Wednesday, June 17, 2009

Dead End

There is much talk about the future availability of oil. Or shall we say "cheap oil"? Almost everything we enjoy today is a result of the constant flow of oil over the last century. And it follows that all of the PRICES we pay for everything we enjoy today is a result of the CHEAP flow of oil. But is this "CHEAP flow" a natural phenomenon, or a manmade one?

Oil has been the key to the fantastic success of the West over this period of time. Therefore it follows that the true VALUE of oil is immeasurable! We complain when the cost of a gallon of gas rises to nearly $5, but can we possibly know the true VALUE until we have to do without?

The COST of living without oil is perhaps the greatest burden [PUNISHMENT] that can be placed on a modern nation. For this reason, oil is the MOST POLITICAL TANGIBLE.

In the past, nations have paid a VERY HIGH PRICE for oil when manmade conditions prohibited (rather than ENABLED) the "CHEAP flow" of oil. South Africa under sanctions (1985-1991) is one example.

So what is the TRUE PRICE of oil? What is the TRUE VALUE of oil? Is it $3 per gallon of gasoline? Or is it the VERY DEAR PRICE we would pay if it wasn't flowing our way?

What is a responsible government to do? It must look to the future and SECURE the inflow of oil. Why has the US stopped looking for new oil in the ground? Because long ago it SECURED the "CHEAP flow" of oil! A manmade phenomenon! The future "CHEAP flow" of oil can only be secured three ways. 1.) Own the oil in the ground, 2.) amass wealth reserves desired by those who own the oil in the ground, or 3.) fool (trick) OTHERS into paying the VERY HIGH PRICE (in gold) for the "CHEAP flow" of oil to your shores.

Arabia has oil in the ground. It does not have gold in the ground. But it does VALUE the precious metal very highly. It always has. Even BEFORE oil became WEALTH.

The exploding world dependence on the "CHEAP flow" of oil has brought GREAT WEALTH to Arabia. Up until 1971 the ease of trading oil for dollars was accepted because these "casino chips" could be exchanged at the CASHIER WINDOW (the gold window). Then, in 1971 the "CASHIER" was closed for good.

What followed was "the oil crisis of 1973". From Wikipedia:
End of Bretton Woods

On August 15, 1971, the United States pulled out of the Bretton Woods Accord taking the US off the Gold Exchange Standard (whereby only the value of the US dollar had been pegged to the price of gold and all other currencies were pegged to the US dollar), allowing the dollar to "float". Shortly thereafter, Britain followed, floating the pound sterling. The industrialized nations followed suit with their respective currencies. In anticipation of the fluctuation of currencies as they stabilized against each other, the industrialized nations also increased their reserves (printing money) in amounts far greater than ever before. The result was a depreciation of the value of the US dollar, as well as the other currencies of the world. Because oil was priced in dollars, this meant that oil producers were receiving less real income for the same price. The OPEC cartel issued a joint communique stating that forthwith they would price a barrel of oil against gold. This led to the "Oil Shock" of the mid-seventies... Until the Oil Shock, the price remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter... The substantial price increases of 1973-74 largely caught up their incomes to Bretton Woods levels in terms of other commodities such as gold.

Then, in the early 1980's, the situation was brought back under control. A leveraged system of paper gold forward sales was set up to keep the price of gold (DOWN) under control, so that OTHER people's PHYSICAL gold could be shipped to Arabia at a low DOLLAR price. This would satisfy "the owners of the oil in the ground" and SECURE the "CHEAP flow" of oil to the US who had the SOLE privilege of creating those dollars out of thin air. From Another:
It's more complicated than this but here is a close explanation. In the beginning the CBs didn't sell their own gold. They ( thru third party ) found someone else who had bullion. That "party" sold to a broker who sold forward for a mine or speculator or government ) . In the end the 3rd party had the backing from the broker that he had backing from the CB to supply physical if needed to put out a fire. The CB held a very private note from the broker as insurance and was paid a small fee. This process mobilized free standing bullion outside the government stockpiles. The world currency gold price was kept down as large existing physical stockpiles were replaced by notes of future delivery from the merchant banks ( and anyone else who wanted to play ) .

This whole game was not lost on some very large buyers WHO WANTED GOLD BUT DIDN'T WANT IT'S MOVEMENT TO BE SEEN! Why not move a little closer to the action by offering cash directly to the broker/bank ( to be lent out ) in return for a future gold note that was indirectly backed by the CBs. That "paper gold" was just like gold in the bank. The CBs liked it because no one had to move gold and it took BIG buying power off the market that would have gunned the price! It also worked well as a vehicle to cycle oil wealth for gold as a complete paper deal.

So, in 1983 Barrick Gold was formed...

And once again physical gold was flowing INTO Arabia and "CHEAP" oil was flowing OUT. But SOMEONE was paying the TRUE PRICE for this oil.

Then, probably sometime in the early 1990's, a group of Europeans that had been planning for a single currency in the "Eurozone" with the ECU that began in 1979 (at the height of the dollar crisis) and later became the EMU and the Euro, came to the realization that the path the dollar (and the entire international monetary and financial system) was on was essentially a DEAD END. It was not sustainable! At some point in the future this system, and its MONETARY FOUNDATION, would (MUST) collapse. This was not a plot to collapse the dollar. It was, instead, a RECOGNITION of the inevitable!

So what is a responsible government to do? "It must look to the future and SECURE the inflow of oil." And given the three choices listed above, ONLY ONE COULD WORK! [2.) amass wealth reserves desired by those who own the oil in the ground.]

So the Euro was founded with the requirement that gold reserves MUST be (PHYSICALLY) held and MUST be marked to the (RISING) market price of gold. What the Euro architects recognized was that this new dollar PAPER gold market would (MUST) at some point transition into a purely PHYSICAL gold market. This was a MATHEMATICAL CERTAINTY.

Back to Another from October, 1997 [emphasis mine]:
Everyone knows where we have been. Let's see where we are going!

It was once said that "gold and oil can never flow in the same direction". If the current price of oil doesn't change soon we will no doubt run out of gold.

This line of thinking is very real in the world today but it is never discussed openly. You see oil flow is the key to gold flow. It is the movement of gold in the hidden background that has kept oil at these low prices. Not military might, not a strong US dollar, not political pressure, no it was real [PHYSICAL] gold. In very large amounts. Oil is the only commodity in the world that was large enough for gold to hide in. No one could make the South African / Asian connection when the question was asked, "how could LBMA do so many gold deals and not impact the price". That's because oil is being partially used to pay for gold! ["CHEAP oil to the West" was the HIDDEN part of the price Arabia was paying for large quantities of PHYSICAL gold. HIDDEN --"gold hiding in oil"-- and did not affect the VISIBLE $demand fundamentals because most Westerners were perfectly happy with PAPER gold] We are going to find out that the price of gold, in terms of real money ( oil ) has gone thru the roof over these last few years. People wondered how the physical gold market could be "cornered" when it's currency price wasn't rising and no shortages were showing up? The CBs were becoming the primary suppliers by replacing openly held gold with CB certificates. This action has helped keep gold flowing during a time that trading would have locked up.

(Gold has always been funny in that way. So many people worldwide think of it as money, it tends to dry up as the price rises.) Westerners should not be too upset with the CBs actions, they are buying you time!

So why has this played out this way? In the real world some people know that gold is real wealth no matter what currency price is put on it. Around the world it is traded in huge volumes that never show up on bank statements, govt. stats., or trading graph paper.

The Western governments needed to keep the price of gold down so it could flow where they needed it to flow. The key to free up gold was simple. The Western public will not hold an asset that's going nowhere, at least in currency terms. (if one can only see value in paper currency terms then one cannot see value at all) The problem for the CBs was that the third world has kept the gold market "bought up" by working thru South Africa! To avoid a spiking oil price the CBs first freed up the public's gold thru the issuance of various types of "paper future gold". As that selling dried up they did the only thing they could, become primary suppliers! And here we are today. [1997] In the early 1990s oil went to $30++ for reasons we all know. What isn't known is that it's price didn't drop that much. You see the trading medium changed. Oil went from $30++ to $19 + X amount of gold! Today it costs $19 + XXX amount of gold! Yes, gold has gone up and oil has stayed the same in most eyes.

Now all govts don't get gold for oil, just a few. That's all it takes. For now! When everyone that has exchanged gold for paper finds out it's real price, in oil terms they will try to get it back. The great scramble that "Big Trader" understood may be very, very close.

Now my friends you know where we are at and with a little thought , where we are going.

The LOW price of gold (1981-2001) was meant to trick YOU into giving up your PHYSICAL gold, so that the CB's didn't have to. But some non-Westerners knew better! They got on the RECEIVING end! Once YOU gave up all your gold, the CB's had to contribute some of their's to this PHYSICAL FLOW. More from Another:
Well a funny thing happened right after the Gulf war ended. What looked like big money before turned out to be little money as some HK people, I'll call them "Big Trader" for short, moved in and started buying all the notes and physical the market offered. The rub was that they only bought low, and lower and cheaper. They never ran the price and they never ran out of money. Seeing this, some people ( middle east ) started to exchange their existing paper gold for the real stuff. [Today, think about Dubai requesting delivery of its gold from London] From that time, early 1997 LBMA was running full speed just to stay in one spot! In other words paper volume had to increase to the physical volume on a worldwide scale, and that was going to be one hell of a jump. It could not be hidden from the news any longer. [ LBMA daily volume leaks out on January 30, 1997 --> 07:05 AM on Monday July 14, 1997 LBMA goes public with daily volume ]

This was not far from the time that "Big Trader" said that "if gold drops below $370 the world would see trading volume like never before seen". The rest is history. Now the CBs will have to sell 1/3 to 1/2 of their gold just to cover what's out there. [Hello Gordon Brown?] To use the Queens English "it ain't gonna happen dude"! [Apparently Gordon Brown didn't get the memo!]

Everything is now upside down and reversed. The more the CBs sell outright the more the price will rise.

It's not a bearish sign anymore. They will now sell to keep the price rising slowly.

So in early 1997 some serious cracks appeared in the dollar castle walls. Ever since that time, the explanations we hear about "official gold action" in the news media is actually the OPPOSITE of what is really happening behind the scenes. What is happening is a FUNDAMENTAL shift in the FLOW of gold as these GIANTS prepare and SECURE their future flow of oil. No more is it gold for oil. Today it is dollars for gold for FUTURE OIL.

Someone once said, "Pricing power is a very limited freedom." So who is pricing the dollar today? Who is pricing oil? Who is pricing gold? Do ongoing pricing changes reflect a CONTROLLED DEMOLITION? If so, why? Who is controlling?

[This blogger suspects that the dollar system of leveraged paper derivatives has ALREADY lost control of pricing PHYSICAL things! (Think about PHYSICAL oil stored in tankers! For profits you must control the PHYSICAL now.) And it (the dollar system) is receiving a HUGE assist from OTHER FACTIONS. (Think about the sale of 1 million ounces of gold to DB by the ECB - this barely avoided a collapse of the paper gold market) This ASSIST is only temporary to enable some last-minute REBALANCING and EVACUATIONS from the dollar den! Once this ASSIST is terminated...]

More questions. Is it really necessary to keep another man [nation] in debt to you, in order to have wealth?

With so little physical gold metal available, HOW DO these true giants get large quantities?

And ever since we have evolved to virtual, digital, purely symbolic monetary units of credit for trade, does it make ANY sense AT ALL to store these things as savings?

In the future, if the US dollar turns out NOT to be what you thought it was, how will you get what you need?

Does the US dollar fulfill the definition of money? Including the "store of value" part?

Watching the gold market today, are we seeing an evolution of supply and demand principles the same as in all commodities? Or are we witnessing a fundamental shift of THOUGHT as the world rebalances PHYSICAL GOLD POSSESSION?

When the revaluation/devaluation happens it will happen fast. Within 30 days. During that time there will be no more REBALANCING. Possession will be OWNERSHIP, and ownership will be LOCKED. There will be no last minute CONVERSION from paper to physical. Paper will be paid with paper, and physical trading will STOP. When it starts again, the entire gold market as we know it today will be a PHYSICAL GOLD MARKET. And the price of gold will be whatever the world sets it at, WITHOUT the leverage of paper futures contracts to hold it down.

When it is all said and done, we will still have paper money for the ease of daily transactions. We may even have fancy purely digital units of credit. But for the "store of value" part of the system, we will have the PHYSICAL GOLD MARKET. The INEVITABLE, MATHEMATICALLY CERTAIN conclusion of the US dollar financial system's RACE down a DEAD-END STREET.



FOFOA said...

Congratulations Ender on your 2nd place finish!

Siege said...

Another well written article. Man I love your logic... so clear.

I think we might be in for a bit more of a cluster than you suggest. If physical gold was to move to the oil producers in the amounts it is due, there would be none elsewhere. Gold and oil won't move the same direction... so if there is insufficient gold to spark trade, does it follow that there is insufficient oil?

Relative to currency, both gold and oil would rise to absurd levels... unless the desire for gold were to decrease within the gold holding nations. It is possible those nations with the gold would cease to seek more, sitting instead on their wealth of oil and gold, dolling them out sparingly in trade for goods at deflated prices. Supply would be limited, but the world's dependence on oil would sustain the power of oil producers.

In short, if enough gold has already moved, it will come down to who owns the oil reserves and where the real power is in nations.

Consider the vast oilfields of Gull Island that the US sits on. Were trade to stop and the US were to start tapping their own resources as a FINAL source of crude, would this oil be delivered at reasonable prices to citizens? I am 100% certain it would not. The cost of maintaining human livestock would become too high. Those in power would sit comfortably on their resources, claiming shortages and extracting every bit of wealth from those that can survive.

Ba ba ba bummm... the alternate means to the same ending, and a definate bummer. :)

I think the key here is that we've depended on rediculously cheap energy, and we'll drop like flies when it ceases to flow.

Martijn said...

Excellent post fofoa. Marc Faber tends to agree.

Siege is also correct: as things have a tendency of balancing out over the long run, there will come a time when the oil/gold owning nations will trade their stored wealth for comfort. However, it would not be illogical for the system to first adapt to the "new" reality.

Anonymous said...

William Engdahl : " A Century of War "

>>> Anglo-American oil politics and the new world order.

A fascinating book with facts and opinions on 60 years of oil-wars.

Through the history of political industry, gold always remained in the background as a sort of stumbling block. The $-system/regime could never live with a prominent role for gold. That's why this gold-trail will become visible again out of its manifest marginalization.

So I do agree with Martijn's conclusion by deductive thingking.

Martijn said...


Should gold really go up a lot in the near future, please remind me to buy you a beer.

Martijn said...

Btw, Max Keiser has picked up on your post of all paper burning.

Martijn said...

Inflation is here.

Anonymous said...

Leap/E2020 :!-Global-systemic-crisis-in-summer-2009-The-cumulative-impact-of-three-rogue-waves_a3359.html

>>> Is the rising $-oilprice anticipating a hot summer & fall !?

Michael said...

Thank you FOFOA for your efforts - for this top informative writings, which I think, is closest to that what will come.


FOFOA said...

Great Michael Hudson video from February.


How's the beer over there? I hear it's good.

FOFOA said...

Those mysterious bearer bonds...

Denninger update. New questions!

A theory on

More questions than answers on Seekingalpha

(Karl Denninger may be a guest on CNBC tonight to discuss this topic)

Gargamel said...

Good article. I just keep thinking of how long this can go on before it blows up. 1 year, 5 years? It will happen but when. I feel like it could happen within a year based on the fact the economy is not improving. Housing can not recover with rising interest rates and non rising incomes.

Chris said...

Great article. It has me thinking back to the purpose of money being a store of value and means for trade. All money is fiat, be it paper, coin, gold, silver, or shells. They only buy goods if both parties see value in them. In a SHTF scenario, barter would hold strong, but people may not want anything 'representative' of value.

If you can't eat it, sleep under it, have sex with it, or train it to work for you, why have it?

In a long term SHTF scenario, I think the real value would be tangibles, associations of trust, power to opress or destroy, but not fiat of sorts.

I guess I'm more than a little concerned that the powerful people won't sacrifice their futures for the sheeple. Scarce resources will be siezed by government and never enter the hands of the common folk. In a nutshell, I think it's about learning how to survive and preparing to do so.

Still want gold? The price may improve later on. Were you to sit on, say, 2000lbs of grain instead of 2oz of gold, and people were starving, how much gold do you think they'd trade for the grain?

Those holding gold in favor of fiat or stocks will be better off, but not better than those holding the means of a future... hand tools, seeds, lasting food supplies... the instruments of life.

For the past couple weeks I've found myself pondering, when the collapse happens how long will it take? Given the involvement of computers and their instantaneous actions in trade, I expect it will be pretty damn quick. On that note, I took a look at Revelations and saw it written that the collapse will take one hour. Of course, it does predict much that hasn't happened yet, so if you believe, you are safe for a while, and if you do not, you needn't worry. :)

Anonymous said...


This is a good read.

"Twenty years before GATA and conspirational gold manipulation theories appeared, real live gold manipulation occurred out in the open, with Volcker in the lead.

Volcker promptly returned to Washington to draft plans for what could be the second massive dollar-rescue program the U.S. has had to mount in eleven months. Among the steps under discussion:

LARGER GOLD SALES. The 750,000 oz. of Fort Knox bullion the U.S. now sells monthly might be doubled, in hopes that this might help drive prices down. Hinting at such a strategy, Under Secretary of the Treasury Anthony Solomon said last week that the gold boom was "extremely unhealthy for the world economy."

FOFOA said...

Thanks Anonymous. That was a good read. Here's a hyperlink.

Martijn said...


Beer here is good. Any plans of going on a trip?

Martijn said...


Good article. I just keep thinking of how long this can go on before it blows up. 1 year, 5 years? It will happen but when. I feel like it could happen within a year based on the fact the economy is not improving. Housing can not recover with rising interest rates and non rising incomes.
Difficult to say indeed. When it happens, it might as well be very fast, as with most collapses of large size. However, lots of people still have an interest in this system, and together those people hold quite some power. It is highly likely that they still have some trick up their sleeves to postpone the real crash.

Martijn said...


In addition, from The cheh shaped recovery" (as linked before):

Buried far deeper in the bottomless abyss of American’s forgotten past are the darkest days of the Carter administration when U.S. deficits spiraled out of control. Gold prices doubled and doubled again as one hundred articles pronounced the dollar doomed.

The dollar has been pronounced dead before, and survived. This time it might not, but it shows that there indeed is quite a struggle to be expected before it finally dies.

Martijn said...


Geitners friend Nouriel is back.

what he has to say is not optimistic.
1. Empoyement falling
2. Solvency crisis
3. Saving not improved
4. Financial system damaged
5. Deflationary pressures
6. Rising government debt
7. QE not inflationary short run(!)
8. Emerging markets weak
9. Some more nonsense

In some points he is correct, others are nonsense. It is however interesting that they've brought him out again predicting doom.

Not a very good sign.

FOFOA said...


"Beer here is good. Any plans of going on a trip?"

Yes. After gold slices through 10K like a knife through warm butter.


Martijn said...

Haha. In that case you'll be drinking a night at my expenses (at hyperinflated prices, I know).

FOFOA said...


You may be surprised at the low price of beer when I come there.

Not all currencies MUST hyperinflate. The dollar must, because it relies on its global reserve status to pay for the military and Social Security. But the Euro does not have that problem.

Also, not all prices MUST hyperinflate. There is plenty of gold in the world at the right price to absorb the flight of fear from the dollar. It is possible that on the global scale, we only see hyperinflation in one metal.

I suspect that many outcomes will be surprising and unexpected. The world is precariously perched right now.


Martijn said...

Yes, surprised will shall be. I hope (and believe) on the good side.

FOFOA said...

Are we being monitored?

Martijn said...

Most likely yes.

FOFOA said...

...skepticism of CNBC's ability to spin all out nuclear war as a green shoot.

Tyler's sense of humor is alright by me.

Martijn said...

Well.. it might produce a green shot...

Anonymous said...

This will sound crazy, but work with me here. Why doesn't the US simply repay the debt in goods? The US needs monetary injections and China has money. The US people also need jobs. Would it not stand to reason that repayment in goods would create jobs for US citizens while injecting money into the US economy with which citizens can service some of their debt? There are issues that would need to be resolved, such as goods pricing and the greed of US citizens, but from a conceptual framework, would this not work?

Ender said...

Thank you FOFOA – the odds are unbeatable! I can’t believe more people don’t join in just for the contests.

And, what is the real value of oil? Great article. A little tease like this could get people thinking – why – would anyone want to setup such a system? Ultimately, when you own the reserve, you can leverage yourself into the fractional side and get your way. When you own the reserve, no one can call your bluff.

So, how do you make a run on this type of bank? Gold coins or efficiency?

Meanwhile, the sun has come out and there is fun to be had. Cheers!

Martijn said...

This will sound crazy, but work with me here. Why doesn't the US simply repay the debt in goods? The US needs monetary injections and China has money. The US people also need jobs. Would it not stand to reason that repayment in goods would create jobs for US citizens while injecting money into the US economy with which citizens can service some of their debt? There are issues that would need to be resolved, such as goods pricing and the greed of US citizens, but from a conceptual framework, would this not work?

Once the US get themselves together they might indeed start producing studff for Chinese people. However, changes like this really do not happen overnight. But it is (partly) what this crisis is about - the US living off the rest of the world without providing much tangible in return.

FOFOA said...

Even more than that.... the DEBT you want to pay off is a FANTASY. It doesn't exist! It is denominated in a far, far overvalued purely symbolic currency that can be created at will by megalomaniacs.

Also, who is the DEBT to? The Chinese? The pensioners on Social Security? The pharma-medical complex in Medicare? The military? The Congressional PORK?? There is too much and it MUST keep growing just to retain the status quo. It is an IMPOSSIBLE situation.

The DEBT DOES NOT EXIST. Jubilee is coming..... through HYPERINFLATION. It is unavoidable (in the US) now!

The US dollar absolutely NEEDS it's reserve status to keep going.

Markets ANTICIPATE changes. They don't wait for definitive answers.

Why enslave future generations to pay off a FANTASY??

DEFAULT IS HERE. It's just a matter of time. And not much. It could come tomorrow, or the next day, or 2010. It is all up to the GLOBAL MARKETPLACE.

You may wake up one of these mornings and turn on the TV to PANIC in Europe as the dollar has crashed!!!

Be ready.


Martijn said...

Marc Faber also believe the US is to face hyperinflation, but does give it a bit more time.

Anonymous said...

I agree that the situation is impossible now and unwinding it is certainly not the direction the government is headed. My thought was to use this approach to pay off other nations instead of them expecting default and shorting the dollar. If the debt is within the US alone, dollar devaluation would still happen, but there might be some way to control the rate.

FOFOA said...

Pushing on a String
By Gary North

A great article! I have a few observations, but I recommend you read the entire article before reading my Thoughts...

"The Federal Reserve is not yet buying equity. It is instead lending to the Federal government, which is buying equity. The government is buying equity on a scale never before seen in American history. It is buying equity in the financial industry: banks. It is buying equity in the automotive industry: Chrysler and General Motors. The precedent has been set."

It is my belief that the Fed IS already buying equity in the stock market. Gary talks about its ability to do so without limit, but he says it is not doing it YET. Even if it is being run through the PPT which should be attributed to the Treasury, not the Fed, the fact that it is being done COVERTLY is de facto the Fed. The Treasury cannot afford to use money from Treasury sales to prop up the stock market. It already has the most VORACIOUS of children to feed, the US DEFICIT. Therefore, any COVERT PPT action must be COVERT PRINTING. And to believe that they are not doing this is to believe that the stock market rally since March 9, 2009 has been purely driven by fundamentals and private investors. Yeah right!

"So far, commercial banks are not buying Treasury debt. They prefer to keep excess reserves at the FED. This is unprecedented in American banking history. Here are bankers, lending money to the FED at 0.15% or thereabouts, who could lend to the U.S. Treasury to buy bonds at 2.5% (5-year T-bonds) or 4.5% (30-year T-bonds). They refuse. They are so fearful of the U.S. government's promise to pay that they have decided to stick with 0.15%. They trust the FED far more than they trust the Treasury."

I don't think, as Gary says, that they are "fearful of the US government's promise to pay". I think they are fearful of THE REST OF THE WORLD'S FEAR that the government will pay them back in devalued dollars. There is a BIG difference. If the rest of the world shun's Treasuries (and dollars) then interest rates will rise and the LIQUIDATION VALUE of the Treasuries they buy now will be HALVED. They will actually lose PRINCIPLE! They will be STUCK holding dollars THROUGH the DEVALUATION. They don't care about return ON principle right now. They are worried about return OF principle. And the (excess) reserves sitting in the Fed are REAL CASH. The principle is going nowhere. It is TOTALLY LIQUID cash. This is the HYPERINFLATIONARY equivalent of a game of chicken. It is just like the cash you have in your mattress which you plan to convert to gold at the first sign of hyperinflation. They aren't buying Treasuries just like you aren't buying 9 month CD's.

"The Federal government will absorb any net increase in private thrift this year, next year, and the year after. All of it. There isn't a high enough rate of saving in the country to fund the Treasury's debt. The Federal debt is a black hole."

The Federal debt is a black hole! This is EXACTLY what China and Russia are concerned about. They know they CANNOT throw good money after bad investments. Just like Wall Street SHOULD have taken a loss on its bad investments, they know they MUST take the loss. Wall Street got bailed out. The only bailout China and Russia can possibly receive is QE from the Fed, which is a double-edged sword. It can only TEMPORARILY prop up the value of their previous bad investments.

The only "private thrift" the Federal government can absorb from here on out is COVERT PRINTING by the Fed. Ben is not comfortable with this. But his hands are tied. Obama and Geithner have Ben by the balls. I wouldn't even rule out blackmail. We haven't heard anything about Ben Bernanke's personal profiteering... YET.

Meanwhile, Congress is OBLIVIOUS to what is going on and IGNORANT of the imminent danger it poses. Devaluation of the US dollar will come as a complete surprise to Congress.


FOFOA said...

Obama Administration pushes IMF gold sales through House by tying it to security bill

From my post: "(the dollar system) is receiving a HUGE assist from OTHER FACTIONS... This ASSIST is only temporary to enable some last-minute REBALANCING and EVACUATIONS from the dollar den! Once this ASSIST is terminated..."

Anyone think maybe they are helping to prop up the $Dollar-system until this deal goes through?

FOFOA said...

Is this the death of the dollar?
How smuggler incident boosted tension about US currency...

"No sooner had the story leaked out from the Italian lakes region last week than it sparked a panoply of conspiracy tales. But one resounded more than any other: that the men were agents of the Japanese finance ministry, in the country for the G8 meeting, making a surreptitious journey into Switzerland to sell off one small chunk of the massive mountain of US bonds stacked up in the Japanese Treasury vaults..."

FOFOA said...

Who Held The Shotgun?

"Someone's going down here folks...

If Bernanke and his pals, including Hank Paulson, forced Lewis and Bank of America to close that transaction and keep from their shareholders disclosure of the material adverse events prior to the closing..."

FOFOA said...

The Bond Saga: It Gets More Odd -NEW UPDATE-

Karl Denninger is doing a great job tracking this mystery. This is a must-read. I have my own thoughts which I will save for later. :)

Anonymous said...

Hi Fofoa!
My conclusions from the Telegraph article are that the dollar is still too powerful to be dethroned, that we will undergo an awful long agony and only in about half a century we will see a chance to restructure this chaos. Can that scenario take place like they envision it? Or is this the way to make us believe there is no alternative, so that everybody quits looking for escaping - as there is no escape in our life time? IMO only the BRIC countris are able to abolish this system (and that only when they will be strong enough)or if a cataclysm will break in.It's very hard for me to understand how Russia and China are still playing the game knowing that they subsidise the military buildup in US and the exploitation of the whole world. Without the mighty dollar they won't have a chance.BTW I' m not left or such!


FOFOA said...

Hi Fauvi,

I think the value of the dollar will be decided by those countries that continue to accept it in lieu of real wealth. And I believe that has already stopped for the most part.

All those technical requirements to be "the new reserve currency" don't mean anything. They only hold meaning if the global fiat regime is to continue. Gold meets all the requirements. I see a world without a single fiat reserve currency, but with many competing factions and localities. Gold will fill the void left by the dollar's failure.

In my opinion the wait will not be long. I read all these opinions that say otherwise and none of them hold water for me. It is much safer to predict that calamity is far away. I have no need for such safety.


Anonymous said...

And yes, I am completely ignorant of the exact economic circumstances as the replacement of the sterling by the dollar took place...I suppose WWII, demography,industrial output... Was there also a battle? How exactly did it happen? Which were the immediate consequences for the other currencies? Is it today too different to make the switch? Why should it be so painful for the rest of the world? Is it because they are not able to adopt/form a new reserve currency,create the rules for it or accept Gold as standard, as Gold would restrict the influence of governments and banksters? Or is it because they still haven't enough Gold? Will the CBs continue to sell their Gold? Will there be a new agreement on that?
As long as the world won't recognise the role of Gold we will remain victims of the fiat system without any outlook for our lives.How long can the Fed go on printing and buying without disrupting the whole economic world? Are there any limits?

My questions are chaotic and show my poor ecomic education, but I would very much appreciate some wiser brains to find an aswer to them.

Chris said...

I think the trick to supplanting the USD is creating a viable mechanism for trade without it and getting it up and running before the USD collapses. I think BRIC nations know this too, that's the purpose of their coalition. It's the currency reserves holding the dollar up today, not faith in it's future. All that need happen is for the world to recognize this.

I'm in agreement with FOFOA, it is coming, and it will be fast.

Martijn said...


Anonymous said...

An excellent article to show how much the world needs American and dollar hegemony. The BRIC countries are stupidly mired in their rivaltries, corruption and insufficiency so that they will go on accepting American and European supremacy without ever reflecting on radical changes. I wonder why the hell did they even spend some bucks for travelling to Jekaterinenburg?!


S said...


Watching the events unfold in IRan one has to wonder why even during the late stage of the Bush adminsaitration there was such an emphasis on quiet diplomacy. The US was essentially thrown out of Eurasia or at least marginalized and wrongfooted by the Russian actions across the central plains. The Iranians were at once talking about pricing in Euros. more than that strategic rivals are scoring major investments in the region which come at the expense of US companies and potential future supply. Note the editorial in the People's Daily last week suggesting the US stay out of Iran with its dreams of fomenting a color revolution.

The St. luois Fed has a series of charts thet TD linked to showing not only the debt contraction in Q1, but the collapsing multiplier. Bernanke has failed, again. The only one taking on water is the US government. I belive the secret here is the enact the PPIP or asset purchase program and then transfer as much private debt onto the public balance sheet as feasible. Once the chosen are secured they will allow the market to destroy the dollar for them. Does this not absolve them of responsibility, though not repercussions. But what are those repercussions? Enter the Japanese bond smuggling operation. enter the Japanese lending money to the IMF in return for gold?

While the USSR collpased in an open fit of revolution from the lack of food of the shelves, the US is the direct opposite. it is awash in things, but sustenance is lacking. How long can such a system last? Inflation does nothing to fix a rotting from within.

Look at what the bond market is doing to rates despite glaring evidence that deflation is ripping at the corw of the US. Look at the CPI and the components that are "rising." Housing, rents etc. It is simply a farce. The CPI is contracitng sharply. Debt is shrinking and the Fed is helpless. The only option for the fed at this stage is to do its best to secure what it can and hope for a controlled detonation. However watching the bond market take rates to the woodshed suggests that as soon as the expectation of dollar destruction inevitability takes hold the market will price3 it. Thus, one suspects any action will be sharp and violent. it has to be to trap the "wealth."

Anonymous said...

Dead End !?

Has the right name for the evolving financial/economic Systemic Crisis already been given ? I keep calling it the $-IMFS Crisis :

Through the $-IMFS, the globe's welfare has been hyper-inflated.
A/FOA > " Your wealth is NOT what your fiat-digits say it is "

The fiat "system" knows very well how and when it maneuvers to extremes in the Systemic Crisis. That same system (its governers) knows very well what the same final outcome is for every such organized Crisis : Radical deflation (destruction) of the created virtual wealth. General Deficits and Loses.

We keep on watching this proces by staring at its details and summing them up. Exactly the same what the holders of the britisch sterling empire did. They also kept on speculating their system would survive. It did NOT.
Today, that what's left of this UK empire joined the further inflation of the virtual (unmerited) wealth, together with the $-system that took over from them (pound sterling).

Maybe Japan got a warning : Don't break rangs ?
Maybe a shot before the Chinese bow (through Japan): Don't push the $-regime too far ?
The entire Middle East continued to be hammered by the $-empire (regime).
Next in line for a serious warning will be Russia.
EU is struggling and doesn't need any warning (for the time being).

Anonymous said...

@ Fauvi :

When you devalue your currency unit by inflating it in order to artificially create virtual wealth,...that wealth shall deflate under the flight forward of more debt inflation.

It is the amalgamating of infla/defla/stagfla that causes all the unnescesarry confusion.
It is all VERY simple.

Crisisses (as wars) are all a matter of political will. The start as well the end of it.

Real (genuine) "change" never happens when talked about it. Dramatic changes happen overnight when the political will behind the silent smokescreens reaches critical mass. W're getting closer by the day.

The gold-actions of the past decade are circumstantial evidence that a new gold-status is definitely in the running.

FOFOA said...


A/FOA > " Your wealth is NOT what your fiat-digits say it is "

Bingo! I think China is learning this first-hand. Is it not?

China is prevented from spending its dollars on what it wants. So is Dubai. The dollar is supposed to have universal value, but as you say, outside the US it is NOT legal tender.

The super-rich "have more money than they could spend in three lifetimes!" How is this possible?? Is it because there is more [FIAT] money out there than there are real things to spend it on (at current valuations)?

"The gold-actions of the past decade are circumstantial evidence that a new gold-status is definitely in the running."

Anon, am I correct in my suspicion that you have personally seen more than just circumstantial evidence?


Anonymous said...

No FOFOA, I haven't seen anything that other forumers couldn't have seen.

But there is one 1999-image that struck me : Duisenberg introducing the euro in the Amsterdam gold-vault ! (the euro severing its link with gold. Up until now, totally unnoticed)

A few years later Putin with a 400 ounce bar in his hands.
These images said more than thousands of words.

Just imagine China (others) having gold-vending machines...

The external $-bookkeeping unit
has only a protocolair functionality. Debt on everyone's balance sheet.
That's why fortunes do balance, discreetly, with goldmetal in possession.

FOFOA said...


I am not so sure "the chosen" that you refer to have control any more. I think, yes, they are scrambling to dump their bad investments onto the public balance sheet. But I think this is a scramble because they know not when the dollar will let go. And when it does, their "investments" will be wiped out.

You end with, "as soon as the expectation of dollar destruction inevitability takes hold the market will price it. Thus, one suspects any action will be sharp and violent. it has to be to trap the "wealth.""

This is exactly how I see it unfolding!!

The trapping of the "wealth", as you say, includes the wiping out of many of those "bad investments" made by "the chosen" within the dollar faction. So those who are actually in control now do not have the luxury of time. [Secret bond missions?]

Deflation scenarios require that the dollar will not destruct, but will rise in purchasing power. This is why delfationists (TD is one) tell you to hoard DOLLARS. They see the entire global economy crumbling but the virtual matrix of the dollar remaining intact.

They look at the M1 multiplier and cite this as absolute evidence. The problem with this view is that it assumes that "money supply" is all that matters because the system is like a machine. But the system is NOT a machine, and the other side of the "money supply coin" is FEAR. This can have an EQUAL effect to money supply. I say that the MONETARY BASE is what matters, not the money supply. Because when fear kicks in, the monetary base will be DEPLOYED and INCREASED. Just like Weimar. Just like Zimbabwe.

This is from What Obama Does Not Know and I believe it is true...

"velocity and money supply can act as [EXACT] 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 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.


FOFOA said...

(Part 2)...

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?"

The problem with the dollar is that it is spread wide over the globe. So this spark of fear can come from ANYWHERE. In Zimbabwe it could only come from Zimbabwe. But with the dollar, this spark could start in Russia, or China, or the Middle East, or even inside the US. Or everywhere all at once... the Internet spreads FEAR at the speed of light!

The end of the dollar as the global reserve currency MUST end in hyperinflation. And markets usually ANTICIPATE these things. [-->the market will price3 it.<--] They don't wait for the actual establishment of an alternative reserve currency. The dollar NEEDS reserve currency status, just to pay the military and social security! Without that status, it must print. The markets KNOW this fact.

It is the ANTICIPATION of this fact that makes hyperinflation [dollar collapse] an immediate threat that could come at any moment. Any day. You could wake up one morning and turn on the news and see footage of a panic in Europe. The rest of 2009 is very precarious in my view.

You say, "Inflation does nothing to fix a rotting from within."

This is true. But in this case, hyperinflation may actually reverse the rot and send the global situation in a new, healthy direction. The economic rot is a result of the virtual dollar matrix that has had a stranglehold on the economy. Hyperinflation will make this virtual structure vanish. And once again the economy will be able to breathe.


Anonymous said...

From Goldonomics :

1836 President Andrew Jackson (Old Hickory) destroyed the American Federal bank (the FED of those days) by ordering the transfer of Gold and Silver out of the Federal Bank to the State Banks. He also paid off all National American Debt incurred during and right after the American Revolution and reduced the Federal Debt to $ 33,733. His view was that politically power should ultimately rest with the people.

However, due to the practice of banks issuing paper banknotes that were not backed by gold or silver reserves, there was soon rapid inflation and mounting state debts.[28] Then, in 1836, Jackson issued the Specie Circular, which required buyers of government lands to pay in "specie" (gold or silver coins). The result was a great demand for specie, which many banks did not have enough of to exchange for their notes. These banks collapsed.[27] This was a direct cause of the Panic of 1837, which threw the national economy into a deep depression.

FOFOA said...

Nice find! I like to try word replacements on well written sentences and see how they read...

Then, in [2010?], [oil producers] issued the Specie Circular, which required buyers of [oil] to pay in "specie" [gold]. The result was a great demand for specie, which many banks did not have enough of to exchange for their notes. These banks collapsed.[27]

Anonymous said...

- money velocity -

That's why the perception builders focus on the consuming public's
*- expectations -* !

The dynamics of the entire economy are based on the swings in expectations (changes in velocity).

It is becoming increasingly difficult to govern (manage) the positive expectations of the masses. Even the Chinese students are having laughs with the particular $-governing ambassador (TG)

Anonymous said...


"Real (genuine) "change" never happens when talked about it. Dramatic changes happen overnight when the political will behind the silent smokescreens reaches critical mass. W're getting closer by the day."

REACHES CRITICAL MASS, i suppose we are nearing very close to that point every day.

We saw Jim Willie with the Centralbank run on gold, we saw the Italian scam, and more, now see what Thorsten Polleit throws in,

All these are making the base "FIAT" weaker, it just needs a small spark.

Remember the story of Paul Revere and that was even without internet :)


Anonymous said...


"are we being monitored"?

Incredible what they can do with your contacts by the internet, have a look here for Mundell as example;


Anonymous said...

@ Shanti : As soon as I see "gold-standard",... I stop reading the article.

The modern fiat-regime is here to stay. The gold-standard dates from before the fiat-system and later became the gold-exchange-standard.

Now we are on the $-standard and urgently need another (genuine) "wealth standard" > Gold.

Goldmetal = Universal Wealth. Currencies are book-keeping units for trade settlement. Meter, gram, liter, are standard measurements.

Main problem is that people lost the appropiate notion of what "wealth" exactly is. They still believe that a currency-digit is a store of wealth. But wealth is a tangible that keeps its correct purchasing power for ever. That's why freegold has to come on the scene in a gradual (transitional) way. One cannot devalue completely all currencies overight and replace the illusion of virtual fiat wealth with freegold wealth.

There never was any currency as good as gold ! Even under the gold-exchange standard, the gold-wealth was extremely undervalued as to not undermine the currency-worth illusion (faith).

Who was Paul Revere ?

Anonymous said...


I know, and you know, that i know that, on this subject there is no discussion.

As just tried to point to that kind of messages who are sinking in to the public perception. If it is true or not, public feels there is something brewing.

But does it in the first instance matter if public takes gold on the wrong perception? As imho i think many do for the moment.

Finaly after revaluation their perception will be automaticly corrected.

You mention FIAT is here to stay, how do you interpret the message of ANOTHER that "all paper will burn"?

As you probably are not an American, Paul Revere maid be a bit unknown. In base it comes on the fact that just ONE MEN sparked an information that spreaded so quick that the History was changed forever.


Anonymous said...

Sorry Anon,

I'm afraid i don't quite understand:

"That's why freegold has to come on the scene in a gradual (transitional) way. One cannot devalue completely all currencies overight and replace the illusion of virtual fiat wealth with freegold wealth."
How would that happen if "transitional"? By which practical means? And how should wealth become consistent with freegold? Could you plesae explain that?

FOFOA said...

GOLDMAN SACHS to make record bonus payout; Spectacular first half of '09...

Goldman Sachs staff can look forward to the biggest bonus payouts in the firm's 140-year history after a spectacular first half of the year... seemed inconceivable that a firm owing the US government $10bn would be looking to break all-time records in 2009...

"This year is shaping up to be the best year ever for investment banks..."

...the firm predicted that President Barack Obama's government could issue $3.25tn of debt before September... Goldman, a prime broker of US government bonds, is expected to make hundreds of millions of dollars in profits from selling and dealing in the bonds.

More in-your-face, fearless, self-preservation.

Anonymous said...

@ Shanti : Of course, there's nothing wrong with accumulating goldmetal wealth for the wrong reasons,...and to be corrected afterwards.

"All paper will burn" : The -store of wealth- status of $-paper and all of its (digital) derivatives will burn (disappear/vanish). Finance capitalism will go back to its normal proportions vis a vis the growth of the physical economy.

The astronomically inflated financial industry is a contradictio in terminis : An industry that is NOT an industry (productive and tangible).
There is no bank Crisis but a crisis of the banking System.

We are drawning in the artificially created cosmos of "digits" that had to be transformed into a virtual (derivatized) industry. This non-industry (xxxx $-Trillions) was created out of absolutely NOTHING !
100% money-mastering.

Anonymous said...

@ Fauvi : We all live and work under the $-int.-mon.-fin.-system.
One cannot "change" this system overnight and replace it with another one. It took 25 years of hard work to set up the euro. The sterling system didn't disappear overnight.
Changes happen in a transitory fashion.

Gold's status has to be changed gradually from being marginalized by the $-IMFS to the wealth status favored by the EMU and friends (followers).

For instance : What will be the general public's reaction when they see gold vending machines !?
Why did the Chinese planeconomy liberalized gold for 1,2 Billion people !? Idem for Dubai, City of Gold. The ECB marking its goldreserves to market...etc.

Gold is being de-marginalized, Fauvi. Gold has to transition to a wealth-correct tangible and not remain associated with doom/gloom.

Anonymous said...

Too little much too late : Snip

June 22 (Bloomberg) -- Congress will take a second shot at the derivatives industry after its decision nine years ago to forgo regulations led to a $592 trillion market that brought financial firms to their knees.

Using President Barack Obama’s regulatory overhaul proposal last week as a foundation, Senate Banking Committee Chairman Christopher Dodd is holding a hearing today on how to rein in a market that grew almost seven-fold since 2000 and complicated government efforts to assess the risk of banks’ interconnected trading when credit markets froze two years ago.

>>> One Gigantic integrated debt cosmos ! Four decades of wild de-regulation dwarfing the physical economy (substance) with debt driven finance capitalism (thin air).

Why do we never hear questions like : What happened to GM/Chrysler !? Zombism !?

FOFOA said...

Good question!!

"Why do we never hear questions like : What happened to GM/Chrysler !? Zombism !?"

What's wrong with the picture when hard working people are unemployed, PRODUCING companies are BANKRUPT, yet GOLDMAN SACHS is having its "BEST YEAR EVER"????

Anonymous said...

The moneymasters provided the globe with a lot of "fun" through the organization of a financial industry based on easy-cheap money (digits).

We all enjoyed that fun and never realized how we were trapped.

Can we now blame that amusement industry !?
Or do we simply get what we deserved (debasing wealth) ?

Am I over-simplifying things ?

FOFOA said...

When I was young, in college, I had a lot of fun doing drugs.

There was an "older" (lady) college student who supplied the drugs.

This was not marijuana. It was a very destructive drug.

I suppose I should not blame her for anything bad that happened. After all, it was fun!!

Thankfully I made it through and now I have some gold.

Anonymous said...

The global piramid upside down (dead end) :

BRIC summit marks frustration with dollar
By Salman Ansari Javid
June 20, 2009

Due to the lack of an alternative to the U.S. dollar the likelihood of a “supranational currency” emerging any time soon is unlikely. However, just the fact that such a large group can have a summit without the presence of American or European leaders.

Anonymous said...


Thanks for the reply 10:49

Do i destillate out of your post that you mean only the $ paper will burn?

I could imagine that once the paper burns, all paper burns, on the whole planet or is there a kind of frontiers in fear?

That was innitialy the point i was trying to make with Paul Revere.


Anonymous said...

@ Shanti :

The entire financial-monetary-economic global complex is to a very high degree a $-system/regime derivative !

It are the governors of the $-IMFS who decide who is/isn't, wealthy.

When this $-IMFS desintegrates (starts burning),...the entire global complex suffers .

ONLY freegold can provide a structural escape (autonomy) from this absolutist $-dominance.

That's why I often refer to Duisenberg's statement that the euro is the first currency to sever the link with gold. A fire-resistant door. You can't burn gold-wealth. Paper that has a freegold wealth reserve running in parallel, has reference to a unburnable collateral.

BTW - Russian goldreserves are already higher than the ECB's goldreserves. They adopt the same wealth filosofy (euro freegold).

>>> But the $-moneymasters will go on trying to lure all fiat-addicts into their fun-casino. With freegold, the casino ($-FI) would have to close its doors immediately. No more money changers' Vegas (drug-palace).

Anonymous said...

Gold's potential double top pattern !?

The perception building machine continues to work hard on the public's "expectations" to avoid the domino event (burning paper).

The fact that the goldprice governance remains at the center of the actions, of utmost significance !

No other interpretation possible. Otherwise the goldprice would be left free floating.

Anonymous said...

True story :)))

“It is the month of August, on the shores of the Black Sea . It is raining, and the little town looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.

”Suddenly, a rich tourist comes to town.
”He enters the only hotel, lays a 100-euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.

”The hotel proprietor takes the 100-euro note and runs to pay his debt to the butcher.
”The butcher takes the 100-euro note and runs to pay what he owes the pig farmer.
”The pig farmer takes the 100-euro note and runs to pay his debt to his supplier of feed and fuel.
”The supplier of feed and fuel takes the 100-euro note and runs to pay his debt to the town’s prostitute that, in these hard times, proffered her ’services’ on credit.

”The prostitute take the 100-euro note and runs to the hotel to pay for the rooms she rented when she brought her clients there.

”The hotel proprietor then lays the 100-euro note back on the counter so that the rich tourist will not suspect anything.

”At that moment, the rich tourist comes down after inspecting the rooms, takes the 100-euro note off the desk, tucks it back into his wallet, and explains that he did not like any of the rooms. He then leaves town.

”No one earned a penny. However, the whole town is now without debt and looks to the future with great optimism.
”And that, ladies and gentlemen, is how the United States Government is doing business.”

Anonymous said...


$-IFMS (all other currencies + derivatives hangs under this $ umbrella(BW)) = Complex o.k.

Fire = All paper burns even €, the fire door is good, but not rock solid, still 15% Gold thinfoil so 85% can burn as well....

I still try to figure out how that firedoor will practicaly work when the heat will be so intence.

If the €- masters can manage that in a good way it would be the most important happening in the monetary history.
I'am not going to bet on it, and as far i understood you would not either. I a'm full insured.

Would be interesting to hear what was talked last week in Amsterdam in the back between Medvedev & HM Beatrix & Prince Willen Alexander.
I guess the precious word has been fallen more than once.
The relationship between Russia & Holland seems precious.


Martijn said...


Well, funny story indeed.

However, what did really happen: nothing. If all debts really are linked like that they could have been crossed off without the tourist visiting. This is not the reality.

In reality the majority of the public is in debt to their banks, not to other citizens. The banks have created this debt, and it will take as many $100 bills as their are multiples of that amount in the total debt. Those bills are simply not around, and the debt will and can not be erased.

Although a funny example, this is not how the US government does it's business.

Martijn said...

As far as the market oracle story is concerned: I don't believe technical analysis is all that good an indicator for gold. Gold has been manipulated for a long time, and the manipulation has even increased recently.

We can clearly see the manipulators are making use of technical analysis. As the market oracle mentions, there is a potential double top in the making. Guess what: the IMF is now selling its 400tons of gold. This has been rather carefully timed, but it will not matter all that much I believe.

Anonymous said...

Yes Shanti, a consideral amount of paper shall have to burn, with or without freegold wealth.

In Euroland, suggestions are running to remove the bankshares from the stockmarket !!!-???
A shocking idea !? Or just common sense ?

The golden firedoor already works for at least 2 billion people (Asians). Liberalization of the precious metal (see LT goldprice in rupee).

The Dutch queen and Russian gas(prom) king will have an entende cordial. But Euroland should have this relationship as a one and undivided Union. Let's mutually respect our reciproke currencies (rouble & euro) and encourage bilateral trade (and peace)...and consolidate both our wealth in freegold wealth reserves !

Anonymous said...

Anon 4:12, i conclude we are on the same track, thx for clearing up the clouds

Removing shares of commercial bankshares and/or National bank shares...?
As it is now it looks like the commercial banks are trowing roundup on any recovery, so it is certainly worth a thought. Ahh, and here is probably where the ECB pulled in the idea to get around the commercials....

Guess the Queen & the Tsar would be proud on such a royal formulation !


Anonymous said...

The heat in the kitchen : Snip

June 22 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said there’s still a risk that renewed financial turmoil could hamper an economic recovery.

“We are in uncharted waters, and there are still risks of a sudden emergence of unexpected financial turbulence,” Trichet said at a conference in Madrid today. “While there are first signs that the pace of economic weakening is decelerating, we must remain alert.”

>>> More Cheap money and state guarantees don't seem to do the job with the expected results.

A CB cannot default,...but can lose credibility/trust. If the CBs don't succeed in getting the economies back on the growing track before 2010/2011,...there will most probably be a panic outbreak.

The turbulence in the uncharted territory is a quasi certainty because of the astronomical debtload and the naked consumer.

Tekin said...

The latest price action suggests that gold and commodities were hit in order to initiate another leg down in the stock market. While the equities fall, escape into gold is discouraged. So far the US has not lost the control of the western population. How shall US deal with Russia and China remains to be seen. Most likely a deal of some sorts will be cut, a deal with a golden element!?

Anonymous said...

Reuters :

PARIS, June 22 (Reuters) - An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.
"For the US, it is absolutely no question that a sustained recovery has to come from a large increase in exports, that may not be very easy to do. This may require fairly substantial adjustments in the dollar," he told a conference.
(Reporting by Tamora Vidaillet) Keywords: IMF DOLLAR/

>>> $-Devaluation(s) !!!

Anonymous said...

But,...Dr. Doom has some good news (hohum) :

Ideas: Business & Economics July/August 2009 Atlantic
Nouriel Roubini, the New York University economist who accurately forecast the bursting of the housing bubble and the resulting economic contraction, has become famous for his pessimism—he has been the gloomiest of the doomsayers. Which is what makes his current outlook surprising: Roubini believes that the Obama administration’s policy makers—and especially the much-maligned Tim Geithner—have gotten a lot right. Pitfalls may still abound, but he is now projecting an end to the recession, and he sees growth ahead.

>>> @ Tekin : I agree with you Sir.
Program trading through and for the insiders (exclusively) and leaving no crumbles for de following digit pools desperately longing for some profits.

Funny that the famous Dr. Doom doesn't see a $-devaluation coming ...???

S said...


The GS paying bonuses speaks to that whole confidence mantra. Look at ll the surveys coming out. they all scream current conditions are worse and deteriorating, however, the future expectations are improving sequentially. We have officially moved from a strong dollar policy to an exercise in positive psychology. This speaks to your FDR references about it being all about confidence.

This weekend’s article about Japan perhaps moving to no cash as a mechanism for fighting deflation comes on the heels of papers and discussion by the FT's Buiter (Mavericon blog).

One thing that has been clear throughout is that the Fed has had to drag the rest of the world kicking and screaming into the gutter in a kind of burn your village to save the us policy.

In thinking about the Euro and gold and the like, one wonders why the ECB indeed has chased the Fed down the hole? Is this merely a short term policy of rope a dope? Or is it really a phase transition, as the FT article about gold vending machines would appear to indicate? Trichet and his German counterparts were clearly reluctant to follow the lead of the Fed. Eventually they did as a result of the information campaign (and truth) surrounding the Euro area being behind the curve as far as the banks go? Germany is out this morning talking about a major deficit as a result of lower revenues and higher expenses. Thus I do wonder why the euro has a sounder long term footing than the dollar (outside of external debt, that if allowed to be gradually inflated in a controlled detonation, would ensure continued dollar supremacy).

So, doesn't that argue that the Euro are will have to trigger something eventfully to forestall the Fed policy? The Fed has essentially employed a MAD scenario to maintain its predominance. But as is the case in nuclear weapons, we live in a post proliferation world. As pertains to finance, one wonders whether the Fed understands this and is fighting a rearguard action, or hasn’t had the Eureka moment as yet...

S said...

I should add that this Central bank tussle is all about who is willing to endure the pain in the short term for LT benefits. One suspects that a Euro area central bank move to say raise rates or by members (key) to reign in spending aggressivily, lik the German Parliment moves, could catalyse flight. The US would then be forced to immediatly go the way of FDR and trap dollar assets in the US through some sort of capital controls. This is a massive game of chicken.

Anonymous said...

30-Years of Inflation Coming, But "Deflation Scare" Not Over Yet, Cycle Maven Says

Posted Jun 22, 2009 07:00am EDT by Aaron Task in Investing, Commodities

Everyone is right to fret about inflation but the "deflation scare" isn't over yet, says Charles Nenner, founder of the Charles Nenner Research Center.
Renowned for his cycle work, Nenner sees deflation remaining dominant until year-end and inflation not picking up for another 18 months. But that will be the start of a 30-year (yes, year) upcycle for inflation says Nenner, who spent 12 years as a market-timing consultant for Goldman Sachs.

The investing implications of this scenario are clear:

Nenner is bullish on gold for the long-term and even more bullish on gold mining stocks, which he says are currently cheap relative to bullion.
After a secular decline, Treasury yields are set to rise, with Nenner predicting the 10-year yield will reach 5.50% by Spring 2013, a 45% rise from Friday's close of 3.78%.

Anonymous said...

Glenn Beck : US is bankrupt !

Tekin said...

About the Reuters story: A substantial decrease in US imports is understandable. However, Reuters mentions a substantial increase in exports?? How? Who will buy all the US exports? How shall the payment be made? Looks like a green shoot of future imbalance to me :)

Martijn said...


There have been some rumours saying that the Chinese somehow got their hands on heaps of dollars. They might be able to pay for American stuff.

FOFOA said...


Cheating and Lying!

These are the two tactics. The strong dollar policy is all about cheating. It is all about QE. It is all about monetarism. It is all about manipulation.

Green Shoots are all about lying. This is the new Keynesianism. Big government painting the weeds green and lying to the people.

Both of these tactics are SELF-DESTRUCTIVE in the long run. True self-interest (free market) does not cheat and lie because it IS self-destructive. These tactics have set the dollar onto this DEAD END road. SELF-DESTRUCTION.

I am not so sure that the Fed is dragging the world kicking and screaming into the gutter. I suspect it is the US Treasury!!

Lately, my gut check tells me that ol' Ben is not so comfortable with the way things are going. I have recently seen Jim Cramer heaping praise on the great-helicopter-one on CNBC. My brow furls.

Something is making Ben uneasy. And so he is now needing coaxing and praise to keep his foot on the gas.

I suspect that Ben has seen the Dead End ahead. He wants to step on the brakes. But Obama and Geithner and the spend-thrift Congress will not let him.

Just as the Fed is reaching the end of its 96-year journey, the Great American Social Experiment is finally hitting its stride! This week two historic events take place.

On Wednesday, "ABC will air the special from the White House during primetime on June 24. "Prescription for America," to be moderated by ABC News' Charles Gibson and Diane Sawyer, will originate from the East Room and will feature the president explaining his plans for reforming the nation's healthcare system."

The other historic event this week is the HISTORIC amount of Treasury auctions...

Who Are They Trying To Fool? (TNX)
I mean, c'mon, $165 billion in Treasuries for sale in the next week?

$31 billion in 3-month bills
$27 billion in 7-year notes
$40 billion in 2-year notes
$37 billion in 5-year notes
$30 billion in 6-month bills

Annualized this is $8.58 trillion dollars!

This is why gold and the stock market must crash right now. To make bonds look good!

Also, the FOMC is meeting this week. I imagine this will put a strain on Ben's schedule as the FCMC (Federal COVERT Market Committee) will be working OVERTIME all week just to buy up its own bonds and hold gold down.

When the lies aren't working, CHEAT MORE. When the cheating is not working LIE MORE. This is the DEAD END formula.

The Fed is following the Treasury. The ECB is following the Fed... and so on. It is a long train. And when it finally hits the dead end (this week???), the ENGINE will take the brunt of the IMPACT while the trailing cars pile on top of each other.


FOFOA said...

Drudgereport--> Silvio Berlusconi sex scandal: New claims may topple Italian leader...

"With weeks to go before he hosts the G8 summit the Italian Prime Minister, 72, is facing new allegations..."


FOFOA said...

A cryptic warning from Jim Sinclair...

"Dear CIGAs,

Remember my advice from a few years back? If you have not accomplished financial privacy DO NOT attempt to."

Tekin said...

@ Martijn

Why would China choose to de-industrialize? They have a huge manufacturing capacity which can be used/expanded to serve their internal consumers. This would increase the well being of their citizens who would be working in well paid industrial jobs.

My understanding is that, China needs raw materials and energy. They do not need manufactured goods.

Martijn said...


That is largely correct indeed. However, as the dollar does not look too good the Chinese might prefer some tangible luxury goods over toilet paper. The might also be buying industrial machinery or so.

I do not have much evidence for this, but logically there should came a time where the Americans work for the Chinese. Perhaps some Chinese figured that time is now.

Anonymous said...

Jesse : Weimar - Uber stagfla - Cheating/lying :

Nicely balanced insights.

If Bernanke has to be replaced by Summers (2010)...The financial/monetary volatile "brutality" will increase dramatically (2010/2011).

And that will increasingly affect the entire world with Goebbels consequences (Jesse).
Any "balancing" efforts will become totally impossible.

Logic deductive thingking and not hollow crystal ball talk.

Martijn said...


Those treasuries Ben has to sell indeed play a role.

Anonymous said...

Gold vending machines in UK/US !?
(watch the picture)

>>> At first people thought it (gold-vending-machine) was a "joke".

But as soon as Umicore started (recently) smelting goldbars without id-numbers,...something was brewing.

If the gold-vending becomes a succes,...the demarginalization/popularization/liberalization of gold in the West, has (re)started.

Anonymous said...

Cashless Japan !?,25197,25658873-5017997,00.html

>>> With plastic to the gold vending machine (real money).

A nearby future where big brother monitors ALL digital flows and where one's real wealth is consolidated in the precious yellow.

Anyone here to disagree with this idea ?

Tekin said...


Question: Why target negative nominal rates?

My Answer: The population has aged and the number of active workers has decreased. Big brother is trying to herd the retirees back into work. Why doesn't the big brother try herding cats? It is much easier.

A suspicion: If the majority bought gold to escape from the negative nominal rates, then the gold price would be decreased to herd the gold holders back into work.

Caution: Pavlov drove the dogs into insanity by sending inconsistent messages. In the end, you could have a large neurotic population who would be no good as workers or as retirees. :)

Anonymous said...

Who cares about the "population"???
The less/stupid/ignorant/sick/neurotic we are the better...
Maybe some day digital gold will rule us, we might have a chip implant and the day you don't function as expected they switch it off.
The money masters with their millenia long experience won't fail their target. Take a look as the "Georgia guidestones" and telll me that I'm a idiot believing in conspiracies! I wish I were!

Anonymous said...

Uncle Schultz : Bankster holiday (august/sept-2009) !?

WHY NOT ? History rhymes.

Tekin said...

?Bankster holiday?

It looks like banking resembles beekeeping. Now that the hive is full with honey it is harvest time. The beekeeper will replace the honey loaded hive with an empty hive and will coax the bee population into restarting the honey production. Note that the beekeepers will come with special clothing to protect them from bee attack.

As one commentator remarked (in the previous link) "They seem to like September for some reason…..?". A poster suggests the date 09/09/09. Why not? They seem to be obsessed with numerology. (9/11 and 7/7)

FOFOA said...


You forgot the hyperlink. I fixed it for you...

My Answer: The population has aged and the number of active workers has decreased. Big brother is trying to herd the retirees back into work. Why doesn't the big brother try herding cats? It is much easier.

FOFOA said...


If you are like me, I am sure that you have the highest appreciation for the salty language that spills from the mouths of barhags around 1AM. And you will just love this piece about this week's Treasury auctions on SeekingAlpha...

The Largest United States Treasury Auction in History: In Perspective
by Adrienne Gonzalez

"America, I've asked you a million times before to wake the f--k up and stop laying down to spread your legs for this bullsh*t but enough is enough. You don't have to understand the particulars, all you have to know is you are getting f----d. Your children are being f----d. Your grandchildren are f----d before they are even created..."

Siege said...

[B]Treasury has raised 80% of the funds required for 09[/b]

I love doublespeak. Just read the news articles and consider the core message to get the true worries of national leaders. In this case, political motivators for the above article could include:

1. Fear that bid to call ratios will degrade further. The statement implies that B2C doesn't matter because the auctions don't matter. "Pay no attention to the bidders, we don't need the money."

2. Fear that yield will drive interest rates further up. If the US doesn't need the money, it has more power to influence yield and rates.

3. Fear of a failed auction. 80% in the bag would allow the US to avert an emergency as they "don't really need the money."

4. Fear of an impending collapse or more likely, public realization of the economy's true position.

5. Fear that too much sale/monetization of treasuries will cause China or other major debt holders to panic.

6. Financial reality with no political motivation.

I'm voting for 6. There's time to deal with the aftermath of Alt-A, ARM, Corp mortgages, Securities, Derivatives, enemic loan volumes, credit aversion of borrowers, unemployment increases, property vacancies and... and... and...

The US has enough money to put a penny over each eye and walk blindly into the abyss.

FOFOA said...

How deflation could make Japan a cashless society

"Anyone here to disagree with this idea ?"

I think it's a GREAT idea!

It COULD work within the confines of Japan (the island) as long as there is something (gold) other than AIR to save as wealth. But for trade across the water I doubt that anyone will be willing to receive AIR for real goods.

A system like this requires INCREASED confidence. The trend is in the OTHER direction.

In today's fractional reserve banking, the fractional reserve is PAPER. What will be the fractional reserve for AIR? There will be none! It can only be used very briefly for trade. I think hyperinflation would happen within days.

A -4% rate would SUPERCHARGE velocity. You work, you earn your "air", and immediately it starts losing value at a rate of 4%. You must either spend it NOW on food or preserve it at the gold vending machine.

Little digits of AIR would circulate like flies on a shit farm.

"Mr Jerram said: “At the heart of the problem of achieving negative nominal interest rates is the idea that physical currency is an anonymous bearer bond with a nominal interest rate of zero.”

Exactly! Paper is a TERRIBLE anchor, but at least it is an anchor. With AIR as the anchor, there IS NO fractional reserve banking any more. Every single credit becomes money. Money loses value faster than shit loses flavor.

I say Japan should go ahead and give this a try. The rest of the world will be watching closely. There is a very good reason why we tested (above ground) hydrogen bombs on ISLANDS in the middle of the OCEAN!

They could get Ripley's to record the whole thing, for the FASTEST HYPERINFLATION IN ALL OF HISTORY edition.

FOFOA said...

"Suck on Our Yachts": Goldman Sachs Issues Non-Apology for Destroying the World Economy

"So some Dutch teachers' union that a year before was buying ultra-safe U.S. Treasury bonds in 2006 runs into a Goldman salesman who offers them a different, "just as safe" AAA-rated investment that, at the moment anyway, just happens to be earning a much higher return than treasuries. Next thing you know, a bunch of teachers in Holland are betting their retirement nest eggs on a bunch of meth addicted "homeowners" in Texas and Arizona."

S said...


Axel Weber on Bloomberg this am said te room for cutting rates had run out and no more stimulus. Sounded to me a shot across the fed's bow. Indeed, as the race to capture capital, increasingly scarce capital, how to differentiate the sovereign?

Then the US treasury comes out today and talks about how it has 80% of its funding needs for the year. This sounds like GE capital reassuring the market it has a business plan. This is even scarier than the Bundesbank firing yet another shot at the Fed.

The chasm is growing.

Anonymous said...

An absolutely "must read" :

Anonymous said...

Also a "must read" :

The great "transition" in progress !

How is this great transition going to affect our personal wealth/welfare during the next decade ?

Thoughts ?

Anonymous said...

Fading of the Dollar's Dominance
Other Nations See Opening to Boost Their Currencies

By Anthony Faiola
Washington Post Staff Writer
Wednesday, June 24, 2009

The days of calling the dollar almighty may be numbered.

Martijn said...


I agree that there is some pressure on the dollar. However, it has been pronounced dead multiple times, even decades ago.

As I said I agree it is facing some pressure, but before I really believe it going down I will need to see some real evidence, instead of an opinionated newspaper article.

Anonymous said...

This has been known for a long time, the so called "conspiracy theorists" have long warned upon. Ben Steil from CFR, which is known for its international manipulations went public about these plans in 2007, as far as i know. But who heard about it? Maybe FOFOA could express some Thoughts on this (CFR,Trilateral Comission... Crisis...)

Anonymous said...

The End of National Currency

By Benn Steil

Summary: Global financial instability has sparked a surge in “monetary nationalism” — the idea that countries must make and control their own currencies. But globalization and monetary nationalism are a dangerous combination, a cause of financial crises and geopolitical tension. The world needs to abandon unwanted currencies, replacing them with dollars, euros, and multinational currencies as yet unborn.

Benn Steil is Director of International Economics at the Council on Foreign Relations and a co-author of Financial Statecraft.

But the world can do better. Since economic development outside the process of globalization is no longer possible, countries should abandon monetary nationalism. Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new multinational currency over a comparably large and economically diversified area......"

Everything clear? No Congress, no votes, nobody heard about it....


Anonymous said...

Martijn said...


National currencies generally only have worth within national boundaries.

That is why when international trade increased in the 19th century the gold standard voluntarily emerged; gold was the most convenient bearer of international value. It was later killed as it limited leeway for governments to influence monetary policy and inflation.

In general the idea of a more internationally accepted source of wealth is not that bad an idea.

Martijn said...


As a gold watcher you'll probably have read this.

Anonymous said...

This one too is interesting:

"One can’t help but be reminded of Vice President Joe Biden’s words at an Oct. 19 Seattle fundraiser: “Mark my words. It will not be six months before the world tests Barack Obama like they did John Kennedy. We’re going to have an international crisis, a generated crisis, to test the mettle of this guy. And he’s going to need help because it’s not going to be apparent initially; it’s not going to be apparent that we’re right.”


Martijn said...

This Amero talk and all certainly is interesting. And a scenario similar to the one decribed in the link posted by fauvi might necessarily boost gold.

Basically the people owing wealth/power at this moment will use it to steal of the general - financially illiterate - public. As I guess the public is still stupid enough to accept drastic monetary changes if brought in the right way, the power/wealth centers of the world shall try to move in the direction of the general public ahead of them. That's the basic game, owning gold is not (although I tend to do the latter better than the former).

Tekin said...

About the link

I am puzzled by the following statement:

We have agreed to support a general SDR allocation which will inject $250 (billion) into the world economy...

More info on the mechanism would be helpful. After the approval of upper management, how does a country get the SDRs? If the country issues bonds and exchanges them with the SDRs (I am just speculating) then this could just be a way of finding a customer to the US T-Bonds. The SDRs can be converted into Euros or Canadian Dollars without selling (shorting) the dollar. If the US gets most of the SDRs, they can create Euro inflation by converting the SDRs into Euros and buying dollars with the Euros.

Anonymous said...

"So what would come next? Well, if you go down the line of currencies around the world, you don't find many attractive opportunities. And that's why I say if the world were to give up on dollars and give up on euros, they'd probably go back to the old standby, which is gold.

And I don't mean by gold, government run gold standard, like we had in the late 19th century. That's politically impossible. Governments will never be willing to subordinate their policies to the constraints of a hard commodity ever again.

But why do I think gold could make a comeback if people lose faith in fiat currency? Well, first of all, remarkably, gold has continued to play a role as a sort of shadowed money. In this particular chart, I plot gold prices against the real effective exchange rate of the dollar, going back to 1992. And you see that as the dollar depreciates against other currencies, people put their money into gold. So they haven't forgotten the monetary role of gold.

Also, people ask these days, "Is there a bubble in the gold market? Is gold being driven up to irrational levels?" Well, look at this particular figure, which plots the real gold price going back many decades. You see that big spike in the early 1980s? At that time, in current dollars, gold was actually over $2,200 an ounce when people had really lost faith in the dollar as a store of value. So if people were to fundamentally lose faith in the U.S. dollar today, you can see that by historical standards, gold has a long way to go.

So how could gold make a revival as a sort of international money? Well, we don't actually need a government run gold standard anymore....."
The whole text of Ben Stein's speech is here:

Martijn said...

Well, so far we shall still need to see people loosing faith in fiat totally. Although it's a plausible scenario, it might take quite some time, multiple years or even longer. There are simply too many interest aligning world powers with the fiat regime. Therefore, the "endgame" will not be fought overnight; that would be highly unlikely.

I do see downward pressure on the dollar and upward pressure on gold mounting, and we might be in for a surprise indeed, but it's not the most likely scenario I guess.

I do however own quite some gold, just in case. If we do come to see a collapse it will simply be too massive to bear without owning gold.

Apart from that I would expect gold to rise even without a total collapse of the dollar.

Anonymous said...

What happened to the NYSE Amex Composite Index this morning!?! Down 48% for nearly an hour... I think it's rediculous to think that was a save; it must have been a computer glitch. Still, take a look for yourself. I'd love to know what took place; if anyone has info, please share it.

Chris said...

Well MSN has a switch that flips between actuals and the dressed up government numbers you see. Someone accidentally flipped it with their coat when they came into the office. It took an hour before they caught it.

Seriously, not seeing the stats on other trackers, likely a glitch.


S said...

What do you make of this? This is totally consisitent with the overnight trapping of capital. it has to happen this way. Which is why you need the market to be lulled into a sense of calm.

Anonymous said...

A bullish case for Gold.

Last week, according to Casey, US banks were short 16,5% of the combined annual output of the entire world's gold mining industry (20,5% is the figure for silver). Bankers have in the past and are still behaving like idiots (proof is that in the US alone 40 went belly up this year). The short position builds a huge case for the contrarians and Gold bulls. Banks off course (Noblesse Oblige) being short on paper Gold are scared like hell to see the day the physical Gold market meets the paper market. The outcome will be barbaric. Hard to tell WHEN this will happen, but there is no doubt it will. The USA and American banks are no longer in full control of the financial markets. The manipulation by financials created a COILED SPRING which will propel $-gold through the $ 1,000 level and higher. It was so at the time of the Gold pool I (1960's) and it will be so at the time of the Gold pool II (2000's).

FOFOA said...

Hello everyone. That's a lot of comments for someone who slept in very late today! :) I am certainly not complaining. Because this is my blog, I read your comments even before I read the news. I have read them all but I have not read all the articles yet. I do have a couple thoughts, though, based on the overall mood right now.

I did read the Peter Brimelow/Harry Schultz article and scanned a couple others.

What most writers do is they skillfully traverse time, from past to present to future. The very best writers do an excellent job describing the past and the present, with both empirical examples and logical analysis sometimes mixed with sharp speculation. Where most all writers fall short is in the traverse from present to future. And the deceptive ones (usually trying to sell you something) do this seamlessly so as to lead you to believe that if they accurately described the past and present then they MUST know the future.

Some of the "market watchers" I follow the closest on the internet I disagree with the most about the future. Denninger is one. Others that I have the UTMOST respect for I disagree with IN PART about the future. Fekete, Janszen and Sinclair are in this group. The point is that when it comes to researching [THIS CRISIS] on the internet, we must distinguish between the past/present and the future. We must read EACH article with this in mind. And from there, we can develop our own logical thesis about the future.

NO ONE knows the future with certainty. Harry Schultz is a perfect example. If you notice, when he makes BROAD predictions he has been remarkably right. When he made SPECIFIC predictions in '08 his followers lost 48% of their wealth in one year. The same thing happened to Peter Schiff.

I do believe that we have all been lulled into a sense of calm right now. I also believe that there are some very powerful and wealthy people in the dollar camp that would like nothing more than a New World Order with a One World Currency. But I think they have lost the control they needed to achieve this over the past few years. The theory goes that a crisis was needed to switch to a NWO. But the problem is that THIS CRISIS has shattered global confidence in each other. This is moving the globe AWAY from a NWO.

What is left is a controlled demolition where it is every man for himself. There is still much wealth and power to be grabbed by the NWO crowd, but their master plan has suffered a fatal blow.

"Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen ... within 180 days, but could be 120-150 days."

The above I can accept. It seems to be an honest view of the present, and it jives with my sense of logic.

"Another FDR-style 'bank holiday' of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it)."

This is much more questionable. It does not jive with my sense of logic. But I do understand where he is coming from and why he would make such predictions.

My feeling is that "they" are no longer in control of things, even if "they" believe they are. EXTERNAL forces are now in control of our future.

Also, there are several DIFFERENT predictions all rolled up into that one paragraph. You should not believe that if one of them happens, then all of them will happen. It NEVER works out that way.

Yes, it has been a slow transition to get to where we are today. 10 years or more. But sometimes things change VERY RAPIDLY. Last year, from Sept. 15 through Oct. 15 was one such time. I believe we are in for something much worse, coming soon...


FOFOA said...


Martijn, "Well, so far we shall still need to see people loosing faith in fiat totally."

I do not believe that "the people" need to lose faith in fiat totally before things change for good. They already have lost ENOUGH faith for the transition to take place.

"it might take quite some time, multiple years or even longer."

This is a very popular stance right now. Many prognosticators were badly burned last year with losses by predicting big change. Schiff, Schultz and others. Those with the more dire predictions last year are now projecting "hyperinflation" or some other calamity 2, 3 or 4 years out. This is a safe stance. But I do not believe it is the correct one. The Prudent Squirrel is another who is now doing this.

"There are simply too many interest aligning world powers with the fiat regime."

Here is the way I see it. There are too many PAPER TIGERS out there. But there are also some REAL TIGERS lurking in the bushes. Those "aligned" paper tigers may be loud, but they are not dangerous. They have been DECLAWED.

"Therefore, the "endgame" will not be fought overnight; that would be highly unlikely."

This is what they want you to think. To the paper tigers, you are support. To the real tigers, you are dinner. Not you specifically, because....

"I do however own quite some gold, just in case. If we do come to see a collapse it will simply be too massive to bear without owning gold."

I believe the endgame WILL be fought "overnight".

"I do see downward pressure on the dollar and upward pressure on gold mounting, and we might be in for a surprise indeed, but it's not the most likely scenario I guess."

To me, the most likely scenario is that those who have no real wealth (other than debt) have no control of when or how the endgame will play. This includes the US Treasury and most of the American public. Those who DO have real wealth will do WHATEVER IT TAKES to protect it.

Of those that have real wealth, MUCH WAS LOST over the last year or more. And during that year they have been plotting and planning how to PROTECT WHAT IS LEFT.

"Apart from that I would expect gold to rise even without a total collapse of the dollar."

This is likely their BIGGEST HOPE. They will initiate whatever they have been planning and hope that the dollar survives. But I really DON'T THINK IT WILL.

Tekin, "After the approval of upper management, how does a country get the SDRs?"

They would have to issue rights to their share of whatever is in "the basket". SDR imbalances would have to be convertible to "those items in the basket". The SDR is worse than "paper gold". It is "paper basket-of-shit".

Martijn, "Basically the people owing wealth/power at this moment will use it to steal of the general - financially illiterate - public."

The only thing left to steal from the public is the future. This is what Washington is stealing. But the changes that will come will invalidate everything this administration sets in motion. For this reason I have stopped being too concerned about what shenanigans Washington is up to.

"the power/wealth centers of the world shall try to move in the direction of the general public ahead of them."

These are the paper tigers.

There is much jockeying by the paper tigers. But the real tiger is still hiding in the bushes. When he strikes, much that is hazy right now will become crystal clear.

Martijn, I have not read Eric since his Treasury/PPT/ESF piece on Sunday. I saw your comment under that one. I will check out his new piece.


Anonymous said...

@ FOFOA : Have been struggling with the NWO idea for 10 yrs now.
The (very) strong aspirations to establish a global control are undoubtly there.
Maybe this will be the reason for its failure. A global uniformazation is as unnatural as can be. It has something unreal like the 3th Reich hysteria.

" Global Confidence " : How much of it is - pro forma - ?

" Global Control " : The more you want it,...the less you will get.

Maybe the Japan $-bond event (story-?) is a serious sign (warning) to those that seek global control ? Add the N.Korea escalation of threaths.
Are the Chinese happy with what happens with their oil/gas Iran relation ?
Will the IMF 400 tonnes go (already allocated to) to China as an appeaser ?
How come China is allowed to dig for oil in Irak ?

Is Bernanke being discredidet at present (BoA) ?

Kissinger restated publicly that the globe "needs" regime change in Iran.

Will the super-powered FED increasingly abuse its powers as to obtain the goal of global power ? Will it therefore stumble on the block of global distrust?

>>> For all these unknowns I agree with your insight.

Anonymous said...

@ FOFOA : Yes, indeed Sir...When one takes your honestly earned wealth becomes extremely unwilling to cooperate for the general (global) wellbeing.

And a big chunk of wealth has already been destroyed.
One only remains calm/disciplined for as long as one has reasons to believe this lost wealth will come back...out of nothing.

I remain convinced it will NOT come back and melt further...

FOFOA said...

"One only remains calm/disciplined for as long as one has reasons to believe this lost wealth will come back...out of nothing."

...Or for as long as it takes to set up the event that will make things right again.

Martijn said...


Thanks for the reply. Time for bed now, so I'll get back on it tomorrow.

In the meantime, here is how they (paper tigers/people in power) play the general perception. The dollar is losing trust and hence declining, yet they try to curb it into an export-related issue.
It is not untrue, export is involved, but it's just not the key point.

FOFOA said...

Gary North says the next bubble has arrived. I wonder when it will pop.

The Next Bubble Is Here. Have You Bought In?

"Where will the hoped-for deliverance come from? Not from private industry. Private industry must compete for capital with the Federal government. Lenders must supply the Treasury with about $85 billion in loans each week to roll over the existing debt and pay for this year's deficit. From China? China is spending money on commodities and domestic bailouts. From Japan? With trade down, its surplus is down. From Europe? It is in recession. Then where?"

Gary says the bubble is in "consumer confidence". In other words... "PERCEPTION".

FOFOA said...

Jesse comments on the Brimelow article...

A Bank Holiday on Deck?

"Harry Schulz apparently thinks a bank holiday is in the offing.

We think that if something decisive like this happens it is more likely related to a de facto devaluation of the dollar, a market break, that would be very brief. The Banks would close in order to allow the markets to stabilize. The occasion is therefore likely to be a major failure of a household name in banking, and/or the more formal nationalization of Fannie and Freddie.

We struggle with the notion of a dollar devaluation. Against what? A continued weakness seems to be in the cards, with some major event precipitating a break in market confidence.

It is obvious that there is a campaign to undermine Ben Bernanke as the Fed Chairman, coming out of the Obama Administration. Bernanke is not willing to monetize debt as aggressively as Geithner and Summers would prefer."

FOFOA said...

Go Karl!

"...Jim Cramer, who said we need "a little less democracy."


...The Fed simply "cheated"...

...Empowered with his "God Complex" Bernanke seems to think...

...those such as Jim Cramer...

...shining examples of representative government as North Korea and Zimbabwe."

Sorry. That snip is a little choppy. Better go read the whole post and watch how the muppets respond to Darrell Issa on the video!

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