20 | 2350154 The Alarmist
The Alarmist's picture

The Rule of Law ... Priceless.

Mon, 04/16/2012 - 22:17 | 2350362 Sam Clemons
Sam Clemons's picture

Can you really put a price tag on the safety of other citizens and the bank?

Mon, 04/16/2012 - 18:18 | 2349950 blu
blu's picture

I have heard said that ancient Rome wouldn't let hardened military units return from extended deployments, simple reason being that the men had become desensitized to killing, no longer had functioning social or workplace skills, and would pose a real threat back home.

Don't know if it's true. Sounds plausible though.

People say our own troups would never fire on us. After multiple tours in Iraqistan calling in air strikes on villages, I'm not so sure about that.

Not disrespecting service men and women. Just say'n. Everyone has a limit.

Mon, 04/16/2012 - 20:25 | 2350164 The Alarmist
The Alarmist's picture

The Romans did not allow commanders to cross the Rubicon with their units because there were questions as to where the loyalties of the Legions might lie, since the compensation of the Troops was often a product of the decisions of the commanders.  Our own modern system of keeping the troops' compensation limited to official pay scales may indeed work to the benefit of the ordinary citizen.

Mon, 04/16/2012 - 20:32 | 2350178 kridkrid
kridkrid's picture

People say our own troups would never fire on us. - normalcy bias. People are going to be surprised by our new normal.

Mon, 04/16/2012 - 17:42 | 2349883 Chupacabra-322
Chupacabra-322's picture

@ bank guy in Brussels, still don't believe we live in a POLICE STATE.

Federal Agencies
United States Department of Energy
Special Response Teams (SRT)
Special Response Force (SRF)
United States Department of Homeland Security
Customs and Border Protection (CBP)
Office of Field Operations (OFO) - Special Response Teams (SRT)
US Border Patrol (USBP) - Special Operations Group
USBP - Border Patrol Tactical Unit (BORTAC)
USBP Border Patrol Search, Trauma, and Rescue (BORSTAR) Teams
USBP San Diego Sector - Air Mobile Unit (AMU)
USBP San Diego Sector - BORTAC (formerly REACT)
USBP - Special Response Teams (SRT)
Federal Protective Service (FPS) - Special Response Teams
Immigration and Customs Enforcement (ICE)
Homeland Security Investigations (HSI) - Special Response Teams (SRT)
Enforcement and Removal Operations (ERO) - Special Response Teams (SRT)
Enforcement and Removal Operations (ERO) - Tactical Intervention and Control (TIAC) Teams
Coast Guard
Deployable Operations Group
Maritime Safety and Security Team (MSST)
Maritime Security Response Team (MSRT)
Tactical Law Enforcement Teams (TACLET)
Helicopter Interdiction Tactical Squadron (HITRON)
Vessel Boarding Security Teams (VBST)
United States Secret Service
Counter Sniper (CS) Team
US Secret Service Uniform Division (UD) - Emergency Response Team (ERT)
US Secret Service - Counter Assault Team (CAT)
United States Department of Justice
Bureau of Alcohol, Tobacco, Firearms, and Explosives - Special Response Teams (SRT)
Drug Enforcement Administration
Foreign-deployed Advisory and Support Teams (FAST)
Mobile Enforcement Teams (MET)
Federal Bureau of Investigation
Hostage Rescue Team (FBI)
FBI Regional SWAT Teams
Federal Bureau of Prisons - Special Operations Response Teams (SORT)
United States Marshal Service (USMS)
USMS Special Operations Group (SOG)
USMS - Special Response Teams (SRT)
United States Department of State
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United States Department of Treasury
United States Mint Police - Special Response Teams (SRT)
National Park Service
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National Security Agency Police Department - Special Response Team (SRT)
Pentagon Force Protection Agency
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Indiana State Police - Emergency Response Team (ERT)
Florida Highway Patrol - Tactical Response Teams (TRT)
Florida Department of Law Enforcement (FDLE) - Special Operations Teams (SOT)
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Maine State Police - Tactical Team
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Maryland State Police - Tactical Medical Unit
Maryland Transportation Authority Police - Special Response Team (SRT)
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Massachusetts Bay Transportation Authority Police - Special Operations Team (SOT)
Massachusetts State Police - Special Tactical Operations Team (STOP)
Michigan State Police - Emergency Support Team (EST)
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New Jersey State Police - Technical Emergency And Mission Specialists (TEAMS) Unit
New Jersey Transit Police - Emergency Services Unit (ESU)
New Jersey Transit Police - Conditions Tactical Unit (CTU)
New Mexico State Police - Tactical Team
New York State Police - Special Operations Response Team (SORT)
North Carolina State Bureau of Investigation (SBI) - Special Response Team (SRT)
Ohio State Highway Patrol - Special Response Team (SRT)
Ohio Department of Rehabilitation and Corrections - Special Response Team (SRT) & Special Tactics and Response (STAR)
Oklahoma Highway Patrol Tactical Team
Oregon State Police - Special Weapons and Tactics (SWAT) Team
Pennsylvania State Police - Special Emergency Response Team (SERT)
Port Authority Police Department (PAPD) – Emergency Services Unit (ESU)
Rhode Island State Police - Special Weapons and Tactics (SWAT) Team
South Carolina Law Enforcement Division (SLED) - Special Weapons and Tactics (SWAT) Team
Tennessee Highway Patrol - Special Operations Unit (SOU)
Texas Department of Public Safety, Ranger Division - Ranger Recon Teams (RRT)
Texas Department of Public Safety, Ranger Division - Special Weapons and Tactics (SWAT) Team
Texas Department of Public Safety - Special Response Teams (SRT)
Utah Highway Patrol - Special Emergency Response Team (SERT)
Vermont State Police - Tactical Services Unit
Virginia State Police - Tactical Response Teams (TRT)
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Anchorage Police Department - Special Weapons and Tactics(SWAT) Team
Arlington County Police Department - Special Weapons and Tactics (SWAT) Unit
Atlanta Police Department - Special Weapons and Tactics (SWAT) Unit
Atlantic City Police Department Special Weapons and Tactics (SWAT) Team
Atlantic County, NJ, Emergency Response Team (ACERT) (Muli-Agency team)
Austin Police Department - Special Weapons And Tactics (SWAT) Team
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Bay Area Rapid Transit District Police Department - SWAT Team
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Charleston Police Department - Special Weapons And Tactics (SWAT) Team
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Chesapeake Police Department - SWAT Team
Chicago Police Department - SWAT Team
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Gwinnett County, Georgia, Sheriff's Office - Special Weapons and Tactics (SWAT) Team
Hampton, Virigina, Police Department - Special Weapons and Tactics (SWAT) Team
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Houston Police Department - Special Weapons And Tactics (SWAT) Team
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Los Angeles County Sheriff's Department (LASD) - Special Enforcement Detail (SED)/Special Weapons Team
LAPD - Special Weapons And Tactics (SWAT) Team
Los Angeles School Police Department - Special Response Team (SRT)
Maricopa County Sheriff's Office - Tactical Operations Unit (TOU)
Marietta Police Department - Special Response Team (SRT)
Metropolitan Washington Airports Authority Police Department - Special Response Team (SRT)
Miami-Dade Police Department - Special Response Team (SRT)
Metropolitan Atlanta Rapid Transit Authority (MARTA) Police Department - Special Operations Response Team (SORT)
Montgomery Police Department – Special Weapons and Tactics (SWAT) Team
Montgomery County Police Department (Maryland) – Special Weapons and Tactics (SWAT) Unit
Nashville Metro Police Department - Special Weapons And Tactics (SWAT) Team
Navajo Nation Tribal Police - Special Operations Unit (SOU)
Newark Police Department - Emergency Response Team (ERT)
New Orleans Police Department - Special Weapons Assault Tactics (SWAT) Team
Newport News Police Department - Tactical Operations Unit (TOU)
New York City Police Department - ESU
North Eastern Massachusetts Law Enforcement Council (NEMLEC) Special Weapons and Tactics (SWAT)(Multi-jurisdiction regional team)
North Miami Beach Police Department - Special Response Team (SRT)
Northern Illinois Police Alarm System (NIPAS) - Emergency Services Team (EST)(Multi-jurisdiction regional team)
Orlando Police Department - Special Weapons And Tactics (SWAT) Team
Orange County, California, Sheriff's Department - Special Weapons And Tactics (SWAT) Team
Orange County, Florida, Sheriff's Office - Special Weapons and Tactics (SWAT) Team
Palm Beach County Sheriff's Office - Special Weapons And Tactics (SWAT) Team
Palm Springs Police Department - Special Weapons And Tactics (SWAT) Team
Phoenix Police Department – Special Assignments Unit (SAU)
Phillidelphia Police Department Special Weapons And Tactics Team (SWAT) Unit
Pima Regional SWAT - (Multi-jurisdiction regional team)
Port of Seattle Police Department - Special Weapons and Tactics (SWAT) Team
Portsmouth, Virginia, Police Department - Special Weapons and Tactics (SWAT) Team (Formerly the Tactical Respopnse Unit)
Prince George's County Police Department - Emergency Services Team (EST)
Prince George’s County Sheriff’s Office - Specialized Services Team (SST)
Sacramento County Sheriff's Department - Special Enforcement Detail (SED)
Salt Lake City Police Department - Special Weapons and Tactics (SWAT) Team
San Diego Police Department - Special Weapons and Tactics (SWAT) Team
San Diego County Sheriff's Department - Special Enforcement Detail (SED)
San Francisco Police Department - Special Weapons And Tactics (SWAT) Team
San Francisco County Sheriff's Department - Special Response Team (SRT)
Savannah Police Department - Emergency Rescue Team (ERT)
Seattle Police Department - Emergency Response Team (ERT)
Shelby County, Tennessee, Sheriff's Office - Special Weapons And Tactics (SWAT) Team
Spartanburg Police Department - Tactical Neutralization Team (TNT)
Spokane County Sheriff's Department - Special Weapons And Tactics (SWAT) Team
Spokane Police Department - Special Weapons And Tactics (SWAT) Team
Suffolk, Virginia, Police Department - Critical Incident Response Team (CIRT)
South Suburban Emergency Response Team (SSERT - Muli-jurisdiction team in suburban Chicago, IL)
Southern New Hampshire Special Operations Unit (Multi-jurisdiction team)
Tacoma Police Deaprtment - Special Weapons and Tactics (SWAT) Team
Tampa Police Department - Tactical Response Team (TRT)
Tucson Police Department – Special Weapons and Tactics (SWAT) Team
Tulsa Police Department - Special Operations Team (SOT)
Virginia Beach Police Department - Special Weapons and Tactics (SWAT) Team
Washington County, Oregon, Sheriff's Office - Tactical Negotiations Team (TNT)
Washington D.C. Metropolitan Police Department - Emergency Response Team (ERT)
Washington D.C. Metropo Transit Police Department - Special Response Team (SRT)
Western New Hampshire Special Operations Unit (Multi-jurisdiction team)
Wichita Police Department - Special Weapons And Tactics (SWAT) Unit
- Special Weapons And Tactics - SWAT

Mon, 04/16/2012 - 18:15 | 2349942 LowProfile
LowProfile's picture

Number of Military Firearms

The defence forces of the United States are reported to have 3,054,553 firearms

Number of Law Enforcement Firearms

Police in the United States are reported to have 897,400 firearms

Number of Privately Owned Firearms

The estimated total number of guns held by civilians in the United States is 270,000,000


Frankly, the odds (68:1) don't look all that good.

Mon, 04/16/2012 - 19:30 | 2350068 X.inf.capt
X.inf.capt's picture

they have armoured vehicles...

and tanks...

and artillery....

and an air force....

and a navy....

and nukes....


ill stay out of that fight....

Mon, 04/16/2012 - 20:31 | 2350174 UP Forester
UP Forester's picture

...and they've worked so well on such well-armed and trained groups as the Viet Cong, Taliban, and FARC.

Asymetrical warfare works so well, ask the Soviets who tried overwhelming superiority when invading Finland during the Winter War....

Mon, 04/16/2012 - 23:02 | 2350427 Abitdodgie
Abitdodgie's picture

and artillery....

and an air force....

and a navy....

and nukes....


ill stay out of that fight.... Yes but they need supplys and backup services , we will not supply

Mon, 04/16/2012 - 19:09 | 2350030 Acorn10012
Acorn10012's picture

Now that is one mofo list...sheeiitt!

Mon, 04/16/2012 - 20:24 | 2350162 francis_sawyer
francis_sawyer's picture

Too much time on your hands - (TMTOYH)

Mon, 04/16/2012 - 22:18 | 2350366 Acorn10012
Acorn10012's picture


Mon, 04/16/2012 - 19:15 | 2350044 Iconoclast
Iconoclast's picture

All that just to support the donut industrial complex..

Mon, 04/16/2012 - 21:46 | 2350302 The Navigator
The Navigator's picture

very applicable acronym

Mon, 04/16/2012 - 19:20 | 2350053 koperniuk666
koperniuk666's picture

Yeah! and there's even more of 'em on the Mainland....

Mon, 04/16/2012 - 19:46 | 2350106 Seer
Seer's picture

4.2 million people with "security clearances" should be all that you need to know to understand this:

Liken it to the "faithful" party members in some communist/fascist country.

Mon, 04/16/2012 - 20:37 | 2350183 UP Forester
UP Forester's picture

Hell, everyone in the military that works a radio is supposed to have a Secret clearance, especially overseas.

And everyone in the Infraguard program, which is supposed to include CEOs on down to delivery boys that wanna be part of the "winning team" get security clearances.

I could give a shit about them until they want to "chat" with me.

I take my curtilage, and the protection thereof, very seriously.

Mon, 04/16/2012 - 22:32 | 2350381 Seer
Seer's picture

And... if you/I/we don't have one, well...

Mon, 04/16/2012 - 20:28 | 2350169 The Alarmist
The Alarmist's picture


Nice list ... but all I need to know is that the Department of Education has its own SWAT team to determine that things have taken a turn in the wrong direction.

Mon, 04/16/2012 - 21:05 | 2350229 Dapper Dan
Dapper Dan's picture

add the Federal Reserve police force,

The U.S. Federal Reserve Police is the law enforcement arm of the Federal Reserve System, the central banking system of the United States.

The Board of Governors of the Federal Reserve System derives the authority to authorize "personnel as Federal Law Enforcement Officers to protect and safeguard the premises, grounds, property, personnel, including members of the Board, or any Federal Reserve Bank, and operations conducted by or on behalf of the Board or a reserve bank" from Section 11(q) of the Federal Reserve Act, codified at 12 U.S.C. § 248(q).

Mon, 04/16/2012 - 17:47 | 2349898 grid-b-gone
grid-b-gone's picture

If the 0% BOA bailout loan had gone to homeowners, this and many other tragic foreclosure events could have been avoided.

The banks still would have been saved, the glut of shadow RE inventory would have been avoided, more people would have been able to remain in their homes, the domino effect of rising condo association fees due to empty units would have been avoided, etc.

Though blame still needs to remain with the shooter, note how the repurcussions of the over-extended homeowner and the bank get transferred to the enforcement tools of the system, in this case the locksmith, sheriff, and SWAT officers. All this, plus the displaced occupants of the three other burned units, could have been avoided twice. Once, by not blowing the RE bubble in the first place, and second, by a Fed and Treasury solution that would have solved the 2008 crisis beyond just bailing out member banks. 

Note to individuals. You are at the bottom of a trickle-down system which makes you least-likely to benefit from the system. Avoid debt. Live below your means. Create multiple sources for your economic needs. Help others avoid this kind of tragedy.     

Mon, 04/16/2012 - 18:32 | 2349976 walküre
walküre's picture

No, couldn't do that. The bankster parasites needed to be made whole FIRST AND FOREMOST. Everyone else gets their face smashed in the dirt and they get beaten if they don't take it with a smile.

Who gives a shit about George Zimmerman? There's 100 (or so) law enforcement of the best trained and best equipped kind going after one guy with a gun who defended his home.

The cops will soon figure out if they're banker's whores or if they really care to serve and protect. If they don't, I'm sure the military will.

Mon, 04/16/2012 - 17:56 | 2349913 buzzsaw99
Mon, 04/16/2012 - 18:34 | 2349979 skank
skank's picture

ahhh, thx for that, i ideate...

<said with swollen tongue> where's my helmet?

Mon, 04/16/2012 - 21:11 | 2350230 buzzsaw99
Mon, 04/16/2012 - 21:47 | 2350306 junkyardjack
junkyardjack's picture

Exactly the guy took out a loan that he was never going to be able to pay.  Probably to go buy some watch with diamonds in it.  

That guy was definitely living the Insane Clown Posse life

Mon, 04/16/2012 - 18:15 | 2349945 GeezerGeek
GeezerGeek's picture

This sounds like a very expensive solution to the foreclosure problem. Four units burned down with an assumed value in excess of the home equity loan's balance. That is going to hurt some insurance companies, and of course  they'll pass along the costs. We also need to take into consideration how much it cost to put 100 (???) law enforcement officers on the scene.

Clearly, uning Nancy Pelosi's logic, this whole episode was very good for the economy. Less so for the three (or more) dead guys. Someone please wake me when reality stops resembling a nightmare.

Mon, 04/16/2012 - 19:14 | 2350040 Acorn10012
Acorn10012's picture

"We have to burn the building down to see what's in it!"

Mon, 04/16/2012 - 18:56 | 2350002 vast-dom
vast-dom's picture

Amazing! Guy is a hero!

Mon, 04/16/2012 - 19:11 | 2350031 Red Heeler
Red Heeler's picture

"Modesto authorities responded by sending 100 police and SWAT snipers"

Where I'm from that's considered a target-rich environment.

Mon, 04/16/2012 - 19:16 | 2350041 koperniuk666
koperniuk666's picture

I'm very sympathetic to this chap but there must be something wrong with the report here ( This is a MSM report after all...)

In the US I thought mobilised troops were protected ( as they are in the UK by the Protection of Civil Interest Act) against foreclosure and other legal action while they are away  on operations. I cant believe you dont have this kind of rule in USA?? Im certain there used to be a rule.

While UK troops are mobilsed or on ops, they cannot be evicted  from home, or foreclosed or even ( i think) summoned to court. I think wives and children are protected -Sensible rule. 

Im sure this is the sort of thing Ron Paul will sort out if you vote for him!

Mon, 04/16/2012 - 19:40 | 2350088 FlyPaper
FlyPaper's picture

Re; Bank Guy In Brussels:  The question I have: why should a cop lose if life over defending the rights of bankers who routinely defraud the public?   

I'm one of the lonely people who believe its my responsibility to pay my bills; and if I owe someone money and refuse to pay it, that's what I signed up for.  

And when property is purchased at Auction, if legitimately foreclosed, does not automatically imply the buyer is a "shady firm."  Unless, of course, the buyer was a bank.... (!)

What frickin freaks me out: what the HELL are the cops doing burning down the damn building and making everyone else who lived there homeless?


What the hell is wrong with people?

Mon, 04/16/2012 - 23:12 | 2350439 AgShaman
AgShaman's picture

You should of posed that question in the early 90's....

When the cops burned down the Branch Davidian compound in Waco.

The time for giving a shit is over.

It's time to arm yourselves....the cops are the enemy of the people

Mon, 04/16/2012 - 16:58 | 2349777 Sudden Debt
Sudden Debt's picture

The Implications Of A Failed Monetary System = SILVER AND GOLD GO BOOM!!!!!!!!!!

Mon, 04/16/2012 - 17:52 | 2349906 Peter Pan
Peter Pan's picture

Hopefully they don't go boom. I prefer them to be the two and only currencies where price is stated in gold and silver and never in fiat. In other words silver and gold should not have a price because they SHOULD be the price.

Mon, 04/16/2012 - 17:53 | 2349910 XitSam
XitSam's picture

Is it just me, or have your arms been swinging faster lately?

Mon, 04/16/2012 - 16:59 | 2349779 killallthefiat
killallthefiat's picture

Got Series 2 bitchez?

Mon, 04/16/2012 - 16:59 | 2349785 futuretrader21
futuretrader21's picture


Mon, 04/16/2012 - 17:02 | 2349794 Sudden Debt
Sudden Debt's picture

spike it bitchez!!!!

Mon, 04/16/2012 - 17:01 | 2349788 Undecided
Undecided's picture

Sticking with Ray dalio's prediction of market tank in Q1 Q2, got to get Obama through the elections first.

Mon, 04/16/2012 - 17:06 | 2349798 penexpers
penexpers's picture

Great anaylsis but did Santiago Capital really have to choose a logo that resembles some sort of 21st century fascist paramilitary organization?

Mon, 04/16/2012 - 17:24 | 2349832 Seize Mars
Seize Mars's picture

An upside - down shell is a symbol of Christian baptism.

Mon, 04/16/2012 - 17:21 | 2349800 slewie the pi-rat
slewie the pi-rat's picture

i asked a coin dealer if he thought "star" notes might be a good play as a "replacement cuurrency" and stuff came flying outa his noZe

then we got a few one-liners off about confederateStatesofAmerica money (in decent condition, 0'course) being worth way more than fuking FRNs

then i hopped on my bike and told him to get back to work filling up those safes!

getchaSumReelPMcoinage and don't sweat the small stuff, BiCheZ!

Mon, 04/16/2012 - 17:09 | 2349802 walküre
walküre's picture

We can all pretend a while longer until even the last idiot understands that it's all been smoke and mirrors. I truly wonder when someone high up will just call a spade a spade and proclaim that paper wealth is bullshit because it isn't backed by anything. Instinctively the players all know this but as long as all keep quietish about it, the shit show can go on. Until one day when someone just doesn't keep quiet about it and the last idiot gets it and all start running for the hills to bury their stashes.

The idiot real Housewives of America's XYZ Anytown will have to learn to stand in line at the soup kitchens. Just like the rest. They know nothing and they can get even less accomplished. They believe their hubbies are worth millions or billions. It's all completely irrelevant paper wealth with no backing. When (not if!) the shit show ends, the paper wealth will be absolutely worthless.

Hyperinflation is actually already here. Just happens that nobody has stood up and pointed it out to the masses. Once that person declares to the masses that all paper wealth is essentially worthless, the show ends.

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