The Great American Collapse, The Gold Decade

Come on Schiff. It's time to wake up to reality. Looks like you are crying desperately for your $10,000 gold mark. You already said gold would be at $2000 in 2009. You continue to be so wrong you have made a fool of yourself. Hyperinflation? Wrong. You are truly a clown. Here, educate yourself.

http://www.avaresearch.com/article_details-589.html

Fred commented:

"Hyperinflation? Wrong."

It will happen suddenly, due to the fiscal abyss in front of us.

The only way we get deflation is if gold is returned as the legal tender, which is of course politically impossible until after the entitlements and debt has been inflated away. Now can you inflate that away without causing a stampede into hyper-inflation? I say no way, because once the cracks in the damn break on the fiscal insolvency, it will very fast, with Greece as an example. Who will bailout the USA in that case?

Perhaps this may be my final comment on inflation vs. deflation, as I am starting a new company and will be busy.

Fred,

Regarding your link arguing against hyper-inflation by Stathis, I had already refuted him about gold, see my comments at bottom of the following article:

http://www.marketoracle.co.uk/Article19888.html

Also specific comment:

http://www.marketoracle.co.uk/Article20327.html#comment93378

Let me expound on that. In addition to the points I had already refuted at link above, Stathis is also arguing at your link, that since the banks are hoarding the QE as reserves, we can't get the monetary velocity of hyper-inflation. Mish and other deflationalists provide this reason as well.

They don't seem to understand that hyper-inflation is caused by the public running away from the legal tender, so it does not matter what the banks do, it matters only when the public decides to stampede. At that point the government only has 3 choices, a) back the currency with gold to stop the stampede or allow the stampede to gold to run naturally, b) print currency like mad and drop it from helicopters. Both of those are hyper-inflation.

As to what is guaranteed to cause the public to stampede, it is the fiscal insolvency that they do not yet realize, but the fiscal situation must break at some point:

http://www.marketoracle.co.uk/Article20327.html#comment93486

http://www.marketoracle.co.uk/Article21695.html#comment93525

And it can't mathematically break towards deflation, without BOTH higher interest rates and gold currency (which is precisely hyper-inflation relative to fiat). The reason is political. The promises made with the current fiat system are insolvent. I don't know why it is so difficult for people to admit and accept shocking truths, maybe the public wants to deny that we are all thieves (can't accept responsibility and guilt and self-adjust their lives back to not stealing):

http://www.marketoracle.co.uk/Article21650.html

But once the truth becomes too painful to ignore, there will be hyper-inflation. The longer the denial can go on, the worse the insolvency is going to be.

Please realize that yes we do have general price deflation and it is relative to gold, as only gold can retire bad debt. And that is inflation if holding fiat. And this will soon turn to hyper-deflation for those holding gold and hyper-inflation for those holding fiat. Note we do also have deflation relative to both fiat and gold, in certain credit bubble assets, but this is just the fork in the cooked turkey (the big mis-allocation of capital that is going to cause under-supply/rationing/price inflation of necessary things). Look at the bigger picture of the fiscal situation and the assets (commodities) that the entire word consumes daily to survive.

Remember deflation is an increase in purchasing power, and inflation is the opposite. Those who waste their time on abstract concepts such as the money supply (an arbitrary concept that even Alan Greenspan admitted can never be defined or measured), are missing the truth of the matter.

Also you can be sure that banksters position themselves to profit off the hyper-inflation, and you can see they have been doing all the necessary steps:

http://www.silverbearcafe.com/private/01.10/thinklikeabanker.html

Hope you all realize before it is too late. I can not keep posting comments here to refute all the mis-information.

Banksters preparing for hyper-inflation, we are just 1 step from hyper-inflation:

http://www.silverbearcafe.com/private/01.10/thinklikeabanker.html

"Once the bulk of assets of transferred, write them down to leverage the public financial backstop."

http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/

"An August Surprise from Obama?...

...Suppose someone owes $500K mortgage on a house now worth $300K. In a refinance, the original mortgage is paid in full and a new one issued. Fannie would forgive $200K and issue a new $300K mortgage.

Let’s follow the money. Where would the $500K that Fannie (we the taxpayers) pays to terminate the original mortgage end up?...

...Our tax money would bail out the fat cats, pay them in full."

So the banks get relieved of the mortgages (and get the cash before hyper-inflation starts) and the mortgages are transferred to the federal govt GSEs (Fannie and Freddie), because during hyperinflation, the value of the mortgage declines towards 0 from the lender's perspective.

The bankers can use the cash to jump-start the hyper-inflation by completing the last step:

"Buy up as many remaining assets on the cheap as possible. Hide this action."

I think people of the world have to confront the banking elites and politicians who indulge in mind-boggling abuses of their fiat currencies and global financial systems.

Asians are beginning to wise up to these Ponzi schemes of

Western bankers and governments.

For your information, the State of Kelantan, Malaysia has just embarked on the Gold Dinar experiment: http://thestar.com.my/news/story.asp?file=/2010/8/12/nation/20100812183855&sec=nation

If I was in control of the fed I would start buying up the worlds gold supply. I think it is something possibly the only thing that can fix the economy... Here is the idea... a massive increase in the value of gold could be engineered if the world starts buying. But its not the answer because the US doesn't have enough gold. Sure, the increased value (if its big enough and i'm talking orders of magnitude) would cover the US debt of trillions of dollars. The downside is that other nations have much more and the US relatively speaking would become only the 10th largest holder (say) in the world. However, if the US is the one doing all the buying then it secures the bulk of the worlds gold supply. The price goes through the roof and the US has ample gold to cover its commitments and more to spare. For this to happen the US would have to do a lot of the buying when the price is low and would have to do it in such a way that no-one new what was happening. After a tipping point it can buy openly forcing the price sky high. The currency would be backed by ample gold reserves. When you think about it the actual value of gold is entirely arbitrary... it could just as easily be $100, $1000 or $1000,000 an ounce. It would be necessary to do away with paper gold ie only physical gold would have value. This point is important because there is much more paper gold than there is actual physical gold. This could be engineered easily enough and would be an important part of inflating the value of physical gold. I think that something as crazy as this proposition is necessary to save the economy from falling into the abyss. The structural problems aren't going to fix themselves and some day soon the world might stop placing any value in the paper dollar. When that happens its a doomsday scenario. But a dollar backed by gold at the right price will secure the US's place as the leading economic power. Something has to be done very soon I think. One other important thing is that the US would want to do this with some of its friends. Include them and sort out their problems too. Just an idea

"If I was in control of the fed I would start buying up the worlds gold supply. I think it is something possibly the only thing that can fix the economy"

You are mathematically advocating hyper-inflation.

That is why you will never work at the fed. This would implode the value of the paper everyone is holding, i.e. hyper-inflation.

The Fed couldn't just magically buy gold at current price without pushing the price up as they gained enough gold to back the current value of the total fiat at the market gold price. For one thing, all gold ever mined is only $6 trillion, and that 160,000+ tonnes. The fed couldn't buy 1000 tonnes without being detected (mines only produce 2000 tonnes per year). Thus the price of gold would rise and the value of what ever gold held by the fed would amply back the fiat in existence, but with the holders of the fiat much impoverished.

Any way, the price of gold (hyper-inflation for those holding fiat) is going to happen, even though the fed is obligated by law to try to stop the hyper-inflation from happening. Which is why the fed is not doing what you suggested.

It is sad that you don't understand socialism. If a centralized force obtains the gold, then there is a huge theft of human capital (you can't just take gold and give it to the population, that is STEALING!). Suggested reading:

http://goldwetrust.up-with.com/knowledge-f9/book-ultimate-truth-chapter-4-borrowing-is-stealing-t152-15.htm#3431

http://goldwetrust.up-with.com/economics-f4/inflation-or-deflation-t9-405.htm#3432

It is really sad how stupid the people are these days. Most everyone is fully indoctrinated into socialism, so much so they don't even realize they are socialists.

And socialism ends horrifically. And people wouldn't have a clue how to avoid the outcome, because they don't even know they are socialists, because they don't even understand anything about what human capital is and how to most efficiently organize it in a free market (certainly not by doing any centralized action).

Sad. Truely sad, is the only way I can describe my experiences commenting on this site. I do appreciate the opportunity to learn and document for myself the pitiful state of the sheeple in our world. At least I won't feel there was any other possible outcome. Revelation in the Bible is mathematically correct. Failure peaks before it implodes. These interactions are proof of how failure peaks as the sheeple emulate each other.

Aaron Russo : Mad As Hell!

http://www.youtube.com/watch?v=J4ry3GzdFBM

From early 1990s:

http://en.wikipedia.org/wiki/Aaron_Russo#Political_career