pipefit
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From the wikipedia.org entry on St. Matthew Island, “For example, Garrett Hardin cited the “natural experiment” of St. Matthew Island of the reindeer population explosion and collapse as a paradigmatic example of the consequences of overpopulation in his essay An Ecolate View of the Human Predicament.[7]”
The carrying capacity of the planet is function of several factors, average standard of living, sustainability of major activities, and the extent to which resources are diverted from uses that improve standard of living. I suppose you could throw in ‘peak cheap oil’, but it is sort of covered by ‘sustainability’.
Since sex is a lot more popular than dying, population seems to be intent on testing the upper limit of carrying capacity. This seems to be putting pressure on farmers to use unsustainable farming methods to boost yields.
Another crucial factor is man’s seemingly inherent warlike nature. Here we have a huge problem. Barring the use of weapons of mass destruction, military machines seem to be increasing their capacity to siphon resources from the world’s economy at a far faster rate than they are increasing the body count. (not that I’m an advocate of the latter. just stating the obvious)
Combine all these factors, I think a parabolic rise, followed by a crash in human population seems to be in the cards. Do away with the world’s military, and the planet might be able to support the present population at half the present average standard of living. (not sure though)
I doubt that, ProfLock. Dozens of writers predicted the housing bubble deflation, with many nailing every detail in advance.
My company’s sales to Europe haven’t dropped off one iota in the last year or two. Anecdotal, yes? But I think it is pretty obvious what is going on, don’t you think, lol?
The LIBOR issue is just another nail in the ‘deflation’ coffin. Not just the interest rate mechanism, but the entire system is fraudulent to the core. Even the sheeple that don’t know what a derivative is understand that as long as massive ‘too big to fail’ banks are creating money out of thin air, the fact that they are skimming even more by fixing rates is a yawner.
I’m not sure when the inflection point was reached, but perhaps some arithmetic average date corresponding to the tops of Nasdaq tech bubble, the housing bubble, and the end of cheap oil (2005). They can still engineer a soft landing, but that would require a massive reallocation of resources away from the military industrial complex to other, wealth building areas. Hard to see this happening though, so a hyper inflationary collapse would appear to be imminent.
skip-“It doesn’t mean we’re not in deflation though.”
According to shadowstats.com, consumer prices are up 5% yoy. That is inflation my friend. And that is going to go up a lot in the very near future, in my opinion.
The problem with your analysis is that you are relying on anecdotal evidence, which merely reinforces our preconceived prejudices. We know from shadowstats that inflation is the dominant feature.
The main problem with the deflation argument is the amount of time that has already passed since the start of the credit collapse in 1997. 5.5 years later, inflation is still roaring along. Obviously, there has been a lot of wealth destruction since then, but consumer prices keep going up, year after year. So there is something wrong with your model.
Instead of looking for a few outlier prices that are bucking the inflationary trend, why not focus on figuring out what is wrong with your deflationary model. Why isn’t wealth destruction on a massive scale resulting in a drop in consumer prices? The preponderance of the evidence indicates that it relates to key shortages that I mentioned in my prior post, but there are probably other factors as well.
The current bubble is the one started by President LBJ in the mid 1960’s, ‘guns and butter’. The question is which item will go first, the guns or the butter? In order to extend ‘guns and butter’ Nixon took us off the gold standard in 1971, and pretty much insured that we would move to the point where we now find ourselves.
If it is ‘guns’ that collapses first, the USA dollar quickly loses world reserve currency status, so we will have a hyper inflationary crash. Quick. Blink and you will miss it.
If it is ‘butter’ that goes first, then the outcome is a little more difficult to predict. This outcome will feature the formation of a massive Lumpenproletariat. As one can see from the shadowstats.com unemployment numbers, this process is already well underway. As with the ‘guns’ first outcome, this one is featuring massive inflation. However, I think this collapse will be of a more gentle slope.
The dominant feature is not the defaulting of debt, as the deflationists would have you believe. Rather, the end game is being forced on the world by the end of easy to produce oil, and the greater and greater reliance on marginal farmland. Also, with the mammoth world population, drought in key agricultural areas, the present situation, are far more devastating that in 1988, when the same thing happened.
A store owner today told me that fruit, vegetable, and other grocery prices will be going up 30% across the board in two to three weeks. This is going to happen across the country. So you see, the Lumpenproletariat will be expanded greatly this year, but the sheeple won’t understand the underlying issues. Just the opposite, they will be goaded into begging the govt. to increase the defense budget, if I’m reading the situation right.
V St. Albans said,
“You even posted some interesting graphs with GDP numbers falling off steep cliffs in the 2nd, 3rd, and 4th quarters of 2010.
How did that turn out? It seemed right as rain to make such claims back then. All the data supported those notions….did it not?
And yet, history proves otherwise
GDP
2nd Quarter 2010 = 3.8%
3rd Quarter 2010 = 2.5%
4th Quarter 2010 = 2.3%”Actually, since TPTB are under counting inflation by 5%/yr or more, we really are setting ourselves up for a hyperinflationary crash, and the economy is contracting in real terms. Not sure about 2010, but I think the buck comes unglued in 2013.
If you do your own grocery shopping, you can clearly see that inflation is really taking off, and the great 2012 drought hasn’t even figured into retail prices yet. We’ll probably have 20% inflation in 2013, and maybe 5% nominal growth, perhaps 10%. But even with the latter, that is a real contraction of 10% in the economy.
No amount of defaulting will make difficult to produce oil less expensive to produce. No amount of Chapter 9 activity will make it rain or halt global warming, and push down the cost of food.
Due to the huge population of the planet, we’re dependent on the marginal oil fields and the marginal fields of corn. And the prices for these things are set at the margin.
The deflationistas are scratching their heads, wondering when the deflation in wholesale and retail prices will arrive. When you see Godot, you will still have to wait some more. The ‘deflation is a monetary phenomenon’ is a paradigm for developing, or even mature, systems. It doesn’t apply to systems, such as the present world economy, where shortage of cheap oil and arable land is in play.
Theoretically, the world’s government could get together and renounce war and divert several trillion dollars from military spending to food production, alternate energy, etc., but that isn’t politically possible at the present time. Hyperinflation will arrive first.
@goldOxen–you said, “Your good intentions are noted and most appreciated. My personal opinion is that RE has gone off the deep end with this one, and both you and Surly, being among the brightest and respected bulbs in our meeting places, have given substance and legitimacy to this Orkin Man madness buy treating it seriously. “
As you are well aware, there is no anonymity on the internet, but there is a huge amount of censorship. Most of the controversial stuff you read is for a purpose other than the stated one. In particular, most (if not all) sites like this one are for the purpose of getting Timothy McVeigh types to out themselves to the FBI/CIA/Illuminati.
You can’t for one instant think these guys are serious do you?
When you see someone posting racist views, such as anti-negro or anti-jew, you can bet it is someone protecting the President or the Jewish Anti-defamation league trying to get hatemongers to out themselves publicly.
The internet is not an exercise in freedom. As someone involved in experimental farming research, I can tell you that there is no way I could do my research without the net. Same with ordering the best pizza in a strange town. But that is garden variety information.
The only way this discussion is legit is if they are posting from a cell at Gitmo, lol…….
@dave–I’m not trying to hedge oil/energy prices. Sorry about the confusion. I’m trying to protect wealth. The best way to do that is to hoard tangible assets, including gold and silver.
Obviously, it is not practical to hoard oil or gasoline. But many other items are easily hoarded without much environmental risk, such a copper, stainless steel, a year or supply of food, fresh water, etc.
Gold has the advantage of being portable, but it will probably be confiscated, as our freedoms continue to be systematically removed.
The dollar is the healthiest horse in the glue factory right now. If that is good enough for you, then I empower you to attempt to protect your wealth with greenback fiat, lol.
@dave–It is difficult to predict every little turn in the road. Why don’t we look at the last 12 years, from the bearmarket (oil and pm’s) low. Unless I’m mistaken, oil is up 700%, silver is up about 900% and gold is up about 550%.
So if you saved in gold AND silver, ignoring the absurd ‘gold only’ advice of FOFOA, you would be hedged pretty well. And that is the just about the most favorable starting point for oil.
RE said, “The problem Nassim is that Gold is NOT in fact a good representation of Energy, whether measured in barrels of oil or food calories.”
Wrong. Mining is energy intensive. That is why gold makes for an excellent choice to use for money. Energy is always an important consideration. When energy is cheap (e.g. 1980’s and 90’s) gold will reflect this, since gold will be relatively inexpensive to dig out of the ground.
You don’t seem to understand the difference between wealth and a store of wealth. Apples, copper, oil, shoes, etc. are examples of wealth. Gold is an example of a store of wealth.
If a company uses some energy, lumber, steel, and human labor to dig some gold out of the ground, and refine it into pure, above ground gold, they have some money. Let’s say that they have 1000 ounces of gold money. This particular company, let’s say, decided to keep the 1000 ounces in their safe. They could have received 16 barrels of oil for the gold, or $1600 (cash), but decided to keep the gold.
A year later, let’s say that there is a war in Saudi Arabia, and oil is now 3 times more expensive, in dollars, $300/bbl, instead of $100/bbl. If the gold miner, in this example, had traded their gold for dollars, they would have lost 2/3 of their purchasing power with respect to oil. But, since they held on to the gold, they will still get about the same purchasing power. Not EXACTLY the same, because gold and oil don’t track each other PERFECTLY, but reasonably close.
A large gold miner with a lot of storage space might want to have a big fuel tank to guard against shortages and price spikes, but gold will work well for intermediate and long term hedging. They could also hedge with derivatives, but then there is counter party risk–think MF Global, lol.
A year later,
steve said, “Those who believe the dollar is worthless confetti might take some time and re-think. Millions of Americans and others willingly, voluntarily trade their dollars for a useful physical good every single day and have done so for decades. Priced in crude oil dollars have real worth. As a consequence… there are negative real interest rates and galloping deflation! “
With all due respect, you are, in order, wrong, wrong, right, and wrong.
1. “willingly, voluntarily trade their dollars for a useful physical good”-Let’s do away with legal tender laws, and then see what people willingly use.
2. “Priced in crude oil dollars have real worth”-That is flat out untrue. Under the threat of getting the treatment Saddam got, oil producers accept nothing but dollars. The USA military has real value, not dollars.
3. “there are negative real interest rates”-true. That means that inflation is greater than 1.5%, which at 6% is certainly higher than 10 yr treasury yields.
4. and galloping deflation! “-read your own comment about negative interest rates, lol. If we had deflation, then interest rates would be positive-i.e. 1.5% 10 yr treasury PLUS the rate of deflation.
@goldOxen–There is only one strategy that makes any sense. That is to assemble a diversified portfolio of assets that includes gold, silver, other tangible goods, and maybe a small amount of paper money to pay bills in the short run.
The problem for the Chinese is that they are very slow to get into the precious metal market, and they are in danger of pushing the dollar (or Yuan-Renminbi) price of metal against themselves as they acquire it. There are consequences for being late.
Since the Chinese are so far behind the curve, compared to India (where most households have at least some gold), they are in no hurry to force the issue. This is why I’m thinking that the house of cards may very well be standing another year, or more.
As I predicted in many spaces, it looks like Obama will win by a landslide. The fed will soon ramp up QE-x, and you just saw how he bought a few million hispanic votes with Dream Act lite. Once Obama is reelected, I think at that point we will see a very swift move to a 1-world currency. They will say that the only problem with the Euro was that it is too small of a block. It MUST be world wide, they will say.
At that point, you will want to have a very diversified portfolio of tangible assets. Dollars will be marked down tremendously on the approach to 1-world currency. In order to make it fly, it will have to be backed by either gold or silver, but probably not 100% backed. Maybe 25% backed like the dollar during the Bretton Woods era.
RE-Just because Ashvin’s friend FOFOA is a complete baboon doesn’t mean that gold’s supporters are wrong. If the dollar collapses in buying power, gold, oil, and everything else will go parabolic in dollar terms.
Instead of looking at the gold price in dollars, look at the price of oil, gasoline, food, or a basket of ‘stuff’ priced in gold (or silver). If you own gold or silver, you would be very happy that your metal has been increasing in buying power. But the goal here is to preserve buying power. Any increase is a gift.
When the price of gold, oil, food, and medicine all go parabolic, and they all will, within a year or two, it isn’t gold or unleaded gasoline that are going parabolic. It is the dollar that is dying.
The dollar is backed by USA’s military force, and the sheer size of the USA economy. The military is still strong, but the underlying economy is being systematically destroyed by the low interest rates. The military alone cannot carry the day.
They will do a reset fairly soon. Maybe right after Obama’s landslide reelection. (don’t blame me, lol, I voted for Ron Paul)
RE said, “The Chinese are of course”
Maybe, maybe not. They own $2 trillion in USA paper. That paper gets sent back here before the ‘toaster’ is even turned on.
They can start a hyperinflationary dollar melt down any time they want. It would be absurd for them to do so now, while they can still spend some of those dollars for metal.
At some point in the next year or two, you are going to see gold and silver go parabolic. I presume that Bernanke has a contingency plan ready. Do you? I hope it doesn’t inmclude a bank account, lol.
My main contingency is a rural Appalachian property with water delivery systems already in place, fruit trees, gardens, natural gas well, etc.
Actually, the Chinese are a lot smarter than you imply. They are saving in precious metals.
They can see that the dollar is toast, so they are protecting their wealth as people have done for centuries, with metal.
“Quote: ‘Over the past week, a youtube.com video of a commercial from China promoting the retail purchase of silver, has been circulated on the Internet, and the link is here. Since the government there heavily controls the media, it is not hard to imagine this encouragement of silver ownership is intended by Chinese leadership.” (scroll down to near bottom
https://www.caseyresearch.com/gsd/edition/7If JPM lost $2 billion (or $20 billion) then someone else ‘won’ the same amount. But you never hear of any big winners. 1% $300 trillion is $3 trillion. 1/10 of that is $300 billion.
What are you saying? There aren’t ever any big winners? If there were, surely we would have heard about it by now.
What if you ‘won’ $300 billion? Where would you spend it? Anything other than US treasuries, and you would be pushing the price up dramatically against yourself just trying to buy.
Perhaps I don’t fully understand this, but if you can’t spend it, is it really money?
doubled said, “It has been estimated the combined
face value of derivative “plays” ( includes finance companies,
brokerage houses, insurance companies, as well as banks) in
America is around 300 trillion dollars!”The world’s GDP is about $65 Trillion, much of which is not for sale. I don’t know how much of that $65 trillion is collateral and callable, but I assume it is a small percentage of the total. So what does that $300 trillion represent?
I can bet you a trillion, or 500 trillion that the Yankees will win the world series. The banks can bet $300 trillion that interest rates will fall. It’s all pretend money either way.
Wouldn’t it be better if all the world’s major countries just did an etch-a-sketch? None of the sovereign debt is ever going to be repaid. We already did the 7 point plan back in the 1980’s with the savings and loan bust, but the system wasn’t overloaded, like it is now.
We’re gonna get a depression anyway, from all the misallocated capital. Might as well lay the foundation for a decent recovery, eventually. that can’t happen in the USA with $15 trillion in debt and $100 trillion in unfunded liabilities, not to mention trillions more in individual and corporate debt, and hundreds of trillions in derivatives.
Eventually, it is all going ‘poof’. Might as well be now.
Patrick said, “At the risk of insulting anyone; faith is simply silly. As we understand it, faith is that which transcends reason. It is something we prefer to believe rather than what evidence-based reason compels one to believe.”
God (or similar) exists or He doesn’t, at least not any more than a concept. Case 1-He exists as more than a concept. In this case, I’m tapping into a power and a strength that can see me through tough times.
Case 2. Doesn’t exist, except as a concept. In this case, I’m ignoring empirical evidence and believing in a power external to myself, and it that way I’m letting of a portion of the ugliness in me. Note that this ugliness is in all humans. It is part of our evolutionary legacy, or ‘original sin’, if you lean that way.
What is so horrible about case 2? How else can we possibly solve Candace’s riddle? Through science? Possibly, but look where the science budget is being spent!!!
I actually line up with Ash on this one, for a change. Somewhere between 2. ‘probably doomed’ and 3. ‘faith’ might save some of us.
Also, Candace is asking the right question and alfbell is on the wrong track. Regarding the latter, it doesn’t matter, ironically, if one believes in Evolution theory or Creation theory. Both explain why humans are so evil. With Christianity it is ‘original sin’.
With evolution it is almost as basic. We evolved into this because it has permitted the species to survive and continue to reproduce.
Interestingly, a study of naughty penguins conducted in 1910 has only recently surfaced. It was buried due to the shocking depravity. “Levick, fearing to expose the reading public to the horrors of penguin homosexuality, necrophilia, masturbation and rape he witnessed, coded his report in Greek so that only highly educated gentlemen would read and appreciate the depth of depravity of penguins in the Antarctic wild.”
Read more: https://www.digitaljournal.com/article/326597#ixzz1xj2kVFLm
Point being that humans aren’t much different than lowly animals. Only problem is that we now have nuclear weapons to ram up someone’s behind, instead of lesser weapons.
What alfbell wants to turn off is humans. That is what we are, unfortunately. Hard to believe there is a small spot on the brain that can be removed that would turn off all the ugliness.
Perhaps the coming depression will instill some humility in the race, but I sort of doubt it. Who knows.
If you add the gold held by India’s Central Bank, India’s corporations, and by families, doesn’t India have more above ground gold than anywhere else on Earth?
If you believe the ‘Free Gold’ mantra, India will soon be the richest country on the planet, by several orders of magnitude, except for maybe Switzerland and some other minor nations.
Let’s say, as a talking point that ‘Free Gold’ isn’t in the cards, but that gold does, in the near future, what it has always done, protect wealth. In that case, I would expect India to muddle through, rather than fall through the cracks like most other places.
rlmrdl post=3493 wrote: The key is that most people see the problem as trying to replace the pistons while the engine is running when the “solution” is to shift perspective https://tinyurl.com/7en27ur
THEN the problem becomes one of public discourse that enables enough of us to hold the new perspective while negotiating the difficulties that will ensure. And THAT would require multiple leaders at all levels, each with the rhetorical and intellectual skills of a Churchill.
Dang, another Morton Fork. As in “stick a Morton Fork in it honey, I think its done”.
You’re right about the ‘morton fork’ aspect of the situation. However, in a ‘morton fork’ situation, a new perspective is useless. You can change the street sign from ‘dead end’ to ‘no outlet’, and even bring in Winston Churchill to translate it to you in Spanish, lol, but you’re still at the bitter end.
What do we need multiple leaders for? The Euro, Yen, and Dollar will go to the same place as all other pure fiat currencies before them, the fire place. There is nothing anybody can do at this point to alter that outcome.
It is quite apparent that we have an energy problem, particularly in the food production area. I don’t know if you are familiar with the South East Asian rice terraces, but they are an ancient agricultural system that is incredibly efficient in terms of water delivery,since the system is entirely gravity fed. The down side is that a lot of the work must be done by hand, as part of an agrarian society.
Anyway, I’m starting a project in Appalachia that uses a similar system of water delivery, although I don’t think rice would be a prominent crop. I’ll post something at the diner when I’m a little farther along with the design and construction.
This was the entirely predictable outcome at the end of the cheap oil era. In the late 70’s/early 80’s, 1991, and 2001, the USA economy went into recession every time oil exceed $30 or $35/bbl. Now we’re growing the economy (slightly) at $90/bbl?
Please raise your hand if you understand that that is impossible. So which number is wrong? Is oil not really around $90 or so per barrel, or are we not growing?
Well, all you have to do is go to shadowstats.com to see that inflation is 6%, and therefore, we have been in continuous recession for many years. Ditto EU.
“I wasn’t cherry picking anything, but rather pointing out the absurdity of your argument that the $ is failing because the euro is still 25% above parity. That is an absurd argument… those short term FX fluctuations really have nothing to do with general confidence in global currencies as stores of value.
Our refineries have so much extra gasoline capacity that they have to export some of it, even with no new refineries built here in 35 years. Yet gasoline prices are up 200% from a decade ago.
So you notice that energy demand has plummeted, yet oil prices have remained elevated (still more than 50% down from 2008 peak)”
You say you are not cherry picking, and then you cherry pick!!!!
The 2008 top lasted for what? 10 seconds, lol. From 1979 to 2001, 22 full years, the USA economy went into recession every time the price of crude exceeded $30/bbl. Then, they decided they would try a work around. The workaround is still in progress, but getting a bit played out.
The mailing of ss checks, combined with their other spending, is contributing to consumer price inflation, currently about 6%/yr, per shadowstats.com. As the federal deficit widens going forward, inflation will increase.
The trillions they give to AIG and JPM were never going to be spent on consumer goods, so therefore they have no effect on inflation. They are merely accounting entries. Any simpleton can see that.
SS checks, on the other hand, buy gasoline, food, etc. Why don’t you take a class on economics, perhaps econ 101, lol?
Hi Ash—If you have to cherry picks entry points to make your argument, you are conceding that you don’t have a strong one. Over the last decade plus a few years, or the entire life of the Euro, the exchange rate to the dollar has bounced around a lot. I don’t know what the average exchange rate is, but probably about where we are now.
So the point is, the dollar isn’t much stronger than the Euro, even with Greece, Spain, etc. in the front row.
Our refineries have so much extra gasoline capacity that they have to export some of it, even with no new refineries built here in 35 years. Yet gasoline prices are up 200% from a decade ago.
Ash said, “Exactly, a cliff – meaning, many of those payments won’t be made. Defaults on obligations = hyperinflation? I think not.”
Sorry, sir, but that is absolutely preposterous. The entire edifice (including the dollar) will fail before they stop sending out social security checks. If you don’t understand that, you don’t grasp the very basics of American politics. I suppose you could argue that there will be a military coup, and a suspension of the constitution, , but in that case they won’t need dollars to pay the workers in the concentration camps.
Why can’t you face it that ALL fiat currencies are failing together? Remember the 1990’s? The Mexican Peso was losing 15% or or more per YEAR to the dollar? That’s all it has lost in the last 15 years!!! To Mexico, a failed Narco State!!!
It is almost universally agreed that the Euro is dead, except that a half billion people are still using it out of habit. And yet it still buys 25% than a dollar. Where is the deflation, lol?
The dollar is on par with a dead man walking (Euro), and is losing ground to another guy with ALS (Yen). And there is a cliff of social security and medicare payments dead ahead.
It is apparent that hyperinflation is only a year or two away, at most. Got metal?
“…..but none of them can solve what underlies the foundation of the issue: Debt. Capital D. Which must be serviced. Which must be deflated.”
Seems more likely that it will be inflated away. Especially with the cover of a weakening world economy. In the USA, for example, the fed is already buying most of the new debt. As the deficit of the USA federal govt. expands, so will the balance sheet of the fed.
Regarding RE’s comment on energy, he must be unaware of the magnitude of the recent natural gas discoveries in the USA. We are definitely going to come out of this a lot better off than any where else.
“I’ll start; someone in the last thread said the government might confiscate his gold.”
Yes, the same fellows that are stealing your social security money, and are taking the remainder of your taxes and giving them to the military industrial complex, will also steal your gold. My guess is that, like 1933, they will set some relatively small ounce total they won’t touch, 5 to 25 ounces per person, and the rest they will confiscate.
The easiest angle for them will be that terrorists are using gold to buy weapons and stay outside the world’s financial system. Therefore, all gold, above the token amounts mentioned above, will be confiscated, in the name of anti-terrorism. Of course there are many other angles they could take.
To make matters worse, they will assume that you got your gold for free, unless you have purchase receipts that show otherwise, and all of your gains are subject to a special capital gains tax of 70% (or is it 90%).
To make matters even worse, if you are posting about gold on the internet, they know who you are, how much gold you have (if it’s more than 100 ounces), and they probably have a pretty good idea where it is, and they know with 100% certainty who you are and where you are.
So, why do I own gold? Because it is part of a diverse portfolio of tangible assets that will do well in the coming hyperinflation. And (are you reading Ash?), it contains food and and water sources, so I will eat, if we get massive deflation, lol.
And you sir, will you eat your gold if TAE is right and we get deflation, lol?
FOFOA-said, “Legal tender laws do not require me to save in the currency. In fact, I do not save in the currency, and I am breaking no law.”
Wrong!! If you have worked 40 calendar quarters, more or less, you are vested in the social security system, and you are saving in communist fiat script. Did they ask you if you wanted to join that communist retirement program? Doubt it, lol.
And not only are they not paying you any interest, they are quietly trying to figure out how to steal your principal as well. Whether you are counting on those federal reserve notes or not is irrelevant. They belong to you. If you don’t care that they are stealing your money, you are a bit different.
“Further, are you saying that currently savers are forced to lend to debtors at artificially low rates? Who can force me, a saver, to do that? In fact, I refuse to do that, so your argument cannot be correct.”
If you get a tax refund, you are loaning money to the government at zero percent interest. If you are disgusted with communist legal tender laws and ‘out of thin air’ fiat creation, you can buy gold. I own a little myself. But it pays zero percent interest as well. You could get a good return with Bernie Madoff, lol. So your options are quickly reduced by reality check.
I’m hoping my gold doesn’t get confiscated, but just in case, I have a very diverse portfolio of various types of tangible assets. Any system that has a government repressive and dishonest enough to feature legal tender laws, is quite capable of confiscating the people’s gold. Not a sure thing, but capable of it.
My guess it that the absurdly named Patriot Act will be amended to allow the confiscation of Americans’ gold, but at fair market value. Therefore, I hold some gold. I could be wrong. Maybe they will seize the peoples’ gold, then devalue the fiat, like in 1933.
FOFOFOA post=3094 wrote:
FOFOA’s dilemma: When a single medium is used as both store of value and medium of exchange it leads to a conflict between debtors and savers. FOFOA’s dilemma holds true for both gold and fiat, the solution being Freegold, which incidentally also resolves Triffin’s dilemma.The conflict between debtors and savers is arises when an entity, other than the free market, sets interest rates. In the USA they are set by a semi-private bank, the Federal Reserve Bank.
The problem is compounded when you have coercive legal tender laws. Not only is the interest rate manipulated, so is the medium of saving.
When interest rates are free to float, savers lend to debtors at a mutually agreed rate. Incidentally, under a hard money standard, interest rates don’t vary much either.
Tri wrote, “2) a statutory limit on expansion of the monetary supply relative to population and one hell of a line to cross that limit,”
That’s what gold is. The supply of above ground gold has remained fixed at about one ounce per living person for 5000 years.
We don’t need govt. (or their semi-private banker) to tell us what money is or where interest rates should be. Unfortunately, they aren’t likely to relinquish that power until they have run the whole deal off the big cliff. (2008 being the small cliff)
With modern debit card technology, there is no need for any fiat currency. To open an account, you merely need to deposit a gold or silver coin at a private bank, in my system. The banks in my system make their money by charging small fees for routing your transactions, and organizing your information, such as estate planning, tax preparation, etc.
If a business needs capital for a project, let them present their idea to a high net worth individual, and if persuasive, borrow some gold/silver.
“FOFOA: he human concept of money is changing whether we like it or not. It is being torn apart. Gold, as a wealth reserve and wealth asset, will exist and trade parallel to the world of fiat, the world of credit and debt.”
You gotta be kidding me. You buy into that nonsense? Ever heard of Gresham’s Law? Bad money drives out good. People hoard ‘real’ money, and get rid of unbacked fiat as quickly as possible. Nothing ‘parallel’ about it.
So you press the FOFOA folks, and they admit it is fiat coerced upon the people by legal tender laws. They can get away with legal tender laws now, because there is no obvious alternative, and the sheeple don’t realize how fragile the paper system is. Once the house of cards falls, and HI asserts itself, legal tender laws will force more and more of the economy into the black market, where transactions are conducted in gold, silver, other tangibles, or plain barter.
This tells you that Freegold is bunk. Just the slightest push and it falls over. All hat, no cowboy.
Golden Oxen post=3069 wrote: Sez FOFOA: “In the end, physical gold will win out and prove to
be the greatest wealth holding anyone has ever known.”Yes, “Gold Will Win” It is the real money, evolved and freely chosen by mankind to be money. History says it, our US Constitution says it.
Actually, the Constitution mentions both gold AND silver. But it is SILVER that is REAL money, and the dollar is defined as a specific weight of SILVER.
The Freegold people think silver is going to zero or nearby. What arrogant fools.
There is absolutely no way of knowing, at this point, if it will be gold, silver, or a bi-metal system in the future.
Also FOFOA is adamant that there will be no gold confiscation. How does he KNOW that with 100% certainty, as he asserts. What a pompous idiot.
The centerpiece of Freeegold theory states that gold will trade side by side with an unbacked fiat currency. Individuals will be free, pun intended, to make purchases in bullion or fiat. When you ask the Freegold people if this fiat currency will be subject to legal tender laws they grudgingly admit that it will. That pretty much destroys most aspects of the theory right there.
Whether we go straight to hyperinflation, or get deflation first, then hyperinflation, once the hyperinflation hits, no one will touch fiat, except in the outhouse.
Another huge flaw in the theory is their view of how much buying power an ounce of gold will have. For one thing, silver will be money, just like gold, in the future. So that will greatly reduce gold’s buying power below the Freegold claims. Another factor they don’t consider is that much of the wealth in the world is not for sale, except at uneconomic prices. For example, all the houses that are owned free and clear, and have no mortgage. The millions of small businesses that are owned outright. How many owners want to sell at fair market value? Some certainly, but not all. Not half. Offer a premium to fair market value, but that is not how to determine gold’s buying power.
If you read some quotes attributable to ‘Another’, it is quite curious that FOFOA seems to have the exact same writing style. No attempt at all to disguise it, lol.
“I DO have a procreation Final Solution I think is pretty fair, but I’ll write it down in the Frosbite Falls MEMBERS ONLY table in the Diner , not here on TAE.”
The way to get thoughtful posters over to your site is to post a brief summary of your great idea here. If you can set that ‘hook’ with the beginning of a great idea, I’ll go to your site to red the full post, assuming I don’t have to pay any money to become a member.
Basically, we have a catch-22 type situation in play. The thing that enables man to build huge cities and enjoy a high std. of living is civilization and division of labor. Div. of labor leads to technological advances in agriculture and medicine, which in turn lead to vast increases in population.
It is not a permanent solution, but we could probably buy a few decades of time if we could do away with war and the big military budgets. Costa Rica, for example, has no significant army, and they are far more advanced, in many ways, than the rest of Central America. So it is possible, just not likely.
RE said, “So what do you do in the case where the people VIOLATE the law and OOPS have a second child? Do you Imprison them? Forced Abortion? Expose the Infant on a Mountain Top after it is born? What?
Also, your Final Solution here is only talking about Rural Families with some direct connection to the land. How do you limit the reproductive rights of people who live in the Big Shities of China, or anywhere else?”
That isn’t my ‘final solution’, lol. I’m just throwing out ideas that I think are relevant to the topic. Part of the test of any proposed solution to a problem is whether it has any chance at all of making it into public policy. In the case of China, the 1-child policy is already in place. I’m not an advocate of 1-child. But since China has a huge population problem, and 1-child is already in place, I think my suggestion is a good way to improve it. Your question about enforcement is absurd. The authorities over there enforce whatever they want, no matter how unjust. Why would they have qualms about enforcing a far more just policy?
“….not here on TAE”
Are you paying Ash for all the advertizing you do here? If not, you are spamming. Doesn’t really bother me, but there are a lot of sites on the web, I don’t have time to read them all. I’m sure your site is a great place for interesting discussion, but my plate is already full.In the book ‘Man’s Rise to Civilization’, by Peter Farb, I recall seeing an estimate of 12 million as the number of human beings in present day USA borders, at the time of European settlement. Or maybe the estimate was 3 to 12 million.
We know that in those places where there are not too many humans, or none at all, things are fine, for the most part. It is only those places where there are a lot of humans, or human activity, that are screwed up.
In order to restore clean water and other niceties, in those high population areas, we need some sort of population reduction, or some sort of technology increase, that addresses the inevitable trauma of high population density.
Unfortunately, other than modern sewage treatment plants, most technology has been used to decimate the environment. It is very hard to be optimistic about this.
In an authoritarian, heavily overpopulated country like China, where the ‘one child’ policy was somewhat of a flop, I would go about it like this, for rural families. You are allowed to have one child. If you show that you are exceptionally good stewards of the land, especially in terms of using sustainable methods of agriculture, you can have a second child.
“If there is some 3rd Option between Austerity and just Printing Money to finance the economy, I do not know what that is.”
I think this is what all the stalling is about. They are looking for ‘the third way’. If they had even a half baked strategy they would have tried it by now.
What is really scary is how lame the interim moves have been these last several years. Compare that to the Fed. I thought their ‘operation twist’ was a pretty clever way of muddling through another year without having to call it ‘QE-3’ during an election year, even though that is basically what it is.
Not that ‘twist’ is a solution at all, but it seems to be politically palatable, and it appears to be buying a little time. On the other hand, the EU boys are just about out of time, it seems.
Surely you have noticed how gold/silver have decoupled from the stock market the last couple of days? SPX has been down the last two days, continuing the decline almost every day in May. Gold and silver had been declining with the SPX in lockstep, until yesterday, and they are up big two days in a row.
What to make of it? Could just be short covering in the metals. But, consider. Gold and silver rallied, the dollar appears to be topping, and interest rates are still falling. And the market keeps dropping. And the overhyped Facebook IPO is a bust.
I’d say that this market is in huge trouble, except gold, which might continue to decouple. The reason I’m bullish on gold is that a. I’m a gold permabull (full disclosure, lol) and b. silver also decoupled the last two days. That is horrible news for everything else, …….
