Monday, May 25, 2009

What Obama Does Not Know

Transcript of the speech

By Richard J. Maybury

Keynote Speaker

And editor of Early Warning Report

At the

Wealth Protection Conference

Phoenix, May 2, 2009

Copyright © 2009 by Richard Maybury, but permission to make and
distribute copies is hereby granted.

In 1992, I coined the term Chaostan — meaning the land of the Great Chaos — for the area from the Arctic Ocean to the Indian Ocean, and Poland to the Pacific, plus North Africa.

Thereafter, for nine years, I warned incessantly that federal officials did not understand Chaostan, and if they did not stop meddling in those countries, we would end up in a war. And, the war would wreck the economy, because the government would pay for it by borrowing and printing dollars; the debt and inflation of the money supply would lead to economic chaos.

Obviously, that prediction has come true, so today I'm going to explain three more things that the government and mainstream press seem not to understand.

The title of this speech is, "What Obama Doesn't Know." The first draft was 14 hours long, but I have cut that quite a bit.

You might ask, how can the president of the United States — the most powerful, most well-connected person in history, with all sorts of intelligence agencies — not know something important?

The answer is that a successful politician is not an expert at economics, foreign policy, military affairs or any of the other areas in which he makes decisions.

A successful politician is a person who is an expert at winning elections. That's how he gets the job — by winning elections. That is his skill, his career, his area of expertise. Winning elections.

In other words, to be president, he needs to be highly skilled at illusion. He must be a better actor than his competition.

I sometimes think we need a change to the Constitution. Every six months, a president's job performance should be evaluated, and if he isn't doing well, we should call up Hollywood Central Casting and tell them to send over another president.

Since the president isn't really an expert at anything presidential, except how to get the job, he doesn't know what he should look for when he hires an advisor or cabinet member. Generally presidents just hire their drinking buddies, or whoever their drinking buddies recommend.

You can see that with Obama's group of economic advisors. Before he was sworn in, he formed one group of advisors, then on February 6th, only three weeks after he took office, he hired a second group. Now he has two groups of economic advisors.

Why? Well, if you know a bit about economics, you can make a good guess.

During his election campaign Obama admitted he knows very little about economics.

The first group he hired were people who were prestigious, but they have different economic models. Some are Keynesian, some monetarist, some socialist — I'll say more about the different models shortly — and I'm sure every time he got a dozen of them in a room and asked for an explanation of what's happening, he got a dozen different answers.

He hired a second group, and he's probably getting a dozen different answers from that group, too.

So, I'm going to explain three crucially important topics the president — and mainstream press — seem not to know anything about.

When I'm finished, you will know more than Obama does.

The first I'll cover is the fact that ...

...the economy is not a machine

When we listen to politicians and the mainstream press talk about the economy, we usually hear comments such as, the economy is sluggish, or, the economy is slowing down. We need to speed it up, to jump start it, or repair it, or tune it up.

But the economy is not a machine. It's an ecology, made of biological organisms — people — you and me and our loved ones, and millions of others.

Economics is not a math course. It's not the study of charts, graphs and equations. It's the study of living, breathing, thinking, feeling humans.

Especially feeling. And I'll say more about that shortly.

Economics is not a branch of mechanical engineering, it's a branch of biology — because we are biological organisms.

The economy is an ecology, the human ecology, and it is by far the most complex ecology on earth. I think, for instance, the typical big city hospital probably contains more complexity than all the other so-called natural ecologies in the world put together.

Think about it. Not only are the physical bodies and brains of the patients unimaginably complex, but so are the thoughts and feelings of the medical staff and patients, the personal interactions, the decisions, the knowledge base, the experience and training, the chemicals in the color of the paint on the walls, the production of the raw materials used in the bathroom tiles.

The contents of that one building are so complex no human will ever understand them.

Yet, for more than a century, politicians and bureaucrats have been meddling in the human ecology, which means they've been playing God.

The economic trouble we see around us today is the chickens coming home to roost.

Right now, there is a big political movement to increase the number of regulations on the financial industry. The industry already labors under tens of thousands of regulations, that no one understands, and it broke down. So how is more regulation going to help?

I submit that the financial industry only needs one regulation, of four words: thou shalt not steal.

Let me be very clear about this: the politicians and bureaucrats have been taught to see us and our loved ones as machines that have broken down, and they plan to do whatever they think is necessary to jump start us and rev us up.

If someone elected you God, and gave you the power to meddle in a rain forest, or a tropical reef, with all its coral, fish and underwater vegetation, where would you start?

How would you tune up your tropical reef so that it ran more smoothly?

How would you jump start your rain forest?

If you've read my Uncle Eric book called WHATEVER HAPPENED TO JUSTICE?, you know that the human ecology is vastly more complex than a rain forest or tropical reef, and yet for more than a century politicians and bureaucrats have operated on the assumption that they are God and they know how to improve it.

So, they wrecked it.

I'm sure that if we gave federal economists control of the Amazon rain forest, it would never occur to them to just leave it alone!

The first thing they'd do is set up the official Amazon Federal Reserve, and start arguing about the formulas they'd use every six weeks to loosen or tighten the supply of water.

A hundred years later, the Amazon rain forest would be a lifeless desert, two million square miles of sand.

The most complex thing ever discovered is the human brain, and the economy — the human ecology — is comprised of 6.8 billion of those brains.

So, does Obama understand that the economy is an ecology?

Well, just listen to the terminology he uses. He has said — and these are his actual words — the economy has "structural problems." It's "locked up." It's "out of balance." It's "sluggish." It's "frozen." It's "slow." It's "clogged up."

The man thinks he's a plumber.

The next topic Obama — and the mainstream press — seem not to understand is...

...economic models

All mechanical engineers and architects use Newtonian physics. Cars, ships, trains, skyscrapers, they're all built on Newtonian physics, because Newtonian physics has been proven right billions of times.

So, for most of what we do every day, Newtonian physics is the model. No engineer or architect would for one minute consider using anything else.

Economics students in college are led to think there is just one model in economics, too. But there isn't. There are five main models: Keynesian, monetarist, socialist, fascist and Austrian, and there is no consensus about which one is correct.

Yet, every financial analysis, every investment recommendation, begins with a choice of economic models. It cannot be avoided. Whether he knows it or not, the analyst is using some kind of economics to do the analysis, because all financial work builds upward from economics — meaning, from the study of the human ecology.

Economics is the foundation. I would like to see the whole financial industry, including every article or book you read, disclose under the name of the writer, the economic model the writer is using, so that the audience can tell what the bias is!

In my own case, the article would show the title, then "by Richard Maybury, Austrian." An article by John Doe would say "by John Doe, Keynesian," or monetarist, or whatever.

When I was in college, we were never told what model we were being taught. In one course, the professor would be a monetarist, in another a socialist, another a Keynesian, and they never disclosed it.

So, most of us didn't even know there were different models.

Ever since, I've talked with college students, and found this has not changed. I almost never run across a student who even knows there are different models.

So they come out of college thoroughly confused. To them, the human ecology is a huge mystery. They've been taught a mass of contradictions, and they think there must be something wrong with them personally — their brains are defective — because they can't make sense of it.

Several times I've had people with college degrees in economics read my little book WHATEVER HAPPENED TO PENNY CANDY, which is written to be easily understood by a 12-year old, and these people have told me that for the first time in their lives, they understand economics.

I use the Austrian model, which is the one that most closely dovetails with the beliefs of Thomas Jefferson and the other American founders. It's the only one that sees the economy as an ecology not a machine.

As far I know, I'm one of the very few people in the whole country who ever disclose their model — because I'm proud of my model.

As for Obama, I'm sure his confusion comes from the fact that he doesn't know or is only vaguely aware that there are various models, and he doesn't know how they differ. If someone asked him, which economic model do you think makes the most sense, and why, I'm sure he'd have no answer.

So the result in the White House is confusion.

It cannot be any other way when the advisors have different models of how the world works.

The third topic Obama and the mainstream press apparently know nothing about is...

...velocity & money demand.

Jim Powell has pointed out that the tens of millions of people who are still working — and that's 91.5% of the workforce — have received a huge pay raise, because prices of houses, cars, refrigerators and a lot of other things, have been cut drastically. The buying power of their wages has soared!

And, it's the best kind of pay raise, because they didn't need to work any harder to get it, and it's not taxed.

This is a huge windfall. It's probably the biggest, most widely shared windfall in all of world history.

So why aren't these tens of millions of people out celebrating? They should be delirious with joy. Why aren't we seeing dancing in the streets?

Because people are scared and afraid to spend the money. And that brings us to what economists call velocity.

As this war was developing during the 1990s, I repeatedly warned that it was likely to bring a dollar crisis, and advised my readers to always have part of their savings diversified into non-dollar assets such as Swiss francs, New Zealand dollars, gold, silver, platinum, oil, and other raw materials.

Incidentally, in March on our web site, I ran a special bulletin telling my readers that I think there is an 85% probability the bottom in non-dollar assets has occurred, or is occurring, and I think those investment suggestions are now as solid as they were ten years ago.

A major reason is velocity. As far as I know, my Early Warning Report is the only publication that says much about it.

I think velocity has become the key driver in the entire world-wide economic crisis, so here is a quick explanation of it.

Money responds to the law of supply and demand just as everything else does.

If people do not want a particular currency — let's say the British pound — then the value of a pound will fall.

Sellers will demand more pounds in trade for their goods or services, and prices in Britain will rise, even if there has been no change in the supply of pounds.

On the other hand, if the demand for pounds rises, the value will rise and prices will fall even if there has been no change in the supply of the currency.

Velocity is the speed at which money changes hands. When demand for the money is high, money changes hands more slowly, and velocity is low.

When demand for the money is low, velocity is high.

A key point is that velocity and money supply can act as substitutes for each other. A 10% rise in velocity has the same effect as a 10% rise in money supply.

The biggest problem with velocity and money demand is they can turn 180 degrees overnight. If people trust the currency, and suddenly perceive some kind of big threat to their futures, money demand can shoot up.

That's exactly what happened last year. The supply of dollars certainly did not go down, but when the real estate crash happened, people became so frightened they were afraid to let go of their dollars.

Within a few days, money demand shot up, people stopped spending and held onto their dollars, and this had the same effect as an instantaneous deflation of the money supply.

If you don't spend your money, that's the same thing as taking it out of circulation.

This can instantly cause the equivalent of a sharp deflation of the money supply by 10 or 20 percent, or more.

That's what happened in the Great Depression. The Fed was inflating. In 1932, the money supply[1] was $20 billion, and by 1940 it was $38 billion. But fear was so great that velocity was falling faster than money supply was rising.

This is why Franklin Roosevelt said in his first inaugural speech, "The only thing we have to fear is fear itself." People were afraid to spend their money, as they are now, and velocity was falling, which has the same effect as deflation, because if you don't spend your money, it's not in circulation.

So, speaking economically, I think that is where we are now. Changes in money demand and velocity are running everything.

And, my key point is, it's all controlled by emotions. By fear.

What are you more afraid of? The dollar becoming worthless? Or losing your job and running out of dollars?

The whole world is constantly shifting back and forth between those two fears, so money demand bounces up and down like a yo-yo, and velocity — the speed at which the money changes hands — does, too.

These wild shifts in money demand and velocity have the same effect as massive, instantaneous shifts up and down in money supply. It's like we're having a huge inflation, then a deflation, every few hours — because our fears change every few hours — because the politicians have all this arbitrary power and we don't know what they're going to do to us!

Now, do you see why it is so important to see the economy not as a machine but as an ecology. Machines don't feel, they don't have fear, or joy, or optimism.

But people, biological organisms, do have feelings. They do fear, and their fears can change instantaneously.

The human ecology, especially these days, is driven very largely by emotions.

How are the politicians and bureaucrats who are playing God ever going to control, or fine tune, or repair, or speed up or slow down, our emotions?

Okay, so I've given you three of the things politicians and the mainstream press say little or nothing about, probably because very few of them understand these things. The three are:

#1, The economy is not a machine, it's an ecology made of unimaginably complex biological organisms, meaning people.

#2, Models. There is no single economic model, like there is in Newtonian physics. Obama probably does not realize his advisors are giving him conflicting advice because they have different models.

#3. Velocity. The speed at which money changes hands is dependent on emotions.

Now you know some of the things Obama doesn't.

Perhaps a good summary of what I've said so far is, when people play God, they always do it badly. And, the politicians and bureaucrats have been playing God with the human ecology for more than a century, and now the chickens have come home to roost.

On March 29th on our web site, we posted a special bulletin telling my readers that I think there is an 85% probability the recent deflationary stage of the crisis is ending and the next inflationary stage is beginning.

I can't prove it, but I think the bottom in non-dollar assets has occurred, or is occurring, and now is the time to get into non-dollar assets: Swiss francs, New Zealand dollars, Canadian dollars, Australian dollars, oil and other raw materials, real estate, and especially, gold, silver and platinum.

Pat Gorman at Resource Consultants can help you with the gold, silver and platinum. I've been recommending Resource Consultants for precious metals for twenty years or so, and never had even one complaint from any of my readers.[2]

If I'm right about this new inflationary cycle, then within two or three years, we will see oil at $300, gold $3,000, platinum $3,000, and silver at $50.

I think we have three to five years of chaos ahead of us, but a lot of new fortunes will be made by those who are knowledgeable and prepared.

We're going through a giant, and very painful, object lesson. But when it's over, America will be back on track to a new golden age, and the people who were knowledgeable and prepared will enjoy a prosperity far greater than anything ever seen before.

That's the objective of my newsletter, Early Warning Report, to get you through the hard times as comfortably as possible, so that you can enjoy the golden age that will come after.

This speech is copyrighted, but permission to make and distribute copies is hereby granted.
[1] As measured by M1. Source: Historical Statistics of the U.S., Colonial Times to 1957.
[2] Neither Richard Maybury nor his company Henry Madison Research, Inc. receive any kickbacks, commissions or fees of any kind for recommending any broker, dealer or publication. Mr. Maybury works for his subscribers, and no one else.


Siege said...

A brilliant and well written speech. Just a thought though, the statement that there is 91.5% employment in the workforce (based on 8.5%) unemployment is does not take into account those who are excluded from the cooked books. Based on, the percentage would be more like 80%. Still, I think the article and it's points are very valuable... thanks for publishing them here!

Martijn said...

how Obama could confiscate your gold according to Marc FaberTalking about ETFS.

Anonymous said...

Aan Martijn : 2 A/FOA snips - 1997
Date: Wed Nov 05 1997 22:06
All paper gold will be worthless just like stocks and bonds! Am I right? If not please correct!
Mr. GCH,
You may be more right than wanted to be. For some it is a long torturous wait to go without paper gains. For ones outside the west, it is not hard. Days pass easily as a thousand years of history give backing to our investment. "For what I hold is not an empty promise. Nor is it a major thought of debt. I am now today, paid in full!"
Turn slowly now and view all directions. The wealth that was had was not real. The Pacific Rim started, now South America. Next will be Europe closely followed by the US. Remember, all currencies are the same now as they are "digital paper"! Nations will defend the system at all cost They will never sell US$ treasury debt as that debt is their currency! The dollar will soar as a final defense! As part of this defense they will allow oil to rise as oil is priced in dollars. How do you get oil to rise? Today, we stop our CBs from selling gold!

Date: Sun Oct 19 1997 13:41
If you are searching for facts you will find them, but the items you find will not be true! Did you think that the high powered world of the LBMA would operate in a fishbowl for all to see? We cannot take what is on the outside as evidence for what is on the inside. To find the answer work with inside assumptions and extrapolate them to the outside!
Think now:
Would the world CBs really have kept gold this long if they only valued it at it's ongoing commodity price? Cannot only the offer of gold have some value in a deal? Can paper gold that has a commodity face value of, say $300 be traded for it's true value of many thousands? Indeed, if your worldly investments ( US stock market? ) are valued in the long run by a full supply of oil, would not future gold in a Swiss acct. make a good trade?
Do the oil states think our military is there to protect them or protect oil?
Fact: If the world bids up the price of gold, all deals will be off! It would be every nation for themselves.Oil would explode in price!

>>> If,...if any officials NOW would dare to suggest another form of goldmetal confiscation...That would be a blessing for the entire freegoldmetal advocacy.

Sounds paradoxal. But isn't.

The world's balance of powers has CHANGED ...continues to change !

Martijn said...

Yes, powers indeed continue to change, and rightly so. I believe the world might be a lot better of with a reshuffling of the players and cards. The current system has been corrupted way too much. Luckily some people are beginning to open their eyes. Freegold would have some rather extensive influence on the political game, which I believe would be a welcome development.

Martijn said...


The reason why I asked the question regarding freegold being a system oriented at individual freedom more then any other system in history has to with the Matrix. I've recently watched all three parts again. Did you know the movie was based on Gnosticism?

Finding larger perspectives on the current crisis is rather interesting.

Martijn said...

Marc Faber says paper will burn.

Perhaps you should write a post on that FOFOA ;)

Martijn said...

Also: Liquidity drowns meaning of 'inflation'

The conventional terms of inflation and deflation are no longer adequate for describing the overall monetary effect of excess liquidity recently released by the US Federal Reserve, the nation's central bank, to deal with the year-long credit crunch...

Martijn said...

more on oil. And as we say oil we again mean dollars.

Anonymous said...

I agree that disclosure of the model used by the writer of an arcticle is a pre-requisite - but I strongly disagree to associate each and every writer with a model. Models are not believe system - you don't pray to your model. You may want but you should not.

In domains where there are non linear effects and where those are measurable practitioners have learned to select the right model for the right circumstances. There is not a one size fits all. And if fail to look at a dynamic model and only look at the statics our bridges will collapse when people dance on them. The lack of sufficient education in non linear effects and the overemphasis of linear math is one contributor to this mess.

I guess this boils down to a technical argument for looking at the economy more like a ecosystem.

Shanti said...


Just for your information;

Some nice pieces of interesting education for deeper knowledge to find there.

Look at the top right corner, "CIGA" where did i heard that before.....

Btw, how many times Another said that paper will burn, did you read all of ANOTHER Martijn?

@Anon 2:00,

I agree 100% on the subject of goldconfiscation

Martijn said...

Ha Shanti,

Nice info, thanks a lot! I must say I enjoy the idea of gnosticism. Great to see other people do too.

As for Another: I have not read too much of him. I would like to, but so far FOFOA, you and the other commenters have always provided a great meal.

Jim Agnew said...

Newtonian Mechanics was proven wrong by Albert Einstein in 1905, although it works fine for non-near-lightspeed physics. Now we have two main competing hypotheses - Quantum Theory and String Theory. So, even science has competing theories!

Jim Agnew, Geophysicist,
Sacramento, CA

S said...


Could you summarize the matrix thesis espoused by Leap 2020?



FOFOA said...


Agreed, 91.5% employment sounds pretty good right about now.

Anon and Shanti,

I also agree that even the mention of confiscation would send physical gold coins to the moon. But gold in the ground and gold in New York would be the easiest and most politically acceptable to confiscate should they entertain such a stupid idea. Gold need not physically move for this to happen. The last thing they want is for the world to get used to "gold on the move". This is why possession is so important.


Yes, I can see your Gnostic/Matrix analogy. Freegold would be like the souls being set free from the machine that enslaves them.

I am disappointed in Henry C.K. Liu. Tax corporations for the SAVINGS from laying people off?


I answered your question under Taking Delivery of Physical, about half way down.


Aleksandar said...

FOFOA and Others,

After reading the Bilderberg report the other week, I indulged myself in some conspiracists sites the past few days. It was good as I caught up on the status of the spiritual beings from outer space who will come and save us from doom, communicating that to us through channelings and generally I was able to satisfy my curiosity about which shape-shifting reptilians have become popular now that Bush is no longer at the helm.

No, jokes aside, it is a disturbing place the internet.

Anyway, I came across a story that I somehow feel different about, it resonates a bit with the Thoughts of Another and does not involve any of the following: The Andromedans, The Gray Men and The 5th Dimension beings from Rael that oppose shape-shifting reptilians on Earth (who as you all should know, worship Lucifer) nor does it mention other stuff such as NESARA, project "Omega", HAARP, chemtrails etc. That said, I collected some coherent Thoughts inspired by that particular conspiracy story.

So, please bear with me.

Up until the time when Nixon "nixed" the $ convertibility, it used to be such that any international trade, that was always made in $, (buying oil for instance) can be thought of as a type of secured transaction with a "collateral" equal to the asset that the $ currency was backed with (gold). This means that in every transaction where $ were exchanged for goods, it basically gave the recipient of the dollars a right to ownership of a fraction of the total assets of the USA (gold, silver, federal property etc.) that back the dollar. No separate collateral was needed for the trade. Today, many trades are made in completely fiat currencies and have no asset acting as a collateral guaranteeing the trade (they invented one: its called securitization and see where it got us). It is similar to an unsecured loan: the lender gives to the borrower liquid accounting digits (fiat currencies) in exchange for a monthly payment of interest+principal but the borrower does not put up any asset as a collateral. I think we can safely agree that this is maybe at the heart of today's problems: think of any exchange of goods vs. fiat digits in terms of an unsecured transaction. Things went out of hand ever since because the discipline in creation of fiat digits, a task of any Central Bank, was not enforced strict enough either due to sheer corruption or incompetence (untested and very varied economic models, thanks to the post above).

More importantly, before Nixon's decision in 1971, loans to various Nations in need of development funds were given by international institutions in (gold-backed) dollars or other asset-backed securities which the borrower could either immediately use as investment capital of utilize as collateral for other loans (but he could not liquidate them and had no ownership rights) and trades. The lenders received in exchange various "certificates of indebtedness" from those borrowing Nations. The holder of such a certificate would hold assets of the indebted Nation, such as its ($-pegged) currency, assets in the ground etc. Notice that no borrowing Nation was allowed to issue certificates covered by nothing else than "future tax income" as that was perceived to be not only unfair but would also negatively affect the development as it invites corruption. The loans were given by international institutions such as the IBRD (Intln Bank for Rebuilding and Development), WB and others set up after WW2 in order to develop the worlds economies. At that time, the intention behind the "global institutions" was to develop the economies of each Nation in the world and avoid future wars. This was the content and spirit of many Agreements and Treaties not only post WW2 but also before.

CONTINUED BELOW (form complains: too much words!)

Aleksandar said...

Basically, the transformation of assets to capital, which Armstrong says is done through the Rule of Law, was provided for with this arrangement. In Europe the Rule of Law already existed, while in other Nations it was to be developed by stimulating this economic development.

I would like to deviate here with a separate Thought. It seems to me that corruption and embezzlement is much harder to do in a world of asset-backed currencies or transactions which are secured with collaterals. This is because the proceeds of the illegal acts are more difficult to hide. Asset-based securities can be traced when execution is performed for instance. Compare this to now when what we actually call "money" are simply accounting units on books that can be "massaged" in many ways as they are not any longer representing real Things but the (virtual) medium of exchange in any unsecured transaction. Money laundering is a new phenomenon which came about with the introduction of fiat currencies.

Now I would like to continue. It turned out that this development plan worked well in Europe (which was a testbed) and things started to move towards the rest of the world. However, a drastic change happened at the end of the sixties. It started as a response to the pressure on the US's hard assets backing its currency. Namely, the quantity of $ in circulation had to increase as the world economies and volume of trade increased. It become difficult for the US because its currency-backing assets were not enough to issue the number of $s out there and hence secure all $-transactions in the world (note that backing was already fractional). Plans were made to increase the asset base of the US by transferring part of the assets of many wealthy families, Nations and Royals from around the world to the US so as to increase the US asset base and allow it to create more dollars. Although all this was in good faith, they (the donators of the assets - mostly gold) still needed assurance that the system will not be hijacked. JFK agreed to lend assurances (remove the FED from the money-creation business) and signed the necessary agreements but immediately after the assets were transferred he was assassinated by people that wanted to simply steal them and not honour the agreements in full. So, the FED and related corrupt institutions (private banks etc.) retained its monopoly upon the root of the world's financial system and moreover, now possesed enormous quantities of assets (mostly gold) that they can plunder and steal and do anything with. Note that the agreements signed by JFK (and other similar agreements before) were afterwards simply not recognized by the USA and are still ignored. Most of these were secret agreements according to the conspiracy story and can thus not be talked about in public. Besides, the counter parties to the agreements were either hushed, assasinated or removed from official power by intelligence agencies. There was a silent takover of the world's political elite by financial usurpers and corrupt bankers that saw the opportunity to grab the offered assets and never honor the checks&balances mechanisms in the (secret) agreements. I agree that this is a bit shaky but lets just go on for the sake of argument.


Aleksandar said...

What is important at this point, with regards to our current predicament, is that those agreements never actually transferred ownership of the assets of the wealthy families, Nations and Royals but only gave "custodianship rights" to the US to issue currency. This right, according to the conspiracy story, has been revoked in the middle of the 90s by the ones that legally own the assets (they had to wait until certain other treaties and agreements expired): the heirs and inheritors of the people with whom JFK did business. Ever since then, there has been a struggle to recover all the funds which were missing, gold that was remelted and sold at the market etc. Much of the political violence and "regime changes" around the world, terrorist attacks and the whole lot of that stuff has revolved around this Grand Battle.

So, the hijacking of the assets that were to be used in a global development plan was accomplished at the end of the 60s and there was no international control anymore over the printing of the world's reserve currency - the $. This created a lot of dissatisfaction in the world. Next, the US invaded Vietnam (as a distraction/threat, similar to what happened at 2001 and later years ever since) and the world's opinions of the US, after many years of suffering of the Vietnamese, was extremely negative. This led to reactions from the commodity exporting countries that were basically "calling for delivery" of the assets that back the dollar. Nixon decided to accept the proposals for a solution from a group of fiat-economists or monetarists from Chicago (even referenced in the Bildenberg report) and removed all backing for the $. The result was years of turmoil, the oil crisis, inflations, unemployments, huge deficits and surpluses in the world's countries due to the inability to "balance the payments" etc. Basically, because the collateral for every trade was gone, there was no longer a possibility to feel secure in the execution of it as one also had to look forward at currency exchange rates (that were now floating), interest rates, the parties to the trades now needed to hedge risks forward, wealth was suddenly redefined as gold no more served that purpose and the FED's notes filled the void, etc. The insurance industry sprung up as a direct response to the need to secure trade.

However, there was no other solution but to continue to use the fiat-$ (no other currency!) but the USA needed to show some restraint. Volcker in the 80s increased the interest rates to battle runaway inflation (restraint) and destroyed a lot of jobs. This however started a long process of wealth distruction around the world as many of the funds that developing countries would have received no longer flowed to them: the gains from simply holding pure paper $ investments made greater "profit". Suddenly, it was possible to make huge paper gains (Another's quote!) by simply trading paper securities in unsecured transactions, speculating on the markets etc. Securities fraud became commonplace and very lucrative. It became possible to profit from destruction of the wealth of developing nations as they no longer could compete with paper-assets, lenders slowly started to execute their old "certificates of indebtedness" and new loans were simply backed by their own fiat-currencies whose value was fixed, by the theory of the monetarists, to the future work and prosperity of their people (forward looking taxes). Countries around the world started to embrace communism as a solution to their untenable position which provoked the USA on ideological grounds to institute corrupt puppet regimes. Nations succumbed to inflation, modern monetary slavery, degradation of their societies and moral fiber knitting their communities. Volcker has created a monster which changed the people's perception of wealth and made them infinitely more corrupt.

Aleksandar said...

In the 80s, modern paper finance was born. We live its culmination.

From the 80s onward, especially after Bush senior was elected, this started to accelerate even more. Up until then, although currencies were no longer backed by assets, large inter-bank trades (international arbitrage games for instance) were still executed with a collateral (usually gold). It is said that it matters not how many zeros you put on the trade contracts, the trade is worth as much as the collateral put up. Most of this collateral was not "owned" by the banks or institutions that initiated the transaction, but they were only its custodians. In a very illegal way, they created tons of practically fake gold certificates, OTC derivatives etc. to cover international dollar transactions. Here comes the resonance with Another. He says that oil is priced in fiat and in gold. What it maybe means is that the trade is executed in dollars with a gold collateral, or the funds originate from a liquification of a claim to gold (or any other hard assets as a matter iof fact). Practically, fiat digits are "created" (probably with double accounting - offshore) from a gold certificate that is traded on an exchange but the fiat/oz. ratio needs not be equal to what is on the exchange - it can be anything that the parties to the trade can agree is a good collateral.

The conspiracy story here states that the gold which private and central banks legally onwed has long ago been depleted (even before JFK) and what they have been doing ever since was illegally using gold as a collateral in international trades (for instance to pay for oil) denominated by fiat digits. That is gold (and other assets as well) which they do not really own but only act as a custodian in favour of those old families, Royals and other Nations ever since they offered it to JFK in order to increase the $-base. As I said, this last group has, since the middle of the 90s when they could legally re-claim ownership due to expiration of the mandate of certain corrupt oversight secret (yes, I know) institutions, started to sort out this tangled web and gather their assets back. Things here go to the trillions of (nowdays) $. Thousands of tons of gold. One of the consequences of this great consolidation is this crisis today and the look of the POG chart.

Well, this is the gist of the conspiracy that I found. It is interesting yes? Like a James Bond movie. There are other things that I think are simply meat-on-the bone type of story "filler" and I dont believe in them anyway. I am a bit embarrassed to post a link to the writings. Too much spiritual and aliens crap to sort out before one gets to the postings of the story-teller of this particular tale.

Martijn said...


You can post the links. Spirituality does matter, although many people tend to forget as they are to busy thinking about what to buy or fearing what to losse, and there is absolutely nothing that underpins a denial of alien existence, is there?

Besides, if you choose to read something, and make up your mind about it, why be scared of how others react? The current crisis clearly shows that people are easily manipulated and often fail to see what matters. Why be afraid of anyone else's opinion?

FOFOA said...


Nice story. It actually doesn't sound so conspiratorial to me. It only becomes conspiratorial when you assign the title of "hero" and "villain" to certain characters. And when you assume that some super-villain planned it all the way it actually played out.

Because, as the article above states, the economy is an unimaginably complex ecological system, it is impossible that an economic plan spanning decades could unfold as planned.

But... if you realize that under Adam Smith's "Invisible Hand", that people act in their own best interest, and that wealthy and powerful men acting in their interest have a greater effect on steering the ship (so to speak), then you can see how things played out similar to what you describe. It does not need to be a grand conspiracy. It can, in fact, be many small, short-lived conspiracies, strung together throughout history. We see this happening right now on Wall Street.

Another angle on this is the fractal. The way our system is currently structured, it makes the serfs feel like they have access to what has traditionally belonged only to the lords. Like home ownership, land ownership, ownership of large corporations, life of luxury, early retirement, etc... Through the credit system and the bubbles it created, average, blue-collar men were able "to live the dream".

But now that the system is collapsing, the reality behind the facade is exposed. And the real ownership of the real goods that seemed to be spread out among all men is now consolidating with the few (and with the government).

The fractal angle is that this same phenomena plays out on all scales, even among nations. Look at Argentina and Brazil. They had to put up real land and real economic capital as collateral for IMF and WB loans, which is later surrendered when the loans are defaulted on. The IMF creates the digits of the loans out of thin air, but then when they cannot be paid back with real wealth, land is taken. It cannot be physically taken, but the paper title that transfers ownership is recorded.

This system has left a legal paper mess of the world in its wake. As things shake out, more theft will occur. Possession will be 9/10ths of the law. Countries will take back legally what they still possess, and their "benefactors" will keep the gold that they possess, returning only digital currency units. Everyone will only own what they physically possess. The paper that says otherwise will burn.

Leaders around the world are slowly figuring this all out. Look at the confusion in the GCC. Look at the deals being made between China and South America, between Russia and Germany. Soon this new awareness will lock up trade between nations. It will begin to flow again only when real wealth is physically exchanged (gold). Trust is gone and must be rebuilt from the ground up.


Aleksandar said...


The links to the conspiracy sites... Sigh. I wrote such a nice and captivating story (even I am surprised!) but I am afraid that if you go to the actual sources there will be much dissapointment.

But, I am familiar with that itch to know more, read more to extinguish the thirst for knowledge. Most of these conspiracy stories read like a good thriller and we are all attracted to them due to the boost it gives us to know something special, exclusive and secret to the majority. This stuff is also quite addictive.

OK, vooruit then. Set your bullshit radars and discriminators on very high.

This is the story as I initially found it (dont ask me how, I just clicked somewhere I dont remember anymore). Open the link to the pdf file. It is a PP presentation. It is a quite fantastic story involving, of course, the ancient biblical archeology crap, references to the divine powers, benevolent "Royals" and organization of "secret" cells and matrixes of freemasons. Nevermind all that (even if you believe in it). Follow the undercurrent of thought that resonates with our own discussions here. Be absolutely sure to click on the link labeled with OITC, towards the end of the presentation. It will take you to the "notes" section where you will find a alleged "email discussion" between the author of the presentation and a certain Mr. Whistleblower. The last is an insider to the organization OITC which is alegeldly the "real" owner of the assets of all Nations and Royal families which bankers have abused and illegaly tapped for 50 years.

As I said, filters on "extreme" sensitivity here.

The organization OITC also has a website. There is also a wikipedia entry. This organisation appears to be real, as the (legit) news sources report from the wikipedia entry. But, those news sources give a very strong impression of a fraudulent organisation this OITC.

Mr. Whistleblower has some posts at the conspiracy site fourwinds10. Search the site for "Whistleblower". Please, do not pay any attention to the retards who post questions to Whistleblower as they believe in NESARA, Farm Claims, spiritual beings from the 5th dimension and all that other new age crap.

So... There.

BTW, gnosticism is OK with me :D.

FOFOA said...


I don't want to stir the conspiracy, but whenever I visit a controversial Wiki page I often check the discussion tab even before reading the main page. It gives me a quick overview of the controversy, usually from both sides, as people often argue in very bold terms.

Interestingly, the discussion page for the OITC was moved in '06, then deleted two weeks later, then deleted again in '07. That is some heavy-duty censorship if you ask me. The "Talk page" us usually where I can glimpse whatever Wiki is censoring. Deletion Log... I've never seen this before. What is so sensitive about this that even discussion is not allowed?


Aleksandar said...


Yes, indeed. If you accept the basic concept of the story, then it is more probable than not that many big and small events of corruption and ignorance have defined what happened. It is not necessary that a central organisation(s) did this or that. Powerfull corrupt people sometimes get caught, sometimes escape, sometimes dont get the job right, sometimes win. There are many opposed interests in the world, defended by people and organisations with resources and agendas.

Maybe it was inevitable once the system of guarantees (collaterals) and the automatic balances&checks was abandoned.

And, yet again, you prove to be a fantastic Thought Consolidator.

PS. Isn't this a good story to be told in a format for children? Similar to the Grasshopper and the Ant?

Aleksandar said...

... the Wiki page.

I noticed that too when I first visited the entry. It made me chuckle when you said that you check the discussions part. I do that too. Probably many others as well.


Besides, read the news entries. Why would anyone on Earth go to the poorest region in the world (some tribal area in Fiji) and offer 2.5 billion $ to the farmers/owners to develop that area? I dont think that one would ever extract that much capital even if they steal the land (Rule of Law needed), dupe the inhabitants and mine for gold!

Also, and you got me started here, the language of Mr. Whistleblower has an air around it... He knows the terminology (always a good sign of genuine knowledge) and speaks as a lawyer.

I will say again, spooky stuff.

Oh, and I just realized that I hijacked your post! Excuses for that. The post above is actually an excellent piece of scholarship, especially the part with the models. In Physics we always know what the limitations and restrictions of a particular model are. If that is not known, then by using the model one is only speculating. Besides, the models need not only be tested, but also pass Occam's Razor and it has to be possible to invalidate them.

FOFOA said...


Adding to your comment about models... it helps to have clearly defined metrics, like meters, minutes and grams.

Define the dollar or else

Good article!


Aleksandar said...

Indeed a good article. Messing with the stuff the article talks about (definition of a dollar) usually gets one in some very deep doo-doo.

It is despicable: the double-standards, the urge to keep the current system going, the hypocricy of the modern legal profession, the lack of intellectual courage to call an animal that quacks like a duck, walks like a duck and looks like a duck simply a duck. We all need today to have oppinions, discussions and fiercely defend laymen standpoints all through the prism of a world that has lost moral and civilisational direction, vision and courage.

Martijn said...


More on gnosticism (in Dutch) can be found here.

Especially the Gospel of Thomas is interesting. Feel free to check it out if you find the time.

Martijn said...


Are you to vote for the European Union? I'm going for Libertas. You might want to check on them.

Martijn said...
This comment has been removed by the author.
Martijn said...
This comment has been removed by the author.
Martijn said...


As far as aliens are concerned, I've never had the pleasure of meeting any, but on the other hand, there is absolutely no hard proof for denying alien existence for as far a I know (proving something does not exist is always rather difficult as you know).

However, sometimes we can find some funny things in the media, such as this article.

Martijn said...

Not that it is any news, but here is more fun on goldman.

I wonder how long these games will be allowed to continue.

FOFOA said...

Since we are talking conspiracy theories... Jim Willie is claiming inside knowledge that Russia has put out financial hit contracts on the banks that are short gold on the COMEX. What do you all think about this claim?

Anonymous said...


One of the guys at GIM found this link... it appears to be treasury manipulation records. Care to take a stab at explaining it? I can't imagine they would post such information online.

Anonymous said...

Conspiracies and manipulations are from all times & places. Cfr. Rotschild & Waterloo.

We better stop giving these manipulations too much (wasted) attention. The fact that since the euro birth period, the gold-freezing went in overdrive,...we could almost certainly conclude that the next trend for gold would definitely be UP ! Regardless of all the manipulative interventions (up/down) during this primary up-trend.

We don't need any inside knowledge.
We are not the ones who want to manipulate the gold-revaluation.

Better stick to the core fundamentals. The final day of reckoning for the systemic mismanagement and failure of the IMFS.
We know already the outcome of this Waterloo battle. A/FOA were our messengers ! And their message should be crystal clear by now.

Jim Willie speculates on very plausible/probable scenarios. Gold non-believers (goldprice wagers) want (need) a time-table.
Goldmetal advocates stick to their funamental knowlegde and objective observations.

Let's honor A/FOA by continuing his gold education efforts. We are fortunate for having discovered A/FOA's writings...just in time (1999/2001)

FOFOA said...

Hi Anon,

I need the full link, and I can't find the thread on GIM. Copy the full link from your browser, or right-click on the hyperlink and select copy link.

I have said that the more they do this, the more they will want to confess what they are doing. They believe it is not morally or legally wrong.

Did you see this? Japan is not so secretive about it...

Japan May Scrap 50 Trillion-Yen Plan to Prop Up Stock Market

There is an argument that can be made, similar to "all is fair in love and war", that the government is just another player in this game, and that smart players will simply recognize this and adjust to it.

This argument may actually be valid in the case of Japan, but not in the case of America. The difference is that the US prints the reserve currency and Japan does not. Japan can only hurt itself by playing in the game. The US, being "the house" or "the casino operator" is actually cheating against the whole world. This makes it very wrong and very dangerous. Also, by keeping it secret, the US assures massive corruption and profiteering in the process.

It is bad enough to cause hyperinflation. It is much worse to do it openly and hand the profits to your friends as Zimbabwe does. And it is worse still to do as Zimbabwe does, only in secret. And worst of all when the whole world is the victim.

Yes, I think that they are THIS delusional.

Anon #2: I agree with you 100% regarding A/FOA versus Willie and other conspiracies. But on the subject of recent PPT actions in the NYSE, I think we are seeing something new. At least we are seeing the evolution of something bad moving to monstrous levels. This is worth watching. It may amplify the A/FOA predictions by orders of magnitude.


Anonymous said...

PPT actions to " monstrous levels " :

Am observing the goldprice (ticks) 24/7 for the past 10 years.
The PPT actions are gradually going crescendo. And so are the $-goldprice contra actions (gold revaluation).

The goldprice behavior (!) has a "structure" and is not moving in a vacuum (erratic/ad random)!

Many observers have already broken their teeth on speculating about the timing of the eventual goldprice explosion (final revaluation).

Goldprice manipulations are temporary rackets and change nothing on the well structured primary trend (gold-wealth-reserve architecture).

FOFOA said...


Today gold moved $12, and it is a non-event. Even the DOW went up. No big deal. What was a normal "tick" 10 years ago?

Aleksandar said...
This comment has been removed by the author.
Aleksandar said...

Had to repost, I made a very obnoxius grammar error.



I cheked the Libertas website. However, I cant vote (not a subject of Her Majesty yet) but it would probably be a logical choice if I could. I didnt look at details but I couldn't find many in-depth points and a Program that I can read. But, as I said, maybe I didnt look closely enough.

I have a feeling that we are putting democracy in front of The Rule of Law. The former is just a Method for making decisions, albeit a natural one, while the latter is what makes civilization possible. I am watching democracy in the Third World. And also in the former socialist countries. It doesnt work very well without a Rule of Law.

So, even if Libertas want elected EU officials to make all decisions, I am not sure if things will change towards a state envisioned here on this blog unless the debt driven political-economy (nod to anony) is changed. The root is to uphold old principles and individual responsibility, afterwards the issues that Libertas puts forwards will be only natural to the state of mind of the people. However, if we are to subscribe to the "choose the lesser evil", they are probably the best.

I wish PVV would just drop the xenofobic rethoric and focus a bit more on the things that matter. They have the courage at least to say what is on their (and their constituency's) minds.

The subject of extraterrestrials. I usually say this: if we are indeed Alone, that would be the most tragic discovery ever made. And dont forget Carl Sagan: "Extraordinary claims require extraordinary proof". At a very basic level, I do believe that there are Others. Whether they have visited us and have already contacts, I dont know. I am agnostic in that respect.


Well, maybe Willie reads your blog. After all, you were listed on the website of LEAP2020! Please, somebody stop my Ego.


But I want to know the Truth! I get a big satisfaction when I see a pattern, reckognize it, piece the pieces together and make a coherent plausable explanation. It is the reason I am an engineer and enjoy my work. It is who I am.

You had the privilege to read A/FOA in the time they were actively publishing. The fact that they were right in many ways gave you that feeling that it is indeed the Truth and the way things should be, or at least supported the process of taking such an (extraordinary) view at the time. I had no such chance, so from my perspective I am still searching but it is getting very clear already. The story I posted above has actually convinced me in what you and the Others here at the forum believe.

For a long time I had the "feeling" of dissapointment when I reached The West and started to work here. Things were far less liberal and open than I thought they will be. There was the nagging voice in my head that many things are not as they should be. Finding the goldbugs, Sinclair and later this blog has made me make a definitive oppinion based on rational thoughts and personal philosophy. That conspiracy story, no matter if the facts are true, partially true or utterly wrong, is just a piece of the process that I have been working on.

You take the very correct, pragmatic and down-to-earth view that conspiracies dont really matter to us as we have no need to enter the survival battle of the IMFS. I appreciate it as I know now how would I think when my oppinions on the matter will mature.

Shanti said...


I read the Willy piece, where there is smoke there is fire

We know by now the fire is everywhere just have a clear look, seeing though the maya (illusions). Or as you put it the other time "standing up high on the mountain", (overlooking it all..)

Sofort i can agree with anon "We are fortunate for having discovered A/FOA's writings...just in time"

Although, if one looks realy deep for something, one way or ANOTHER you will find it. Isn't that a beauty (diviness) of life....

FOFOA said...


"Mr. Whistleblower" lost me when he said his "collateral accounts" contain 20 million tonnes of gold. Pull out your calculator. If every country known to have a gold hoard had 22 major banks (he says his "accounts" are spread throughout the countries of the world, held in bank vaults), and the gold he claims was spread evenly, that is 2,458 private vaults, each with a hoard of gold LARGER than the largest known public hoard, Ft. Knox.

Take a look at this picture. MAYBE that is 150 tonnes. Imagine 60 TIMES as much gold as that picture, all in one vault. Then imagine 2400 such vaults. ALL SECRET.

At the very least, for this to be even possible, there would have to be hundreds of BANK VAULTS around the world with hoards of gold that literally DWARF Fort Knox in size (I'm talking 10 times the size of Ft. Knox), and that this has been kept completely out of the public domain for not only the last 150 years, but for centuries.

But just looking what has transpired over the last 150 of this supposed "agreement", we have several wars, multiple world wars, regime changes, currency changes, etc... Any of which would have been plenty of reason for this information to escape the realm of secrecy. Yet it didn't. This is simply impossible.


Anonymous said...

Hi FOFOA, here is the link, and the caption from the Federal Reserve Bank.

"Permanent OMOs: Treasury

The purchase or sale of Treasury securities on an outright basis adds or drains reserves available in the banking system. Such transactions are arranged on a routine basis to offset other changes in the Federal Reserve’s balance sheet in conjunction with efforts to maintain conditions in the market for reserves consistent with the federal funds target rate set by the Federal Open Market Committee (FOMC)." - transation details follow

Anonymous said...

@ FOFOA : " Ticks "

It started (1999/2001) with $3...$ $15.
The early knock downs : +/- $100. Consolidation periods : +/- 6 months. High tension moves : $50

Look at the goldprice-behavior in the €-oil-gold, troika : The pillar of the $-system = The $ reserve status through the petro-$ privilege.
Freegold's (free floating goldprice) pillar is gold's wealth reserve concept through the ECB's MTM of goldreserves.

That's why the behavior of the troika horses (€-oil-gold) is of utmost importance.

When the oilprice was devaluating the dollar,...the ECB's euro kept its oil buying power relatively well. A privilege because of the ECB's freegold concept.

It is against this background that I'm watching the goldprice evolve, structurally.

Tangible values (energy-commodities-production)(Oil/gas-Asia) are looking for the right exchange (value barter). Value for equal value...and not a worthless mismanaged $-unit of account (non store of wealth).

Look at the many goldprice charts ( LT-40 years) in the different currencies. Note how all these charts started a new life during the euro birth period (1999/2001).

The pax dollar stopped with the 9/11 atrocity. The unofficial start of a new era now in crescendo swing.

Goldprice will probably make new big swings ($50-$100-?) when the $-bond markets implode.
We watch all together...

FOFOA said...


Interesting. But that is only the Open market operations, and only in Treasuries. On top of that we have the Covert market ops in Treasuries, and the Covert Ops in the stock markets. The question is how do the covert amounts compare to the open amounts. My guess is that they dwarf them.

That page seems to show about $55 bn in the month of May. I think Jim Willie showed about $85 bn in Covert Treasury Ops from Sept to Oct. And I believe we are looking at $Trillions in the stock market rally since March 9th. Hundreds of billions on key days in order to move the markets AGAINST bad news like North Korean nukes, and major bankruptcies.

I can only imagine the real money supply is doubling every couple months starting in March, just to keep the stock markets afloat. So do the maths. Either stock market fails or the dollar fails. Either way the dollar fails. And either way the stock market fails.


FOFOA said...


And it is not as if all this printing to support the stock market is flowing to the pensions and mutual funds. We have major insider selling during these covert ops. Without that selling, the markets should be soaring with the PPT's help. But they are just barely staying afloat. This is why I say it is hundreds of billions in a day. The insiders are bailing out and taking this new money with them. The PPT HAS to know this. Therefore, it is corrupt!


Aleksandar said...


The 20 million tonnes of gold is indeed not technically possible to be in hiding. When I read that comment, I checked the estimates of total above-the-ground gold in the world: it is probably around 100 times less than that (official gold reserves at about 100k tonnes I think). Also, your calculations show that it will be a very difficult logistics matter to hide that amount.

It is not a fact-checked the story that I collected above. It is just a hypothesis and one with a lot of imagination I must say. There are probably many more inaccuracies.

But, I liked the concept of the collateral-based transactions in comparison to the paper regime now. It helped me to achieve a much better understanding because I put it "all on paper" so to speak.

FOFOA said...


Re: " Ticks "

I would like to see more of your "decade of observations" whenever you get around to it.

It has not consolidated in my head yet. But I sense that there are some important Thoughts in there, and perhaps some dots worth connecting.


FOFOA said...

MK ( 28May2009; 16:36)
From Jim Wille today, as posted at GoldSeek

“Background inventory strain has come from unexpected sources. The Germans have demanded that gold bullion held in US custodial accounts be returned to their owners, with physical gold shipped back to Germany. The Dubai bankers have demanded that gold bullion held in London custodial accounts be returned to their owners, with physical gold shipped back to the United Arab Emirates. They are following the hired German counsel. In all likelihood, neither US nor London sources are in possession of all the gold held in those custodial accounts, since at least some of it probably was improperly leased. By that is meant without owner permission or knowledge. So an uproar could come soon with charges of gold bullion theft, or at least failure of fiduciary responsibility. Theft is a simpler description.”

MK Comment: Although Jim Wille does not quote a source for his information, it would not be difficult to understand why those with bullion on deposit at foreign entities would want to repatriate it under the current circumstances. Therefore, his assertions should be taken seriously. This is the potential scenario at which I was hinting in my previous post on this subject (below). This is why I felt that there may be more to Chris Powell’s 5/14/09 post than meets the eye. I have never seen any figures on the amount of private Gulf-based gold on deposit in London and elsewhere, but I would guess that it is large enough to present problems if depositors were to find a better alternative and ask to have their deposits returned. Arguing in Dubai’s behalf is the fact that it is fresh, new, close to home and the gold will be deposited with kindred souls. Arguing against is Persian Gulf instability. Boiling it down, if you happen to be privvy to significant information about certain entities in London and beyond, you might be forced to make a choice and, when faced with the prospect of default, the Gulf’s instability might be the lesser of two evils. There is an old Italian proverb that gold and love affairs are difficult to hide. Translated, there are no easy choices when it comes to storing vast amounts of physical gold. Some might opt for Dubai for the reasons already mentioned. If so, there could be bullion banks in the market looking for physical. It wouldn’t be the first time, and it won’t be the last. Back in the day, I used to post here regularly that among the enlightened, few sell gold because they want to; they usually sell because they have to. In the late 1990s within days of the Bank of England’s announcement to sell, I suggested that behind it might be the needs of bullion bankers with deposits to return. In other words, it had to sell to cover demands on the bullion banks. And that in turn might be what’s behind Gordon Brown’s serial attempts to dredge up IMF gold from time to time. And further on, it might be why the Gordon Brown Rally Indicator has been so accurate in the past. I take Jim Wille’s assertions, as stated above, in cautious advisement. There may be something to them. If leased gold is being repatriated, I wouldn’t be surprised. More significantly, such activity could be the catalyst for the next leg in this bull market.

FOFOA said...


More on that NY Fed link

Ender said...

Sir Anonymous,

Your words (he who typed: “Am observing the goldprice (ticks) 24/7 for the past 10 years.”) take a form that is distantly familiar. It is good to see you online once again!

If I could schedule time to travel, there are places in Europe I would enjoy seeing. Do you have any recommendations?

We watch. The transformation is unfolding, yet like the turning of the tide, it is felt by few.

May the halls ring with the cry of Freegold.

Anonymous said...

@ Ender : I would warmly wellcome you in Flanders...

Anonymous said...

@ FOFOA : Think about the following extra-ordinarry fenomenon >>>

Interest rates were down-maneuvered in a very structured manner from ATH's in 1980. That is almost a period of 3 decades that IRs were gradually declining to 50 year lows ! Tick by tick by tick...non stop.
How did they managed this ?

The gold-forces are doing exactly the opposite with the sole purpose of setting gold-pricing, free.

Anonymous said...

Freegold charts (WGC)

Anonymous said...

Liu :

The inversion of the Ponzi debt-piramide goes hand in hand with the MTM of gold.

Anonymous said...

Geithner in China :

The PBoC has a pile of $-reserves and above + underground gold. Both, dollars and goldmetal reserves, are rising in volume.

What kind of assurance can the $-regime give the Chinese that the international purchasing power of the $-reserves remains intact !?

Possible answer : Keep accumulating our dollar AND goldmetal reserves,...and we make sure that any loss on $-purchasing power is compensated by a proportionate rise in goldmetal purchasing power on MTM terms.

Deal !?

Life can be really simple....

Shanti said...

Anno 11:46

If you (US) can't beat them, then join them (CHINA)

"That" would be interesting as the capping would be replaced by the opposite.....

Btw: schoon fietsweer !

FOFOA said...


Re: Liu

Thanks for the leads.

Let's take the MTM[odel] issue even deeper. In the above speech, Richard Maybury discussed the issue of various economic "models". He stated that any writer SHOULD acknowledge the model he uses. Maybury compared these models to architects using the Newtonian physics model. It would not make any sense for a bridge builder to use his own "home-made" model that employs metrics like "an arm's length". His bridges would surely collapse.

Ivo Cerckel says, "Money is the vehicle or transmission mechanism through which the information or knowledge which the economic agents need in order to produce and/or consume wealth is being channeled." [In other words, money is the metric used in the blueprint of the economy, and the language of economics.]

All models rely on metrics, like feet, inches, meters, grams, ounces, etc... Civilization relies on a common language.

In Define The Dollar Or Else, Trace Mayer says "If units of length were mired in definitional chaos then the buildings and other contraptions humanity builds would be unsound, unstable and prone to chronic failure. But when it comes to units of monetary calculation the current worldwide state of definitional chaos, a floating illusion currency system, is taken for granted."

The dollar is the metric of the model used in the "blueprint" from which the IMFS was built. It is a metric that is not only NOT defined, but one which changes constantly. And also one which cannot be believed, thanks to FX interventions. So as a transmission mechanism [language] it lies. As a metric it confuses. And in the MTM equation, it throws off any reliability. Whether Mark to Market or Mark to Model.

Even something that is Marked to Market today is still being measured with a faulty metric. Sure it is better than marked to Model or Myth, but it is still wrong.

Is it any wonder the "structure" of the IMFS is collapsing like a faulty bridge?

In his piece, Liu says, "There were two dimensions to the cause of the current credit crisis. The first was that unit risk was not eliminated, merely transferred to a larger pool to make it invisible statistically. The second, and more ominous, was that regulatory risks were defined by credit ratings, and the two fed on each other inversely. As credit rating rose, risk exposure fell to create an under-pricing of risk. But as risk exposure rose, credit rating fell to exacerbate further rise of risk exposure in a chain reaction that detonated a debt explosion of atomic dimension."


FOFOA said...


I would like to try a word replacement... "There are two dimensions to the collapse of the system. The first is that the model [the blueprint] is flawed and destined for collapse. The second, and more ominous, is that the metric used in the model [by the whole world] is not defined, but instead controlled, and the two feed on each other inversely. As the model collapses, the metric seems to swell, causing confusion [Have we hit bottom? Green shoots ahead?]. But as the metric swells, confidence in the flawed model returns, shrinking the metric again, and on, and on, in a chain reaction that detonates a debt explosion of atomic dimension."

First the model. As you say, IR are on a 30 year dead end road, ending at the zero-bound [already reached]. Debt is on a 30 upward cul-de-sac ending in unsustainable levels [already reached]. And gold is on the inverse path to freedom, guaranteed by IR and debt hitting the end of the road.

Then the metric. This is a different problem. It is like language, as Ivo says, "to transmit economic knowledge". But this metric is flawed. It is not based on Newtonian physics. It is more like an "arms length" metric, only on Stretch Armstrong! It is presented as a solid metric, but it is changed, controlled, and twisted with smoke and mirrors behind closed doors. Unfortunately the whole world uses it now. It is even more common than the metric system or English. It is the common economic language. Soon we will be like Babel in the Bible, where God struck down man for his hubris by taking away his common language.

I see Freegold as the end of the cul-de-sac based on the model alone, as it will be the only way to monetize or settle the extreme mountain of debt. The only way to cull the beast. But then there is the additional problem of the metric. This, I think, is new, or at least worse than it was 10 years ago. Do you agree, disagree?

What do you think of these Thoughts? Am I rambling? Part of me thinks I am. But the other part thinks that we have some hard times ahead. Yes we will live with Freegold. But with the confusion of Babel, will gold "go into hiding" for much longer than anticipated? So many goldbugs think that hyperinflation is the Holy Grail. They could not be more wrong in my opinion.

I appreciate your feedback.

BTW, Geithner does not even need to verbalize such a guarantee to the Chinese. His actions have already guaranteed it. And actions speak louder than words, right?

All they need to do is sit around drinking and laughing with the girls behind closed doors. And then, in the wee hours of the morning after the girls have passed out naked, perhaps they will discuss how to get more physical gold [personally] over the next 30 to 90 days. Should be a fun party. Unfortunately I won't be there.


Anonymous said...

@ FOFOA : Flawed metrics !?

Allow me to somewhat simplify your thoughts.
"Free Gold wealth reserve", with a severed link to currency (Duisenberg) :
The governance of the IMFS' systemic debt creation needs a collateral that is freely running in paralel with it.

The only metric (imvho) is how good/bad the governance of the IMFS is/isn't. Simplier : How productive/unproductive debt is.

If a fiat IMFS is not capable of producing genuine wealth/prosperity,...freegold will tell so ! Freegold will force the governers to govern or get the bag.

Gold is, has always been, the one and only tangible destined to be universally "hoarded". Nothing/nobody is going to change this. Because goldmetal in possession is the only universal "motion of distrust" !

Do we need any metric for this ? I don't think so.

@ Shanti : Ben seffens weg...;)))

Anonymous said...

@ FOFOA : Geithner/China

Exactly !

Most probably they don't even dare to mention the gold-word (?)

But as an Eurolander, I've been living for decades like the Chinese with US$ under my pillow.
Changed the greenies for euro + goldmetal and dumped every $-unit as soon as our currency was born.

The WGC LT-goldcharts show that many others also hardened their pillow with the precious metal in exchange for the green paper.

One day, many other currencies will claim having the freegold wealth reserve in their CB's vault.
Those Chinese girls might choose these golden currencies instead of the green cheese...

The only metric being...FREE FLOATING GOLDPRICES. How paradoxal this may sound. A gram of goldmetal is and remains a gram of gold ! The only metric that counts.

Martijn said...

Hyperinflation is on Fox news!

Isn't this a bit too early for 'mainstream'? Or are we really going that fast?

FOFOA said...

Wow. Marc Faber is starting to sound like FOFOA. He is 100% certain that the US will experience Zimbabwe-like hyperinflation. It is already too late. It is assured.

Peter Schiff on the other hand, seems subdued (understandably) by the last year. June '08 to June '09 was a brutal year for Peter's business. He was all over hyperinflation in early '08, now it's just "high" inflation.

Ender said...

@anonymous - "Flawed metrics !?"

Well said. It is about the productivity of debt. Gold is, will be, a great way to measure currency management.

Speaking of currency management, can you provide a basic feeling regarding the Euro? Specifically, it is becoming very clear to the world that the dollar system is being miss-managed. And, as we've seen in the couple videos posted above that inflation is most likely on the way.

What about the Euro - and it's management through this crisis? I'm sure you have a perspective that is quite different than anyone standing on US soil. Is confidence rising or falling for that currency?

Also, last October our political system rammed through a bill that allowed our banks to continue to use the Marked-to-Model accounting system right at the point where the system was scheduled to change to a Marked-To-Market system. It's my understanding that European banks use Marked-to-Market. But, I may have that incorrect. And, if so, it would seem to me that these banks would either be stable, or already closed down. Whereas, in the dollar system, unstable banks are still in operation.

Do you have any insight regarding this?

Anonymous said...

"How are the politicians and bureaucrats who are playing God ever going to control, or fine tune, or repair, or speed up or slow down, our emotions?"

With the help of BIG Pharma? HAHAHAHAHA


Anonymous said...

Speaking of BIG Pharma....


Anonymous said...

All models rely on metrics, like feet, inches, meters, grams, ounces, etc... Civilization relies on a common language.


Isn't it fascinating humans want the absolute measuring device (so that they can have a point of reference :) which is unchangeable) meters,kilos,newtonian mechanics,digital signals ... and in reality everything is changing always all the time..

As we can see even gold (in monetary terms) don't give us this stability.
Yes fundamentally it may be almost the perfect measurement economic device, but we are living in a human world.

We need index or something that also measures corruption, greed, manipulation, so that we can combine it with the logical measuring sticks like gold,forex,s&p.. to find this point of reference ;)

I had for a long time a picture in my mind that we have to come to solve the problems in our life from the vantage point that we live not on a unshakable ground, but more like on a raft in the sea. If you get my idea.
We have to balance constantly.

FOFOA said...

Yes, Raptor,

I get your point. We are constantly trying to take measurements against a moving, fluid surface!


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