Golden Oxen
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As we at The Automatic Earth have said since this crisis started, there’s only one possible outcome to the beggar thy neighbor to the bottom race that is now taking shape: the US must and will lose it. The prettiest horse in the glue factory will receive so much capital in flight, it’s going to wish it had played down that recovery story by a substantial margin.
Not defending their insane policy by any means, merely trying to anticipate their next move.
Perhaps this particular problem will be addressed by a return back to fixed exchange rates, with the bringing out of Gold from the closet to stabilize the currency trading madness that is harming everyone at his juncture?
Necessity is the Mother of Invention and there are many, myself included, waiting for the Genie to be let out of the bottle.
Because if you’re Japanese, spending what you have left in wealth is the last thing you want to do today AND tomorrow after 15-20 years of deflation and your falling wages under huge pressure. How is that not obvious?
Probably a correct assumption, but not a given in my view.
Perceptions based on “Confidence Only”, can change quickly and decisively. Who was it that said Confidence is Suspicion sleeping?
It could be possible that a government hell bent on creating inflation and destroying the purchasing power of it’s currency could start enough people to lose confidence and go on a spending borrowing binge to escape inflation’s ravages. This type of activity has a way of spreading quickly.
The yen has fallen considerably in value against the dollar recently, about 20% in a very short period of time which is inflationary in my book. Japan’s problems however are so serious; and as you say sir, “Sell to Whom” that it is most likely and exercise in futility.
There are simply problems we can’t solve
That is how we see it. There is a religion or cult out there that does believe in technology as a god that will cure the ills we are placing in the immediate future.
How to cure that mindset is quite a task. How to go about it is beyond me, but we will go nowhere with our cries to ‘Wake Up” without doing so.
Hi Lucas, Yes, there is some of that jackpot hope, but it is more that that. Stability, planned orderly slow debt free growth, prudent financial management are frowned upon as the traits of losers or the dim.
It is a sad situation when reckless growth at any cost mentality becomes the norm for those considered to be wise, and the opposite, a method for the less enlightened.Have had the same sort of argument with people on Wall Street for decades. Growth at all costs is instilled in their mind like religion
.
They will pay forty times earnings for an unseasoned company without dividends because it is growing fast; but a seasoned blue chip dividend paying company with a solid balance sheet, no debt, and limited or slow growth will languish at eight or ten times earnings and be hated by Wall Street.
Ask them to explain it in any coherent fashion and all you get is, “There’s No Growth”, “There’s No Growth” and they give you that, “What Can’t You Understand Look”Same with countries, Italy and Japan are untouchables, nothing is worth anything in either country because their population isn’t growing. It’s considered worse than a plague by the wizards that rule our monetary affairs; no wonder they hate gold so much and adore the fiat credit system.
ilargi post=7096 wrote:
How d’ya like that DJIA, hitting record high after record high, week in, week out, for months? That 85 billion per month that Benny and the Ink Jets been puttin out ain’t fer nuthin’, ya know!
It’s called zombie money, and there’s no better way to put it then caveat emptor.
For which one? The owner of the zombie money, or the buyer of the stocks fleeing the zombies?
Thank goodness here in the States we have The Clintons and Obama to clean up the mess. Things just couldn’t be better for the poor and downtrodden with those kind loving greats at the helm. What lucky blokes we are.
BTW, what is that about the world moving into gold? $20,000 an ounce? Are there really still people touting that line? Yawn.
I remember hearing that one from another gold basher when it was $200. Amazing how some folks learn nothing from history, especially ones that should know better. Hold on to your cash, it has an excellent history of preserving wealth. Yawn
Just amazing to me how the banks in Spain and Italy are still open. This entire Europe situation is beyond my grasp. Watching now as if it is suspense, horror movie with the usual unfathomable surprise ending.
How can anyone leave a deposit sitting in these countries over the long Easter weekend??
Gold Confiscation
Is your point do not own gold because it can be confiscated, or to own nothing because it can be confiscated?
Should we all dispose of everything we own and walk naked on a pair of sandals and pray the swill don’t take our sandals from us, or is it just the Gold they have brainwashed you into hating..??
There are plenty of places to run too.
Gold, silver, stocks, reits, real estate, art, farmland, diamonds, hidden cash, commodity funds, oil drilling partnerships, natural gas mlps, junk bonds, corporate bonds, soverign debt.
None without some risk of course, but if you feel your funds are going to be confiscated anyway, the risk becomes less, or more tolerable. Perhaps that’s the plan??
Something surely is wrong here, it certainly doesn’t add up. Are we witnessing the work of a few buffoons, or the start of some major take down by the powers that be?
My only take on it is that it is giving me a most uncomfortable feeling because of it’s destructive potential and lack of a coherent explanation????
Say’s much about storing ones wealth in Legal fiat tender and trust in it’s issuers.
“Gold Will Win”
Sir, Your low volume being bearish idea does not square with the facts. Great bull markers always end with very high volume and massive participation by the public, especially in low priced stocks. Just think back to the internet insanity for reference
What the current low volume shows is steady public and insider liquidation since the crash, and a parking of the money in Treasuries, which are perceived as a safe haven.
While I agree with you about the importance of the debacle in Europe, pointing to a low volume, lack of speculative frenzy rise on Wall Street as ominous is an error in my view. The market is no doubt overdue for a correction, but the current lack of froth and enthusiasm at the current new highs, makes anything more than a normal correction unlikely.
The Queen could always make Lloyd Blankfein a knight if things got really desperate. Then Sir Lloyd could perform some of his God’s work on the poor currency and save them. He would no doubt know how to run the shorts, and he and the queen could also do a massive score in the forex markets as their heavenly reward for doing the work of the lord.
“There will always be a London”, so they say.
Why is the stock market making all-time highs?
Viscount, That is merely the Fed creating the Wealth Effect.
It doesn’t seem to be working well for you, but Lloyd Blankfein bought a new 35 million dollar home last month.
You know what they say, Don’t Fight the Fed, Buy Gold, the punch is supposed to be flowing until 2016 last I heard from Uncle Ben.
@reply jal, Facts have no place in the financial world of today my friend. We deal in perceptions, Fed policy statements, and statistics massaged to fit the current fable. There is also technical analysis to consider, as well as the actions of the PPT, and the pool operations of the banksters and hedge funds.
There is always someone like you trying to ruin a speculative orgy with factual data, and it goes against the spirit and intoxicating mood of a grand bash. Lighten up, drink some punch, and join in the festivities; all your worries will just vanish. The Fed has promised to keep the booze flowing until all is well, so the fun is just beginning.
What a terrifying article. To think these people who poison us with Roundup and destroy the wonders of Mother Nature have the nerve to claim ownership over what they are destroying and go before our Supreme Court. They belong in jail and any justice that sides with them should be impeached for having dementia.
Where are the champions of getting second hand smoke from tobacco banned hiding, or 32 0z sodas; isn’t this much more deadly?
I hear you loud and clear Professor, old Billy was one smart gent wasn’t he? Had a great sense for priorities, “The First Thing We Do”….
Insurance has gone the way of all good useful products, into the hands of the banksters and their hired gun lawyers that have destroyed all things financial with their corruption and skullduggery.
FDIC insurance on the trillions of dollars in the US banking system will be the end of the great insurance scam when and if the big crack arrives. I can here them now, “Get in line”, “You will get your money but it will take some time.” “You must present a notorized document as proof of your deposit to receive your first annual payment of 5 % of the total.” “No claims whatsoever will be paid to heirs of the deceased.” “You must take 80 % of your payment in a government issued note that is not redeemable until seven years after issue date.” Politicians and Police, because of the good deeds they perform and necessity to us in the financial emergency, as well as banksters and the bank employees will all be allowed full access to their funds so they may perform the task of paying everyone’s claims in an orderly fashion.”
I am having a problem figuring where the lawyers will stand in the mayhem, any suggestions?
Facts, reality, numbers, how quaint. What spin are the talking heads on the business station placing on the latest pronouncements from Zeus, AKA Bernanke; was there a change in tone, wording, emphasis.? That’s what’s important.
As far as France goes, is that a city or a country? Wasn’t that the place the artists used to go to hang around in cafes, drink wine and write poetry and paint all day?
Moreover, the side effects of quantitative easing are significant. Many worry about an upsurge in inflation, though, given the outsize slack in the global economy—and the likelihood that it will persist for years to come—that is not high on my watch list.
Sir, This is an error in your analysis in my opinion. All serious bouts of inflation occurred during times of economic stagnation and malaise. It is no different this time. We have already been witnessing the inflation since the big print began and it will only get much worse from this point onwards.
Witness the insane stock markets, commodities prices, ludicrous current advance in real estate prices from specualtors in bed with banksters, Japans current Yen bashing etc etc
Inflation is a Monetary Event, it has as much to do with slack in the general economy as the stock market does, namely Zilch.
These mad men in charge have made their intentions to inflate their problem away vividly clear, fight them on moral grounds all you wish and I agree with you, but on a practical level they are as you say evil, and in total control of the Fiat Printing Press. Negative interest rates will most likely be their next move if their inflationary goal doesn’t ignite quick enough to please them.
I enjoy the format and look forward to each new article and enjoy many of the comments as well. My only regret is Ashvin’s articles being missing, they were of the same caliber as I & S and missed by this reader. His religious articles are fascinating and of the highest quality but his Financial insights were valuable as well, hopefully he will favor us with a current financial viewpoint from time to time.
Someday, Hopefully, 2 and 2 will equal 4 again.
Until this fairy tale of lies, gimmickry, and corrupt deceitful behavior is ended with a cold bitter dose of reality we can expect the skullduggery to only get worse.
Witness the daily news headlines of the great recovery we are in, how the stock market is forecasting an imminent World Wide Boom. How everyone is building houses and home prices are going straight up. The Food Stamp nation finds itself in boom times overnight.
Ilargi gave the best description I have encountered of our current state, A Bankster’s Wet Dream, just what we are living and trying to survive in.
May we assume Ilargi, that Obama has forfeited his last chance to become a great president with the appointment of Lew?
“In 1991, following the lead of the International Development Association, Mali relaxed the enforcement of mining codes which led to greater foreign investment in the mining industry.[4] From 1994 to 2007, national and foreign companies were granted around 150 operating licences along with more than 25 certificates for exploitation and more than 200 research permits. Gold mining in Mali has increased dramatically, with more than 50 tonnes in 2007 from less than half a tonne produced annually at the end of the 1980s.”
Would you prefer a more constructive economic endeavour? Producing something more useful like poppy, drones, nuclear weapons or chemical. Would a movie industry or a gambling mecca work well in Mali?
It’s good honest work and doesn’t bother anyone except the hate gold fiat lovers, and of course the environmentalists; they are bothered by just about everything.
The National Debt Is A Millstone Hung Around Our Neck chartistfriendfrompittsburgh.blogspot.com/2013/01/the-national-debt-is-millstone-hung.html
If you think it is going to be paid with Monopoly play money, it’s not so heavy.
Let’s issue a wooden nickel worth 20 trillion and pay it all off.
Repealing The Patriot Act, is the only action that would cause me to consider a president Great. Dealing with the swill on Wall Street is secondary to restoring our freedom.
What is most distressing to me is the “It’s Yesterday’s Story” idea.
It is all over except for some minor details and signatures of the wise that have saved us.
Much of the financial press has also fallen victim to this reckless short sighted banter. It scares me to see such complacency regarding an ongoing disaster affecting tens of millions of people by those who should be watching closely and ringing alarms and warnings, offering ideas on preparation and advancing ideas on possible solutions, at least partial ones.
It is creating the perfect atmosphere for a Rude Awakening and resulting panic.
This could easily become a Black Swan event that takes the entire financial system down if it is not handled properly.
Their idiocy in storing this amount of asset documents in the basement of a flood prone area does little to instill confidence.
One can only assume the worst when wondering what is going on in the minds of those with assets at the location.
Ilargi, This was a most revealing article, one of your best, the MSM has buried it from view, and I thank you for bringing it to the attention of TAE readers.
What a great interview, Thanks Stoneleigh.
Have finally come to understand your idea on how the relative value of a good goes up in a deflation to all but the holder of a good amount of cash. For some reason it was always hazy and escaped me, the part of the non cash purchaser having no money, until listening to this superb discussion.
Quote Stoneleigh, “Savers will have all the buying power, IF they have managed to get their savings away from dependence on the solvency of middle men. Otherwise they will likely disappear in a giant black hole of credit destruction, as yet more excess claims to underlying real wealth.”
Isn’t this what Gold is all about? Real money, the hiding place, no counter party risk, the money without a country, the anchor in a world destabilized by violent currency turbulence.
If I hide in fiat paper, cash as you call it, will they not try to steal that as well, or destroy it by deeming it worthless by edict and adopting a new one with a different color?Where oh where does a sane man hide in a world gone mad with debt, lawlessness, devious and corrupt financial institutions, and tyrannical governments????
@ reply pipefit, I certainly am in sympathy with your point of the new currency for the old, but holders of dollars will never accept an instant 90% drop in their saved wealth to save the debtors, preposterous
Prefer sticking to the time tested workable solution of constant never ending inflation. Five years of a very workable 10% inflation rate will do wonders in the screwing of the saver and will make debtors smart again. The increased revenue to the tax man via the inflation will make his Social security bills and others manageable.
Of course bonds would crack open sooner or later in that scenario, but another round of drunken orgies in the stock market, commodity markets, and of course the real estate crowd will mute it’s effect and we can continue in our paper world of make believe for a while longer.
If Ilargi is correct, and we get a deflationary bust instead, then the question arises of how long are 7 billion people going to stand in a soup line, and how do you get out of that problem, everyone starting their own garden?
Members, I was referring to my prior stated beliefs that hyperinflation was a currency confidence event that had nothing to do with the strength or weakness of the economies involved at the time of the Hyperinflation.
May I reference Argentina, China, Germany,Mexico, Zimbabwe, and countless others. Their economic situation was hardly a healthy growing one at the time of the upheaval.Excuse me for my poor choice of words. I consider the authors at TAE to be the best and hold them in the highest regards.
My views on inflation have been instilled in me, a senior citizen, by over 60 years of relentless inflation and my current trips to the grocery store and gas station since the great credit contraction started have done little to change my view of it’s continuance.
My deepest apologies to all I have offended with My Mumbo Jumbo remark, it was intended differently but I can see it was a poor choice of words. Regards GO
Puru Saxena and Tyler Durden? My preference is for John Williams, his numbers say hyperinflation is inevitable, and he is correct IMHO.
Clouding the issue of unabashed fiat creation with economic mumbo jumbo only serves to muddy the waters.
The path chosen by the Fed and its cohorts in Europe is inflation and currency debasement on a grand scale, standing in their way used to be called “Fighting City Hall” back in the good old days when being wealthy meant having the mortgage on your Ten thousand dollar home paid off.
