Jun 252013
 
 June 25, 2013  Posted by at 12:15 pm Finance



Russell Lee Family Car February 1939
"White migrant and wife repairing clutch in their car near Harlingen, Texas"

Over the past two weeks or so, we've been seeing a very clear portrait of how sick our economies are. Not that you would know it from reading the press. The term deflation pops up only very cautiously. Could that be because people don't understand what's going on? Or are they simply afraid of the word? This is the real thing, guys. And it's going to hurt.

Money (actually: credit) has shifted out of emerging markets by the trillions. So where did it go? Not into bonds, stocks or precious metals. Money shifted out of there too, and also by the trillions. Money isn't going anywhere, it's going "poof". It's vanishing and will never be seen again.

Markets may still rise at times to some extent, but only if and when more stimulus is flooded into the system, or people think it will be. Markets have simply been undead for the past 5 years – or so -, as long as central banks have issued stimulus. Take that away and all you're left with is zombies. And even if markets rise, or "normalize", a little in the future, this genie's out of the bottle and won't get back in: bond yields and interest rates will not go back to the extremely low levels of the past few years. Central banks' longer term control of either has always been no more than an illusion. And as for another illusion: you can't call something a "recovery" if you pay for it with more debt, that doesn't make nearly enough sense.

People think they can find the reason behind the vanishing trillions in money/credit in things Ben Bernanke may or may not have said, and perhaps in a hard stance by the Chinese central bank. But they are merely small parts of a bigger story. The problem is not that the Fed hints at tapering, it's that the US economy is too sick to stand up straight without constant and/or increasing credit infusions. A zombie economy propped up with zombie money. And that can't last. It never could.

Nothing Ben does, whether it's issuing stimulus or hinting at less stimulus, represents real value. And that, to many people focused on the illusion of value, may have become clear only when Abenomics appeared on stage, seemed a success at first and then showed its true colors in a substantial Nikkei crash. Abenomics is the Fed's QE on steroids; both follow the same trajectory, but it's a matter of the harder they come, the harder they fall. Japan wanted too much too fast, and ended up shattering the stimulus illusion worldwide. As I put it three weeks ago:

What If Stimulus Is Self-Defeating?

… in today's world stimulus is self-defeating because it's stimulus itself that reveals the weak spots in an economy, and more stimulus reveals more weak spots.

Note: this is not the same as saying all stimulus is bad, or must necessarily defeat itself. But it is, and it does, in today's world, where stimulus doesn't serve to jolt the real economy into recovery, but to hide existing debt and create only the illusion of recovery. What makes it worse is that even just about everybody who should have known this instead elects to cling to the illusion. Well, your wake up call has come, and if you still don't listen it'll come back louder next time.

Today's stimulus is self-defeating simply because it is unleashed in a toxic financial environment, ridden with hidden debt. [..] … it can only function when debts are properly restructured, defaulted upon, their holders bankrupted where applicable.

And there's no chance of that: the most prolific debt holders are Wall Street banks, and their debts have been made more secret than the latest whereabouts of Jimmy Hoffa. As long as that stays the way it is, QE is nothing but a very expensive – and very temporary – stop gap. Short term profits for the financial world, long term losses for you and me.

How much money/credit has evaporated into thin air in the last few weeks? It's impossible to even estimate, and nobody's trying, maybe because of a fear of some kind, but it's certainly multiple trillions. A Reuters article over the weekend stated that "global equity markets lost $1 trillion on Thursday alone" . And Thursday was by no means the worst of the lot. The biggest losses have come not in stock markets, but in the bond markets, and these losses will continue. Not only did central banks never have control here, what's crucial is that nobody believes anymore that they have. More from the article:

The CBOE Volatility Index, a gauge of anxiety on Wall Street, jumped 23% on Thursday to 20.49, the first time this year it has exceeded 20, an often-used dividing line between calm and stressed markets. It closed at 18.90 on Friday.

Signs of concern about high-flying assets like emerging markets can be seen in the options market, where more than 1.35 million contracts in the iShares MSCI Emerging Markets exchange-traded fund traded on Thursday – 82% of which were put options, generally used to protect against losses.

The Merrill Lynch MOVE Index, a measure of expected volatility in the U.S. Treasury market, rose to 103.7 on Friday; that index sat at 50 in early May, a multi-year low.

Volatility, nerves, uncertainty. Deadly for an economy based on make-believe. The problem is not what Bernanke says or does not say, the problem is the debt still hiding underneath the layers of stimulus. Peel those layers away and guess what you see? And nerves or no nerves, bonds are losing value fast, the losses for institutional investors, governments, central banks and other parties will be enormous. And that is deflation.

Over the weekend, the BIS came with a curious number on the losses, as quoted by Reuters :

The BIS said in its annual report that a rise in bond yields of 3 percentage points across the maturity spectrum would inflict losses on U.S. bond investors – excluding the Federal Reserve – of more than $1 trillion, or 8% of U.S. gross domestic product.

The potential loss of value in government debt as a share of GDP is at a record high for most advanced economies, ranging from about 15% to 35% in France, Italy, Japan and Britain.

"As foreign and domestic banks would be among those experiencing the losses, interest rate increases pose risks to the stability of the financial system if not executed with great care," the BIS said.

Curious, because a 3 percentage point rise is a large number (so large it may well have been picked to throw people off) and losses will already be very substantial at a much lower percentage too. Moreover, in the $82 trillion or so global bond markets, a $1 trillion loss looks very low in comparison, certainly when you see the BIS claim that France, Italy, Japan and Britain can see their bonds lose a third of their value. But still, again, this is deflation.

Perhaps the clearest, most down to earth and black and white illustration of deflation comes from two graphs that Ambrose Evans-Pritchard posted overnight . Remember, deflation does not equal falling prices, they're just a consequence. Deflation is the combination of the money and credit supply with the velocity of money. We know what that means for Japan, where velocity is extremely low, and PM Abe finds out that he can try to increase the money supply, but he has no control over the velocity. Here are M1 and velocity for the US:

 



 



Not a picture that leaves many questions open, it would seem. Still, it would be good to note that these developments didn't start with the latest market turmoil. If anything, they're the best illustration we can hope for of the failure of QE and other stimulus to induce an economic recovery. It's still impossible for all intents and purposes to find even one single politician or "expert" who does not talk about a return to growth and recovery, and that, in view of what we see out there, is taking on a bizarre character.

Someone should start talking about what we're going to do if and when growth does not return, when recovery is not just around the corner. We've lost precious years in which we could have cleaned up our economies but didn't. We instead borrowed from the future to put lipstick on the zombie. And now, behold: we've run headfirst into deflation, the very dreaded enemy we all wish to avoid. Are the Bernanke's and Krugmans et al of this world simply not smart enough to understand what is happening, and why? Perhaps, but I'm not so sure of that. It's too obvious. Even if Krugman seems to genuinely think a federal government can never suffer from debt deflation.

You can call it something else, and everybody has until now. But that doesn't change a thing. Trying to solve a debt problem with more debt creates bigger bubbles. In the end, there's one rule that always applies: credit bubbles lead to debt deflation, and the bigger the bubble, the more deflation there will be. It's inevitable. And it's not all bad: it cleanses the system, albeit in a painful way. But the longer you try to postpone it, the more painful it becomes.

Just because our economies can no longer function without stimulus doesn't mean they can with it.

 


Home Forums Deflation By Any Other Name Would Smell As Foul

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  • #8374

    Russell Lee Family Car February 1939 "White migrant and wife repairing clutch in their car near Harlingen, Texas" Over the past two weeks or
    [See the full post at: Deflation By Any Other Name Would Smell As Foul]

    #7793
    ted
    Participant

    I know you don’t like timelines but with history as a guide where do you see this playing out in the next 3 to 4 years….can the central banks drag this out further to 7 or 8 years and if they can do that how about another 7 or 8? Then is it a problem, because human nature can’t worry that far away?

    #7795
    jal
    Participant

    “… credit bubbles lead to debt deflation, and the bigger the bubble, the more deflation there will be. It’s inevitable. And it’s not all bad: it cleanses the system, albeit in a painful way. But the longer you try to postpone it, the more painful it becomes.”

    I would like to see some discussion of who, when, how, “debt deflation” will cause pain/suffering.

    How will “debt deflation” affect someone with no debt?

    #7796

    Ted,

    Central banks don’t control this. Rising interest rates will squeeze most people sooner rather than later. Perhaps the main problem is most will think rising rates equal inflation. What will really happen is they will further stifle the velocity of money.

    #7797
    p01
    Participant

    Dorothea Lange has some illustrations of how a smaller debt deflation has affected everyone at a certain point in fairly recent history, including those without debt.
    Man, I wish TAE would use some of Lange’s illustrations in their excellent articles. :whistle:

    #7800
    Nassim
    Participant
    #7801
    Professorlocknload
    Participant

    Jal,

    As with anything else Leviathan does, the fix always exacerbates the problem. Fixes such as price supports kill production and distribution by pricing goods, transportation and labor out of market reach.

    Policies which come from people who are, and for the most part always have been, net consumers, not producers, so they don’t have any market experience. Yeah, the same crowd that created this mess will take charge of fixing it 😛

    Hell, many of the insane policies put in place in the Great Depression are still with us, like Davis Bacon, Dairy Price Supports etc. Distortions caused by inept policies only spread the suffering.

    Think things like hungry people in cities while fruit fell on the ground in Iowa, and government agents dumping milk on the ground and burning wheat to support prices…that couldn’t be paid in the city!

    Other stupid things like California officials stopping people who had no money at the Colorado River in Yuma, AZ, in order to hold labor costs up among workers further inside the state.

    Best read ever on the subject of Depressions….And it seems, deflation has brought it’s price down to our level, as well 😉 https://mises.org/rothbard/agd.pdf

    First half is wonkish, but well worth the read. It presents the “OTHER” side of the story we never were allowed to hear in school.

    #7802
    davefairtex
    Participant

    So you guys all know I’m a chart guy. I was intrigued by the chart of US M1 and dug into it deeper to figure out what was going on.

    Turns out, the issue was Demand Deposits at Commercial Banks.

    Then I dug into it a little deeper, and noticed that the 108 billion dollars in demand deposits that vanished, seemed to appear in the savings accounts at commercial banks! It turns out that SAVINGS isn’t just savings, but its also money market deposit accounts, and the like.

    Deflation is still happening, I believe – but this chart isn’t the smoking gun. All the commodities dropping, bonds dropping, and equity markets dropping at the same time – that’s the smoking gun.

    Likely international capital flows are an important component of this as well. If we chart forex rates in the emerging markets, we can see that money is fleeing there, and running to Japan and the US. But clearly not into US bonds or equity, likely into cash vehicles of some sort.

    Although, oddly, its not showing up in demand deposits, as I would expect. Where all that money is going is a bit of a mystery. However, its not a mystery as to where it is coming from, or what effect the capital flight is having on the markets.

    I also think emerging market central banks are selling treasury bond holdings in an attempt to limit the change in rates. I’m positive that’s happening in Brazil. These guys have massive US treasury holdings, and their sales are (again likely) swamping Fed QE buying, causing our rates to rise.

    #7803

    Dave,

    Yeah, M1 is a crude measuring stick, but I thought if Ambrose can use it, why not me? I think the velocity graph is the more interesting one. Even with all the hurrahs for home prices, money ain’t moving.

    Since all these asset classes have lost so much ground (gold at $1230 as we speak), a lot of the “where did it go” can be answered with covering losses and – more interesting – covering shorts. I quoted the example 3 weeks ago of Treasuries being used to hedge against MBS risk, with a breaking point (bond vortex) at a 2.2 yield for the 10 year. It’s blown way past that at 2.57 now. The financial world is full of hedges like these, and they must now be covered.

    #7804
    davefairtex
    Participant

    Ilargi –

    Armstrong basically agrees with what you just said – at least a version of it. He says there are a large number of dollar short positions out there, and so if we take what you two are saying together, the money fleeing the emerging markets is going to unwind these shorts. That deflation is rapid financial-market deflation rather than the stuff associated with more normal mortgage, business, and consumer loan deflation, so it appears in the market prices (including commodities – including gold) in real time.

    It will be particularly interesting to see the NYSE margin data covering this period. Pity it lags by a month. It will help to confirm the hypothesis.

    One of the indicators of the start of the 2008 downturn was a downturn in NYSE margin loans.

    After watching how various reporters (and even otherwise really smart analysts) use FRED timeseries, I’ve come to the conclusion that sometimes they really don’t know what they’re doing. Or – they look at one particular area without attempting to understand the system as a whole. That’s what I think happened with Ambrose and his M1 chart. If you look at M2, you’ll see that the money supply including savings accounts is actually tracking up.

    I agree with you about the velocity. Printed money acts to inflate the bond market, and then goes to sleep in Excess Reserves where it gets 0.25% – beating 3 month treasury yields of 0.06%.

    Speaking of which, that’s another FRED chart I object to. The hyperinflationists use the BASE money chart (which includes excess reserves) to suggest hyperinflation is inevitable. Its not saying that at all. Excess Reserves is all about getting 0.25% at the Fed rather than 0.06% at the Treasury or 0.12% by lending it overnight to some other random bank that you probably don’t trust anyway.

    #7805
    cheltman
    Member

    jal,

    debt deflation means deflation (the lack of money flowing around the system) caused by debt which has to be written off. Since 97% of money is credit then this credit is extinguished when the debt is written off (banks stop lending). This causes a huge lack of money in the system which cannot be replaced by QE measures, etc..

    Its serious for everyone, even those who do not have debt because businesses collapse, people lose jobs, etc… without money to lubricate the economy it grinds to a halt. The defensive strategy to make sure you can hang onto some money=cash, while banks are collapsing, see some of the TAE primers for how to do this.

    Hope that mostly correct, I’m no expert.

    #7806
    jal
    Participant

    Rant time

    Price of paper gold is crashing as it is being converted to cash to meet leveraged obligations.

    Mother earth is restless.
    A flash rain storm put the center of Calgary under water.
    A monsoon rain has killed over a 1,000 and destroyed villages in india.

    One step forward, two steps backward.
    There is no way that life is improving and that budget will get balanced.
    —-
    There are dozens of excellent websites out there that teach people advanced prepping techniques for free.
    The A.E. has done a good job of discussing what the financial manipulators have been doing and explaining some of the possible outcomes.
    Even those who don’t read the A.E. are aware of what is coming and what has happened.

    Think of a tsunami.

    The financial manipulators have only put the tsunami in slow motion. The predictions of Armageddon have been delayed not cancelled.

    However, It will affect everyone. Those that are farther up the hill, (preppers), will also find themselves relying on the same luck as those already in the water. The financial manipulators are just as aware of the possible outcomes as are those that are already in the water.

    Did you read
    https://market-ticker.org/akcs-www?post=222193
    The Italians were also cooking the books to get into the E.U. and thereby delaying the tsunami.

    In the USA, there are now 3/4 of the population living paycheck to paycheck and growing.
    Let’s keep things in prospective. Its a lot worst everywhere else.

    Some quotes …
    https://www.zerohedge.com/node/475692
    17 Signs That Most Americans Will Be Wiped Out By The Coming Economic Collapse

    Those that have not made any preparations for what is coming are going to regret it bitterly.  The following are 17 signs that most Americans will be wiped out by the coming economic collapse…

    #1 According to a survey that was just released, 76 percent of all Americans are living paycheck to paycheck. 
    #2 27 percent of all Americans do not have even a single penny saved up.
    #9 Today, a higher percentage of Americans are dependent on the government than ever before.  In fact, according to the U.S. Census Bureau 49 percent of all Americans live in a home that gets direct monetary benefits from the federal government. 
    #10 Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

    Get prepared while there is still time.  If you do not know how to get prepared, my article entitled “25 Things That You Should Do To Get Prepared For The Coming Economic Collapse” has some basic tips, and there are dozens of excellent websites out there that teach people advanced prepping techniques for free.

    Here is some similar advise as the A.E..

    The Beginning of the End is the first novel by Michael T. Snyder, the publisher of The Economic Collapse Blog.

    #1 An Emergency Fund
    #2 Don’t Put All Of Your Eggs Into One Basket
    #3 Keep Some Cash At Home
    #4 Get Out Of Debt
    #5 Gold And Silver
    #6 Reduce Your Expenses
    #7 Start A Side Business
    #8 Move Away From The Big Cities If Possible
    #9 Store Food
    #10 Learn To Grow Your Own Food
    #11 Nobody Can Survive Without Water
    #12 Have A Plan For When The Grid Goes Down
    #13 Have Blankets And Warm Clothing On Hand
    #14 Store Personal Hygiene Supplies
    #15 Store Medicine And Medical Supplies
    #16 Stock Up On Vitamins
    #17 Make A List Of Other Supplies That You Will Need
    During any crisis, there will be a lot of other things that you will need in addition to food and water.  The following are just a few basic things that it would be wise to have on hand…
    – an axe
    – a can opener
    – flashlights
    – battery-powered radio
    – extra batteries
    – lighters or matches
    – fire extinguisher
    – sewing kit
    – tools
    This list could be much, much longer, but hopefully this will get you started.
    #18 Don’t Forget The Special Needs Of Your Babies And Your Pets
    #19 Entertainment
    #20 Self-Defense
    #21 Get Your Ammunition While You Still Can
    #22 If You Have To Go…
    Have a plan for what you and your family will do if you are forced to leave your home.  If you do have to go, the following are some items that you will want to have on hand…
    – a map of the area
    – a compass
    – backpacks for every member of the family
    – sleeping bags
    – warm clothing
    comfortable shoes or hiking boots
    #23 Community
    #24 Have A Back-Up Plan And Be Flexible
    #25 Keep Your Prepping To Yourself

    The tsunami has been coming for a long time. The web has made it possible for you to see it coming.
    Act within your capacity.

    #7809
    Viscount St. Albans
    Participant

    Mish lost 25% of his money in 2 weeks.

    On June 13th he announced:
    “Last week I bought a basket of miners with a significant amount of money.”

    Now, after watching a huge fraction of his liquid capital vanish, he states:
    “am I selling? Of course not, and it seems silly to even ask.”
    ————————

    Even the smart money is penny wise but pound foolish.
    Mish, you didn’t invest. You gambled and you lost.

    The only true investments involve people and relationships. Everything else is Vegas.

    #7810
    TonyPrep
    Participant

    Yeah, but stocks are going up again. We’re all saved!

    #7812
    davefairtex
    Participant

    Viscount –

    “Mish, you didn’t invest. You gambled and you lost.”

    I’m not sure why you are blessing us with a note clearly addressed to Mish. Perhaps sending it to him directly would be a more effective way to communicate with him?

    #7813
    Viscount St. Albans
    Participant

    @ Dave,
    It’s a comment on the non-existent distinction between investing and gambling. I recently had a friend tell me that she never gambles, but she loves to invest in the outcomes of horse races. She explained: It’s not vulgar betting because she does a lot of research on the horses’ health and their race histories under varying track conditions.

    #7815
    gurusid
    Participant

    Hi Folks,

    For those interested in giving feedback on how the site ‘looks and feels’ please go to this thread:

    TAE 3.0: What do you want to see?

    Thanks,

    L,
    Sid.

    #7820

    Jal,

    Mike Snyder has a nice list, though a bit obvious at times. We would agree with most. But not with no. 5 : Gold and Silver. With 30% losses over the past 2 years, it is now official that for most people it’s been a bad advice for a long time. Unless, as we’ve always maintained, you can sit on it for 10-20 years, and that is true only for the seriously wealthy.

    #7821
    Variable81
    Participant

    Might gold (and possibly silver) end up having more value in economies which may turn their backs on the USD sooner than other nations?

    I’m thinking China/Russia were political tensions to escalate, as well as any nations that are currently non-friendly with the US (Cuba? Iran?).

    Also noticed this on ZeroHedge the other day:
    https://www.zerohedge.com/news/2013-06-26/gold-drops-below-its-average-cash-cost

    To be fair, ZH is a gold bug haven. But had to wonder what would be the impact if many gold miners start going out of business – wouldn’t that eventually drive up gold price due to scarcity (i.e. aggregate prices falling due to deflationary effects – macro – but gold’s value within aggregate prices growing due to less of it being available – micro)? Even as the price of gold falls, demand seems to keep growing…

    #7824
    ted
    Participant

    I was thinking this today that maybe it will be gold and not silver or the opposite but is there room for both? And won’t it go lower first as people have to sell off their gold holdings to pay for essentials early on?

    #7825
    davefairtex
    Participant

    Ilargi –

    “Gold and Silver. With 30% losses over the past 2 years, it is now official that for most people it’s been a bad advice for a long time.”

    Calling this “bad advice for a long time” reminds me of how smug those goldbugs acted when silver hit 50. Its probably wise to wait until the full market cycle is complete before taking a victory lap. As we know, two years of downward move (or in the case of SPX, four years of move off the lows of 666) does not a complete cycle make.

    #7826
    davefairtex
    Participant

    Viscount –

    One could just as easily say that any action that has an element of uncertainty to it is gambling. Opening a restaurant, hoping that it will be successful. Paying for your child’s education, hoping they will graduate.

    Tomato, tomahto.

    #7828

    Dave,

    Of course that’s true, full cycles etc. Just saying that the buy buy buy mania hasn’t exactly paid off so far. The gold cycle itself will return to buying a toga in Rome for a gold coin, and a suit in our world 20 years hence. It’s the meantime that’s the killer.

    #7829
    jal
    Participant

    Since 75% of the USA is living pay check to pay check, I would think that buying gold is far from being an option for most people.

    The well-to-do middle class, (next 10%), might consider buying costume jewelry so that they don’t have to barter their gold wedding ring for a loaf of bread.

    Gold would have its use, in bartering, by the local warlords.

    #7831
    Professorlocknload
    Participant

    OK,,,IMHO…

    Jal, might I suggest a jewelers scale for weighing fine particles of Au in smaller transactions?

    Just scroll down to the amazon “key words” block here on site and enter “Jewelers Scale” and have $10 bucks ready.

    ilargi, ” It’s the meantime that’s the killer.
    Mean buy high and sell low won’t work?

    Dave, you jog my memory back to 2001 when I went “all in” to gold related paper with my modest IRA. Even my tax man thought I had gone over the falls. The long side PM markets were a desert back then! Damn that was a lonely feeling!

    But when a mining type feller out in Carlin let it slip he could buy it cheaper and put it back in the mine, than waste the diesel to dig it out, I had to do it.

    My el cheapo crystal ball (and a little canary in the bar at Winnemucca 😉 ) has my next trigger set at “around” < $850. My best guess at average production cost, based on average demand, which, as weak hands run for dollars, will likely stabilize. With any luck, I'll trade rising (5 year old) 10 yr paper, now in that IRA, for falling Au? On Ag, well, as soon as a pre 64 quarter gets under the price of a gallon of gas again, the green light will come on. Might need that suit or toga some day, for a trip to the marble orchard, plus a couple gallons of gas for the hearse. Guess I’m just a preservation of wealth( all be it modest) bug at heart. Variable, “Might gold (and possibly silver) end up having more value in economies which may turn their backs on the USD sooner than other nations?”

    China and India have already turned their backs on fiat currency. That’s a fair share of world population, maybe? Hear tell a lot of Europeans own it too.

    My take is, gold producing/holding nations will support gold, non producing/non holding ones will diss it.

    Also, this is too long already, but as for gold miners going under, it won’t matter. The hole in the ground and what’s “rumored” to be in it, will remain. A new “liar” will resume position on top of it when the market is ready. Has a lot to do with the nature of these here “fungible” thangs.”

    ps. ZH isn’t so much gold bug. More like “Project Mayhe…..oops, can’t talk about it.

    My nickle-ninety-eights worth.

    #7832

    you guys should get a kick out if this

    Gold, The Mark Of The Beast And Malcolm X

    https://chartistfriendfrompittsburgh.blogspot.com/2013/06/gold-mark-of-beast-and-malcolm-x.html

    #7833
    Viscount St. Albans
    Participant

    Markets, mistaken priorities and misallocated time.

    A box full of double eagles will pay the salary of a home health care aide (just as it did 1000 years ago) when you’re too weak to walk to the bathroom and wipe your rear. But unless you’re paying a second inspector to monitor the performance of your aide, chances are you’re not going to get much in the way of tender loving care. The same applies for the guilt of not “being-there” for a loved-one when being-there is required. Sure, the market will provide geriatric facilities to landfill the elderly (out-of-sight and out-of-mind), but that same market has not yet provided a pill to assuage the guilt.

    Wall Street/Bloomberg/Zero Hedge/etc. offer little guidance on the appropriate allocation of time and energy. If nothing else, they provide a timeless reminder of the constant struggle to see what is in front of our noses: We’re only here for a short time and we don’t own anything.

    #7835
    Jack
    Member

    Gold is taking a beating and TAE must be proud that their predictions are coming true.
    I remember many gold bugs coming here and arguing that the price will go to 3,000 and up an ounce.

    I am tempted to play the market I feel like an expert.
    yesterday gold was 1,200 an ounce and When it was higher I was saying that it will go down.

    This is what I am saying now.
    It has moved up to 1,226 an ounce.
    I would bet on a option contract that it will go up to 1,260- 1,290 an ounce
    Than it will go back down to 1,100 an ounce
    I am trying to persuade others with this idea and get commission.
    —————-
    Online trading company.
    https://www.youtube.com/watch?v=ZOU-KG8Rapg
    Giving a analysis
    ————–
    Nicole never talked about this kind of energy and I think it is a feasible idea.

    -cold fusion,
    -overunity electromagnetic motors,
    -magnet motors,
    -gravity motors,
    -vortex technologies.

    #7836
    Jack
    Member

    I know you don’t like timelines but with history as a guide where do you see this playing out in the next 3 to 4 years….can the central banks drag this out further to 7 or 8 years and if they can do that how about another 7 or 8? Then is it a problem, because human nature can’t worry that far away?
    – See more at: https://www.theautomaticearth.com/index.php?option=com_kunena&func=view&catid=15&id=7520&Itemid=96#7565

    ilargi
    In Canada not everyone is affected by all the bad worldwide economic downturn and many people will argue with you and the argument will turn ugly because they don’t want to hear your depressing words.
    However there are many people here suffering from this bad economic situation at the same time.

    So what I am trying to say is that the banks seem to have control of the rates and the situation.

    #7843
    pipefit
    Participant

    ilargi post=7525 wrote: Ted,

    Central banks don’t control this. Rising interest rates will squeeze most people sooner rather than later. Perhaps the main problem is most will think rising rates equal inflation. What will really happen is they will further stifle the velocity of money.

    Rising interest rates are inflationary. It is falling interest rates that are deflationary. Antal Fekete has covered this at length in various articles. Just look at the 1970’s. When interest rates finally peaked, and started falling, so did prices.

    Also inflationary are federal government fiscal deficits. For the fiscal year ended 9/30/12, using GAAP accounting, they ran a deficit of $6.9 trillion. The year ending 9/30/13 will see a larger one, and this will really take off and go exponential in 2014.

    One could argue that they will declare everyone’s social security, medicare, and military retirement benefits null and void, but that will FOLLOW the collapse of representative democracy. That would cause the loss of world reserve currency status and hyperinflation.

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