Wednesday, June 24, 2009

The Triumvirate of Wealth

Triumvirate n (1584) 3: a group or association of three

There is a battle under way right now. In this battle there are three things to watch.

The Dollar

What is a dollar?

To different people and groups it is different things.

To the average American the dollar is a unit of measure for trade and the denomination of debt owed. To the Chinese the dollar is a mandatory middleman for international trade and a mandatory store of value for the excess wealth China receives from trading with the West. To bankers the dollar is the denominator of contracts holding others in debt to the bank.

There is a particular meme spreading right now that a very large mountain of contracts denominated in US dollars is somehow SUPPORT for the US dollar. As one example, I quote the latest Prudent Squirrel newsletter:
There is no clear alternative to the USD system at present. China, Russia, Brazil, India are taking steps to diversify their foreign exchange, but the amounts involved are a few tens of $billions, and nothing compared to the USD footprint world wide which I previously estimated at $2200 trillion for all USD stocks, bonds, contracts world wide, not to mention that all important commodities are still priced in USD – sort of like the US having its own private world wide ‘comex’ in everything from money markets to commodity markets to you name it.

That's $2.2 Quadrillion in contracts denominated in US dollars! That is not wealth. That is one entity holding a contract that INDENTURES another entity or individual.

The question I want to ask is does this mountain of contracts lend de facto SUPPORT to a continued dollar regime? Or is it the fatal FLAW of the regime?

Chris Laird seems to think that the usage demand of the dollar as a middleman for international trade must somehow be weighed against contracts of debt held by the banks. And if the debt weighs more than the net usage demand, then the dollar must continue on as the reserve currency.

But as I said, the dollar is different things to different people.

And my thesis is that the dollar's Achilles' heel is that it must perform TOO MANY functions. The dollar's fatal flaw is that if any one function fails, they all fail.

Think about the mountain of contracts held by the banks. Compare this mountain to a bag of groceries. If the price of a bag of groceries goes from $20 to $100, the entire mountain of contracts (derivatives) collapses and the banks go bust.

Now think about global usage demand. This is a funny thing. Intuitively you would think that if the price of oil rises it will hurt the dollar. But in fact the opposite happens. As the price of oil climbs, all the world must buy more dollars to get the same amount of oil!

This creates demand for dollars which keeps the dollar strong. But here's the Catch 22. The rising price of oil also raises the price of a bag of groceries. This puts downward pressure on the value of the dollar. All those banks holding contracts denominated in dollars lose value when the price of a bag of groceries goes up.

So the dollar's interconnectedness in the global marketplace combined with its reliance on performing too many functions creates a very unstable environment for survival (of the dollar).

If all of a sudden dollars were not needed to pay for the rising price of oil, there would not be the usage demand to counterbalance the rising price of everything else. And this is why a few tens of billions in usage by the BRIC countries is a DEADLY threat to the $2.2 Quadrillion in derivative contracts.


What is gold? What functions does it perform?

To different people and groups it is different things.

But not for long. Soon it will perform its one and only function, wealth reserve par excellence!

But for now, to those bankers who sit precariously on a mountain of contracts denominated in dollars, gold is a tool used to lie to the people about wealth. There are a couple problems though. Most of the people being lied to have no wealth to preserve. And those that do are starting to see through the lie.

One more thing. In order to lie through gold, they must have a fractional reserve of gold from which to pay physical gold to those that see through the lie. For the last 10 years that gold has been provided by Gordon Brown and the central bankers. But now things have changed. Now the central bankers are net BUYERS of gold.

The lie is coming to an end.

During the last century many things have come and gone. Wars, nations, leaders, parties, ideas, ideals, blood was shed, promises broken, much chaos. But one thing has been steady. The evolution of gold!

First we had a regime of fixed gold prices ($20, $35, $42) and all the while the dollar printing exploded! Then we had the regime of semi-fixed gold prices from 1971 to 2001, and dollar printing exploded even more! Finally we had a decade of "controlled demolition" or controlled gold price inflation, as gold tripled in value at the same time as oil rose SIX times in price and the US dollar printing EXPLODED like never before!

So what is next in the steady evolution of gold? It is free gold pricing and the recognition of its one and only function, wealth reserve par excellence! This is next!

What to watch for? Watch for when gold starts to outrun oil to the upside. So far over the last 10 years gold is up 3 times and oil is up 6 times. When gold outperforms oil it will mean that the process has shifted into high gear.


What about oil?

Do we have an energy crisis on our hands? Did we have an energy crisis in 1973?

How can we possibly know?

Certainly a monetary crisis and an energy crisis are not mutually exclusive. They can happen at the same time. But what we know for sure is that monetary manipulation distorts free market pricing mechanisms, causes massive malinvestment, and masks the reality of whether or not we are facing a true resource crisis.

In just one year we have seen the WILD fluctuation of the price of oil from $147 to $30. At $147 per barrel the producers and anyone holding oil should have been jumping out of their seats to sell, yet we were told there was a shortage. At $30, we were told that demand was low. Buyers should have been jumping out of their seats to buy! So why all the confusion?

Can we really know the true availability of resources while prices are so distorted by currency fluctuations in our fiat system? No, we can only speculate.

No disrespect to my favorite active Peakist! As I have said before, I am agnostic when it comes to this subject. And yes, Hugo, I did read your post.

The End

So how will we know when the end is near? When Helicopter Ben comes under attack for being too tight with the printing press, the end is near. When helicopter drops are not enough to satisfy the beast, the end is near. When the US borrows more in one week than it did in an entire year seven years prior, the end is near. When scorched earth self-preservation tactics, in-your-face theft of public funds, and outright corruption is done in broad daylight without fear of reprisal, the end is near. This is what to watch for. Please let me know in the comment section if and when you happen to see any of these signs. We all need to be on the lookout!



Anonymous said...

Brilliant FOFOA. Bravo !

The end is already here : Crescendo DE-regulation that led to wealth destruction for the masses and hyper-concentration of the wealth leverages.

Now comes a period of pro forma regulation,...certainly without any implementations.

The healthy balance between the regulating state and private capitalism is totally gone. The plundering beast of finance capitalism was allowed to kill/destroy (free license).

It continues to amaze me realizing that no citizen sees the gigantic lies.

On the other hand, I see a very small event that is growing : The "spread" on the goldcoins (bullion) increases constantly ! From 1% now already 8%. Demand remains greater than the offer (goldmetal shortages). Never happened here in the free goldtrade during the past 4 decades. This is not a temporary "blip".

>>> Your $-oil-pricing theory is absolutely correct. It always was an offer-market under $-regime control (AIG-London for instance). Simply remember the previous (1974) oilcrisis and the petro-$ recykling hysteria (eurodollars - now removed from the official stats).

Another evidence that the dead-end is upon us : M3 stats removed !
Who cares ? The general -so what- reaction (if any).

Anonymous said...

Signs on the wall :

ECB pumps €442bn into banking system .

By Ralph Atkins in Frankfurt, Krishna Guha in Washington and David Oakley in London

Published: June 24 2009 11:05 | Last updated: June 24 2009 23:12

The European Central Bank on Wednesday pumped hundreds of billions of euros in one-year loans into the eurozone’s weakened banking system, making record amounts of emergency finance available in a bid to unlock credit markets and revive the region’s economies.

The move came as the US Federal Reserve pushed back against expectations of an early rise in US interest rates.

>>> Example of a paradoxal regulating de-regulation : Euroland Banks are now also allowed to amalgame mark to market and markt to model, as they please (at convenience). A blatant ecouragement (de jure/de facto) for much more fractional (negative) reserve banking.
This is pure (dead end) desperation and no Crisis solution.

Anonymous said...

Dead End CATCH-22 !!!

Mervyn King warns that spending cuts and tax rises are needed
The "extraordinary" scale of Government borrowing run up by Gordon Brown will require spending cuts and tax rises after the next election no matter who is in power, the Governor of the Bank of England has cautioned.

>>> The stubborn infantile attitude is shocking ! Because it is misleading the general public in a criminal way. This pseudo political correctness makes me sick.

FOFOA said...

California set to issue IOUs as fiscal crisis weighs

"LOS ANGELES/NEW YORK (Reuters) - California's controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can't quickly solve a $24 billion budget deficit..."

IOU what?? Imagine if suppliers demand something REAL in exchange for their goods. I mean they can't even get worthless dollars anymore in California. Now its IOU's.

Remember, this is not just a state. It is the largest economy in the US. California represents 13% of the US GDP. California's own GDP as a state is $1.8T. Larger than ALL countries in the world except eight!

FOFOA said...

Thank you Anon!

The end must be near.

Anonymous said...

New International Socialist Order !?

Anonymous said...

Crisis exit doomed to fail !

Anonymous said...

Read the last line !

Siege said...

Well stated FOFOA, but I personally think there is a critical element missing from this position. The end will be occur after the 'man behind the curtain' stages his exit.

A common view is that Goldman Sachs is intentionally blowing and popping these bubbles as a means of gathering wealth. This only works when the capital has value and they know it. When Goldman Sachs and its shells are fully secured on material wealth, the final chapter will be written. It's a race to be the first out with a shirt; I doubt Goldman will grant anyone else first option out. They'll manufacture and take their leave, potentially frontrunning your triad.

At this time, Goldman appears to in the final stages of executing another stock bubble, while busily leveraging a treasury bubble and building the next. False stability has and fear is driving the stock market, which I expect Goldman will execute shortly. That will inflate another TARP bubble. Maybe we make it to the cap & trade bubble; maybe we don't. I expect we will, and that it will happen regardless of the collapse.

I suspect Goldman's next significant step will be the US bank holiday, with the outcome being a (Goldman bred) financer at the helm of a consolidated superbank. This would put Goldman in an ownership position on nearly all property within the US. Control over the money supply, legislative bodies, AND the land on which we live and work. Now THAT is real control. I consider it endgame, at least for the US.

The stage is set with the public to pick up excess debt on defaulting morgages, protecting Goldman as this strategy is executed. But Goldman needs a monopoly position on morgage papers to become the final dominant player. With every default, Goldman becomes landlord and the public pick up the tab... perpetual income resultant of endgame. Think Monopoly. What would you do if you couldn't flip the board at the end? The FRNs are a means to the endgame; if Goldman holds the deeds, the status of FRNs won't matter.

Goldman pulls the strings in most every major institution around the globe. Determining their endgame strategy is to miss one of the most influential players to date.

Anonymous said...

So as you watch the value of your home decline by 60%, and your portfolio decline by at least that amount, and watch as we move from recession into depression (the jobless rate, BTW, is a joke, as it is far above 8% - reality is that we are closing in on 20%, likely to go more like to 25% or higher over the next year), consider that there have been plenty of voices calling this as it is. All along. It's simply that it isn't in the money trust's interests that those voices be heard, or remembered.

A system predicated upon fraud isn't sustainable. A clearing and settlement system that facilitates counterfeiting and fraud, and is accountable to nobody, isn't a clearing and settlement system. A media that only touts the party line isn't a free press. A private cartel of banks, writing trillions of dollars of taxpayer-funded checks while refusing to tell anyone who is receiving the loot isn't a sustainable banking system. A government that allows all the above to become the status quo, and which twists statistics in order to lie to its own citizenry as well as the rest of the world, isn't a sustainable government.

So many were divided over a black President being elected, and liberal ideas taking the day over conservative ones, but doesn't everyone understand that it's all theater, designed to take your mind off the obvious looting of the nation? Who really cares what color or religion or ideology the guy who slips the icepick into your spine is? Why would it even matter?

Rome is on fire. The government is pumping gasoline through the fire hoses, and the only ones benefiting are the recipients of the trillions and trillions of dollars of your money. Fairly soon, I think it will be safe to say that the formerly prosperous middle class will become the working poor, in a land filled with half-vacant strip malls selling shoddily-made crap to a populace so numb and dazed it doesn't know the difference and can't remember anything better. Just as 50 years ago seems like a fairy-tale time, when a gas station attendant could support a wife, kids, a car or two, and a home on his salary, a few years ago will sound surreal to our children; imagine a time when two working parents could afford a home and a car! Imagine when there was enough work for both of them to even work steadily! Imagine owning a car! Or a home! That's crazy talk, and we can't change things, so why dwell on it...Wealth has to be created in order to steal it and that is exactly what has happened...

Tekin said...

I am not sure that purely economic considerations would be sufficient for evaluation of the maturity of the end. I believe there is a military aspect of the "end". The military aspect, I guess, involves, controlling the energy supply of China and Europe.

Consider the following headline:

Iran overtakes Saudi as China's No.1 crude supplier

This occurs simultaneously with the election "color revolution". Coincidence? I am not sure.

Consider the Israeli exercise called Glorius Spartan, where Israelis practiced an air attack at Greece in 2008. Now some expert suggests that this attack would be initiated through Turkish air space.

Obviously triggering a Turkey-Iran war. What is more, the Americans have been calling Turkey, Turkish Islamic Republic despite protests from diplomatic and military elites of the country, almost "forcing" the country to be a "light" Islamic Republic. The vocal dissidents have been arrested with accusations of "coup planning". The media have been strongly pumping New Ottomanism. I know, I am from Turkey.

Consider the following website about the Israeli Exercise. There, a poster strongly argues that, Russia would love to eliminate a major rival in the Energy Business.

A Pakistani think thank, suggests that US planning to stop all the sea routes of oil transportation. See:

All these complications would propel gold beyond the milky way. Where would these lead us, politically, is unclear to me.

Martijn said...

One more thing. In order to lie through gold, they must have a fractional reserve of gold from which to pay physical gold to those that see through the lie. For the last 10 years that gold has been provided by Gordon Brown and the central bankers. But now things have changed. Now the central bankers are net BUYERS of gold.

Paper gold market.

By the way, in a sense fractional reserve emerged from the market back in the days of the goldsmiths, didn't it? In that sense I am not completely sure whether fractional reserve really is such a terrible thing. It does make things a lot more complicated though, and perhaps the market has not been given a chance to evolute further as governments took over the money business and regulated fractional reserve to be ok.
In a free market perhaps those using fractional reserve would have been punished on the long run, we do not know yet.
Perhaps we shall soon see.

Martijn said...


There is some nasty business going on in Turkey indeed.

And yes, you are very correct at stating that geopolitical tensions are increasing. They have been since the beginning of this crisis, and will continue to tighten. Together with the horrible fascist going on in some countries this is really not that great an outlook.

Luckily quite some people seem to be getting aware.

Martijn said...

And these global taxes are really scary stuff.

Anyone here familiar with Hegelian dialectics (thesis, antithesis, synthesis)?

Sometimes they really seem to try to push the public somewhere by deliberately evoking the antithesis in order to be able to present the synthesis as a solution to the problems they've created themselves.

Martijn said...


You were right yesterday saying that when the system really collapses it will happen overnight. I wouldn't dare to disagree on that.

As far as that moment knocking our door allready: perhaps indeed so. Perhaps some stunts were pulled to hide the succumb of the dollar. Perhaps they did let Lehman collapse to create a need for (dollar denominated) liquidity.

FOFOA said...


You have some frightening observations. It is a tense situation over there in oil-land. Jim Sinclair has been repeating the mantra of Turkey as a victim for a while now.

Remember in my last post, Dead End, I said there were three ways to secure future oil...

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.

We can forget about #3 for now. This method is dying and cannot be revived. Leaving #1 and #2.

#1 can include some sub-categories like 1a) CONTROL the oil in the ground, 1b) PHYSICALLY STEAL the oil in the ground, etc...

You say, "All these complications would propel gold beyond the milky way." This statement stems from an older view of gold as a function of doom and gloom. The steady evolution of gold to its one and only function as a wealth reserve will ultimately remove the doom and gloom function of gold from the mind of the marketplace.

In freegold, gold will be fairly valued and will not need to respond to doom and gloom. This may sound like a bold statement, but consider the steady evolutionary direction gold is heading.

Then consider that all the efforts to CONTROL the oil in the ground are DOLLAR INTENSIVE operations. The easy flow of dollars keeps these operations going. When those dollars become worthless there will be a major shift in the soldier's mind as to whether or not he can afford to continue. This will be a big problem for the commanders and things will change.

I am not saying that I know of any kind of solution to the problems in oil-land. But I am saying that there is still hope that the dollar collapses before something really bad happens. I am also not only talking about the US military nor am I saying that it is the root of the problem. A dollar collapse would dislocate the machinery on all fronts. A dollar collapse will throw all paper payments into question!

I do understand that some don't fight for money. But usually in battle at least one side is being paid. And it is hard to fight unless both sides are fighting.

It will be like a hard reset on your Garmin GPS. You hold down a button as you power it on and everything is wiped away for a clean start. (nod to Karl).

The steady value of paper currency is one variable not often considered by military think tanks.

In the old days, you had to make sure you had plenty of gold coins before going to war. Today we rely on the steady value of paper.

If this happens soon, I don't know what we will see in "chaostan". But I think we will be surprised. Hopefully pleasantly surprised. But perhaps not.


FOFOA said...


Fractional reserve in and of itself is not such a terrible thing. The problem is that it creates a moral hazard. This moral hazard is such that even regulation cannot fix it because ultimately the regulators become morally corrupted by the system.

The shift that is coming in the gold market, from paper to a physical market, is the ultimate conclusion to a fractional reserve system. It is the collapse of the system as confidence is ultimately lost that there is any reserve actually being held in your name.

If we only use fiat currency as a unit for trade, and not for store of value, but instead have a non-fractional wealth reserve riding shotgun, the system will once again become sustainable.

The currency will fluctuate per the actions of the printer, but if he prints too much, more value will flow into the wealth reserve. If the printer is responsible, people will gradually be willing to hold the fiat for longer and longer periods of time. Ultimately, if the printer remains responsible, some people may hold the fiat as a store of value. But then this will tempt the printer to print more and value will flow back into gold.

This is where evolution is taking us. It is not taking us back, it is taking us forward. We are evolving to a place where governments print the money we use for trade, but not for savings. They will have to earn our trust again before we will save in their currency.


Anonymous said...

Germany - US :,1518,632494,00.html

Angela versus Summers. Not a honeymoon.

FOFOA said...

Good article!

Chancellor Merkel Visits the Debt President

"The world believes that the US is borrowing money from capital markets. It is often said that the Chinese and the Japanese will buy government bonds. But the truth of the matter is that trust in the gravitas and reliability of the United States has suffered to such a great degree that fewer and fewer foreigners are purchasing its government bonds. That's why the Federal Reserve is now buying securities that it has printed itself. The Fed's balance sheet has more than doubled since 2007, making the US central bank one of the world's fastest-growing companies. The purpose of this company, though, is to create money out of thin air."

Larry Summers is pompous, arrogant and cocky. This does not go over well on the world stage.

In 2005 Larry Summers made the news big-time here in the states. I don't know if it made the news over in Europe. He was president of Harvard University and he made some controversial comments about WOMEN. This scandal ultimately led to him resigning as president of Harvard and is very likely the reason he was not selected as Obama's Treasury Secretary. Wikipedia

I note that Angela Merkel is a WOMAN!

"The fact that German Chancellor Angela Merkel recently gave a speech in which she was critical of the US economic stimulus program did not impress Summers. In our conversation, he said he thought Merkel's position was a tactical one. "She only says that out of domestic concerns," he said and rolled his eyes in disapproval."

Anonymous said...


You have been writing down the correct definition of freegold in the most simpliest of words.

Cheers to you, Sir.

FOFOA said...

Thanks Anon!

I'm learning from the best!

Anonymous said...

Snip from Jesse :

That unserviceable debt becomes 'monetized' and a serious inflation results. It is a form of debt default.

Devaluation of a currency is a form of inflation which specifically addresses external debt obligations, as well as default on bonds which is a form of selective national bankruptcy.

>>> " external debt obligations " ..." default on bonds " !!!

Imagine how the $ 5 Trillion $-holders must feel !?

And what about the 5 decades accumulated euro-dollars nobody ever seems to mention !?

Are euro freegold wealth reserves put next to this eurodollar mountain of debt !?

Would it surprise you that many (all) other $-holders imitate this ECB/EMU example !?

How come that not one single angloamerican gold-watcher ever touches this thought ???
I honestly have no answer for this.

Mark Ancona said...

Witness the congressional failure to investigate....well......anything! We are in the midst of a global paradigm shift, one that will certainly reorganize the free world and place the U.S. somewhere else on the list.

I have seen with my own eyes, the bitterness and hatred the American people have grown in their hearts for banks and financial advisors this past 18 months. I have witnessed a transition from free wheeling and open wallets to a new frugality, one that will bring the banking industry to it's knees. Without willing victims, the banks cannot peel off their ten percent and grow. The banks will shrink down to a shadow of their former selves, but not before doing everything in their power to strip America of every last gram of treasure.

The chaos that we are facing will dwarf that which was witnessed in the '30's, and will be forever etched in the memory of every living soul on this planet. it will not be the U.S. suffering alone, rather it will be a global depression; a world changing phenomenon.

Time to put on your big boy pants and buckle up!

Martijn said...

How about them Celente apples, claiming those bond smugglers were hired by the Japanese?

The passports weren't from Japan as far as far as the internet is concerned.

Not that we can be sure, but Japanese indeed might be another signal.

FOFOA said...


In my opinion that Celente post is badly flawed and was not written by Celente himself. It is going off a Hal Turner report (which is badly flawed) and the video of the drunk finance minister is very old. Nothing to do with this case.

Here's another post I was just reading about the bonds.

That those Philippine passports are associated with this case is pure supposition. They have nothing to do with this case. It was suggested on one website that those two Filipino men might be the "Japanese looking" men and those pictures were posted. Some on the internet have then made the leap that those pictures are the actual passports used? That's just stupidity.

Obviously the men had Japanese passports. And in my analysis, it was NOT those two men!

THIS STORY (!) and the way it has been handled IS a signal! (In my humble opinion of course)


Martijn said...

The story you were reading is indeed right, something doesn't add up.

I don believe it was Italian mafia also. Theyǘe got other ways of making money and would not be printing such large bonds and using Japanese looking guys to smuggle them.
Several other stories however did mention that mafia cash was quite welcomed in the legal economy recently in order to boost liquidity shortages. That however has no necessarily connection with the bond story.
As for the bonds being fake: why such large sums indeed.

And yes, I believe this sotyr might very well be a sign. Itś too big to ignore and too big to just muffle away like this.

FOFOA said...


The newspaper of record (MSM) has finally released the official version of the story.

Italy Intercepts Billions in Fake Treasuries

It took a while. But I'm sure they just had to get the details right.

Martijn said...

Well, sound very reasonable to have those guys released and not know too much about them. THey were only carrying some bonds. Who doesn't?
And off course there is nothing strange about this getting out in the open in Italy, they are one of the most transparent countries in the World. Berlusconi is totally clean and the mafia is perfectly legal. They never hide anything in Italy.

Did you happen to read about the "power struggle" in the fed?

Anonymous said...


The doubts about the "exit" strategy are subtilly rising.
First time that I read the "gold" word in an ECB text.

Confidence will definitely shift from the state to the private sphere.

The perception builders are still relatively succesfull in holding the dykes (must be Dutchmen).

FOFOA said...


Here's a quote from Geithner about the US borrowing too much...

“You cannot discount a run on the dollar. But you cannot fully quantify that risk at the moment...

Even if we could be confident that the world would be comfortable financing the US on these terms for some time, that fact alone does not mean that it is prudent for the US to continue borrowing on this scale."

That was from January 23, 2006 when he was president of the NY Fed. Here's the original article. And today he has just presided over the largest one-week borrowing spree ever!

Martijn said...


My take on it all is that the USD is facing the highest pressure ever, and that we certainly are driving into a dead-end street at full throttle.

But, before we finally drive into the concrete wall at the end, some other obstacles have to be smashed first. And when I was saying that it might take some time before the actual collapse I was saying that I believe those other obstacle might turn out more and bigger than we assumed. There still are some tricks to be pulled (starting a war or spreading some virus could be one of those) to distract attention.

On the other hand, the dire straits the US is in are well noticed globally. Some dogs are indeed awaking and it will be a hell of a job putting them back to sleep.

If nothing happens anytime soon we shall face the collapse sooner than many of us expect. I somehow find it hard to believe that Helicopterman and his friend will keep refraining from taking any actions to change the course. Then again, perhaps they really can't.

Martijn said...

The day gold rises over 5 percent in a day will mark the day of the collapse.

Gold never rises too much on a day, it's upward moves are controlled within a bandwidth. The day that bandwidth is broken is the day they've lost control. That might be the ultimate signal.

Martijn said...

Maybe even a lesser percentage (3-4) will do the trick..

Anonymous said...

@Martijn : Gold already had some +5% / -5% ($50) moves per day !

The goldprice governors manage the goldprice also in function of the major goldmines who have to provide the scarce goldmetal needed for further $-POG governance.

The giant goldmetal accumulators know very well that they cannot "corner" the goldmarket,...and better don't retry it (cfr. WAG/CBGA - 1999 goldprice spike from $250 bottom)

Bear in mind that price-behavior (through price governance) is the main psychological factor in any market.

A goldprice explosion to new highs (> $1000) might provoke a big hole in the perception dyke. Goldprice can move up without causing/provoking panic when stockmarkets move up in tandem.

Gold may not be percepted as an escape (selfdefence) for FI armageddon. I'm playing the devil's advocate now.

Anonymous said...

Encore ! (Bloomberg) :

June 26 (Bloomberg) -- China’s central bank renewed its call for a global currency and said the International Monetary Fund should manage part of its members’ foreign-exchange reserves, triggering a decline in the U.S. dollar.

“To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,” the People’s Bank of China said in a review of the economy in 2008 released today.

People’s Bank Governor Zhou Xiaochuan in March urged the IMF to expand the functions of its unit of account and move toward a “super-sovereign reserve currency.” Russian President Dmitry Medvedev proposed on June 5 that nations use a mix of regional reserve currencies to reduce reliance on the dollar.

“Zhou Xiaochuan sees the current international financial system is flawed, putting too much emphasis on the dollar as a reserve currency,” said Kevin Lai, an economist with Daiwa Institute of Research in Hong Kong. “The dollar should depreciate to address the global imbalance but because it’s a reserve currency it cannot.”


Anonymous said...

Anon 1:36

Was about to post on that yesterday, but i had log-in problems posting it. Than rather i thought, the ones who look for it will see it anyway :))

With ECB news on expanding with € 422 Billion it looks a nice buying opportunity. Still i'am a little surprised of the lack op POG to react on that.

Seems this world is getting used to the dream world news, until.... it starts becoming reality.

Btw nice biking weather

Martijn said...

5 percent up on a daily bases? I don't remember seeing that too often. 5 percent down is no deal at all off course. I'll need to check on in again.

Martijn said...


Thanks for the biking remark. Was already considering going for a spin, now decided to do so indeed.

Anonymous said...

Why the economy will remain weak.

>>> Will the real green shoot be a sudden $-devaluation !? Coming soon ?

I have the impression that the $-spinners want to blame China for having a $-devaluation.

(time for pond-garden-bike, Shanti)

Martijn said...

Those that have a mouse at their disposal: feel free to click here.

"We've got a situation where Geithner is smiling and has no choice but to stress the credibility and stability of the US financial and economic system, while the creditors [such as the Chinese] smile back and say they believe him, while at the same time giving hand signals to their reserve managers to get rid of these things [U.S. Treasuries]." - Neil Mellor, Bank of New York-Mellon

The Mad Scientist said...

Hey..I thought I was your fav peakist!

Martijn said...

And watching this vid on MJ is fun. It's loads a bit slow, but it is worth the time.

Anonymous said...

how England has destoryed other economies through its london centred financial cabal.

Bankers Capture the Money Machine - Fighting for the Family Farm

In the 1890s, "keeping the family homestead was a key political issue" given that foreclosures and evictions "were occurring in record numbers," much like today. The "Bankers Manifesto of 1892" spelled it out - a willful plan "to disenfranchise farmers and laborers of their homes and property," again like today except that now our very freedom and futures are at stake as sinister forces aim to steal them by turning America into Guatemala and lock it down by police state repression.

The panic of 1893 caused an earlier depression - severe enough to establish a precedent of street protests, the result of the first ever march on Washington. Businessman/populist Jacob Coxey led his "Coxey's Army (of around 500) from Massilon, Ohio (beginning March 25, Easter Sunday) to the nation's capital to demand jobs and a return to debt and interest-free Greenbacks. Local police intervened. The marchers were disbanded. Coxey was arrested. He spent 20 days in jail for disturbing the peace and violating a local ordinance against walking on the grass. However, he was never charged, then released, and is now remembered for his heroics.


Anonymous said...

have you ever wondered as to how come this economic crisis is basically of england and usa but their economy has gone down only by a ferw percentage pints while the rest of the world economy has gone donw by much longer depth?
and that the americans and british have printed money and despite that their stock market has gone up by more than 30 % in 3 months?
they printed money , they balied pit banks all actions opposite to what they preached their asian counterpartts in 1998 not to do and what thier agent IMF was imposing economic discipline on other nations.
in a way the british and americans have manipulated the world and their economy buy NOT foolwoing thier own prescription.

Anonymous said...

why we all should combine our resources to bankrupt the already bankrupt USA and UK.
The reason american and uk stock markets still rise depsite bankrupt nations of uk and usa-is because stock market is a big fradu to suck money from foreigners.


The neoliberal global system never was open in practice. America never imposed on itself the kind of shock therapy that President Clinton’s Treasury Secretary (and now Obama’s advisor) Robert Rubin promoted in Russia and the rest of the former Soviet bloc, from the Baltic countries in the northwest to Central Asia in the southeast. Just the opposite! Despite the fact that America’s own balance of trade and payments is soaring, consumer prices are rising and financial and property markets are plunging, there are no calls among its power elite to let the system self-correct. The Treasury is subsidizing America’s financial markets so as to save its financial class (minus some sacrificial lambs) and support its asset prices. Interest rates are being lowered to re-inflate asset prices, not raised to stabilize the dollar or slow domestic price inflation.
The policy implications go far beyond the United States itself. If the United States can create so much credit so quickly and so freely – and if Europe can follow suit, as it has done in recent days – why can’t all countries do this? Why can’t they get rich by following that path that the United States actually has taken, rather than merely doing what its economic diplomats tell them to do with sweet self-serving rhetoric? U.S. experience itself provides the major reason why the free market, run by financial institutions allocating credit, is a myth, a false map of reality to substitute for actual gunboats in getting other countries to open their asset markets to U.S. investors and food markets to U.S. farmers.
By contrast, the financial and trade model that U.S. oligarchs and their allies are promoting is a double standard. Most notoriously, when the 1997 Asian financial crisis broke out, the IMF demanded that foreign governments sell out their banks and industry at fire-sale prices to foreigners. U.S. vulture capital firms were especially aggressive in grabbing Asian and other global assets. But the U.S. financial bailout stands in sharp contrast to what Washington Consensus institutions imposed on other countries. There is no intention of letting foreign investors buy into the commanding U.S. heights, except at exorbitant prices. And for industry, the United States has once more violated international trade rules by offering special bailout money and subsidies to its own Big Three U.S. automakers (General Motors, Ford and Chrysler) but not to foreign-owned automakers in the United States. In thus favoring its own national industry and taking punitive measures to injure foreign-owned investments, the United States is once again providing an object lesson in nationalistic economic policy."

S said...


Great post. So timely. The Chinese out this morning with calls for super currency indicate one thing in my mind: the growing chorus is meant as a warning light to Summers. The Bloomberg article yesterday that Summers and Geither are in conflict with Bernanke (and volker sidelined) who they believe is not monotizing fast enough. Summers plan is simple: get in monotize as fast as possible and trap the rest of world when they let the market work and the dollar is destroyed. That is why cramming the 10 year down and rushing through refis is so critical. That has to be the plan, actually they have said as much. They would rather contend with hyper than the deflationary spiral that is currently underway (Japan today).

What seems apparent is that that inflection is coming faster than anyone expects. The Chinese in my reading are very openly calling bluff, which may force the US to make a move. One suspects though have no evidence that the movement of those bonds which has dropped off the radar (although the NYtimes is runnning a story) would point that way.

What would the US do in a contingency operation. The North Korean trawler and the missle defense of Hawaii (of all places hat tip FDR).

One suspects that the US is left with one option if dollar run started: create chaos. how would you do it? There are multiple flashpoints that would generate a chain of events whose outcome is unknown but it would be very kinetic. Such a conflict could be a last ditch at driveing flight to dollar and rallying an alliance.

While the sheep watch the ebb and flow of the stock market, one suspects the US is watching the gold flows desperately. Clusterstock running an article on gold bars at comex showing up with different serial numbers. Commemnts are interesting in the post, namely that major bullion banks are late since end of May on delivery of silver bars. TAnd then there is the little tidbit of Dresdner K/B dropiing out as a primary dealer.

This tea leaves are scremaing read me. Ther are a lot of balls in motion at the moment. One should always keep in mind that the head of intel is out to Congress testimony saying the greatest threat facing the US is the economy. In kkeeping with that the Pentagon is reported to have wargamed for a scenario exactly like this. In such a scenario, regional players would likely move to solidy positions.

Anonymous said...

In my humble opion the show will come out like this:
- inflation coming up
- higher oficial numbers of jobless
- T-Bonds bought by Fed in even amount
- vociferous foreigner calling for another currency
- bank holydays
- maybe a little flu and some infected vaccines for the overpopulated earth
- SDR als world currency(The basket +25%gold)
It is not to forget that Brzezinski is an architct for G2 (China&US)
and that the CFR pleads for several local/continental monetary unions maybe all pegged to SDR/IMF/BIS that means for me under special observance! The article from Washington Post names an advocate of free trade - Gerston. This Gerston is a "Bilderberger"! And this year at the Bilderberger gathering they decided to let the dollar drop. But when that is due to happen I don't believe that anyone except the sheeple is going to suffer. It will be a kind of confiscation worse than the euro for the masses and a good reset for PNAC. It is an illusion to believe that the world oligarchy will suffer any detriment! Wishful thinking and hopes only help for the time being before despair can get hold of us but see this regime falling takes to much imagination unfortunately.
I don't even believe that gold possesion will help us. Maybe for a short time fenster for a special investment but afterwards it will be surely put under arrest in usage for us - digital gold for example only on account and notheld privately and exchangable.
I hope someone tells me I am wrong.



FOFOA said...

The Mad Scientist has left a new comment on your post "The Triumvirate of Wealth":

Hey..I thought I was your fav peakist!

You are! There were two messages to two different people in that paragraph. Some of the points in the oil section were taken almost verbatim from a random post I came across.

Anonymous said...

Great post, Fauvi. But can we already conclude that everything is already in place to corner the $-rat ?
(Open question)

Goldmetal confiscation : American gold was confiscated to let the external dollar (no legal tender) live and expand ! The US lost most of its 28,000 tonnes with it. Much of this gold went first to Europ and later to the House of Saud for oil in dollars.

Now, I don't see any purpose in confiscating american gold, once again. On the contrary. The US will certainly adopt the freegold concept when the other economic blocks dedide to do so.

Anonymous said...

I don't believe either that this time will be an "official" confiscation à la FDR. There might be a hidden one as making only deposited gold availabe so that gold in natura would not be accountable.They might have many machination to make it useless for us. Yes, banks, states would put value on it, use it internationally, giving it monetary substance, but normal peasants with a few ounces, kgs will see themselves under pressure to put it out in an account at a predefined value or under their matress for their grand grandchildren and the next reset in 70 years. As about cornering the rat, nobody needs to. It itself is bitting in his tail as the worst oligarchs are in the in uk and us. It's just a drama taking place now only for the benefit of the sheeple. Last chance to rob at the highest possible extent NOW , before exit and "Their" last chance to amass everything robbed from them. Then make the sheeple believe there is a solution and they will be happy even if even more empoverished.My highest appreciation goes however to the same countries and people, as only they seem to have the guts to even look straight into the face of the criminals and defend (somehow a bit )themselves. Where are the French, German,Italian and the rest of people in Europe trying to expose the lies of our politicians/banksters?

Anonymous said...

I do share your serious worries, Fauvi.

Today, Berlusconi ordered all economic institutions to shut up about the Crisis (negative expectations)! They only make things worse.

The green (not yellow) shoots propaganda is OK.

If one is convinced armageddon (hyperinflations) will come upon us,...what other alternative than goldmetal in possession is there ? None, imvho.

Our wealth is crescendo being confiscated anyway.

But think about the following : The less goldmetal CBs have in reserve,...the higher its price must go to remain in balance with all the inflations.
What's the use of confiscating the gold from the citizens ? Let the gold explode in price and tax it.

FOFOA said...


Good thoughts! The dollar is different things to different people. Used as a digit of trade only, it doesn't matter what it is worth. It can be worth a bunch of grapes, or one single grape. Doesn't really matter to those who use it only for trade.

For those in deep debt denominated in dollars a "worth-less" dollar will be a godsend!

So a devaluation of the dollar means different things to different people! And a dollar devaluation is already in the cards. The only question remaining is WHO will initiate it?

In a hyperinflation, the FIRST people to spend the new currency profit!!! Everyone else LOSES.

There are TWO ways hyperinflation/devaluation occurs. One is INTERNALLY and the other is EXTERNALLY. One is by the printer issuing lots of new currency. In this case the US, the Fed and the Treasury PROFIT by spending the new cash first. The other way is through a RUN on the currency. This has the SAME EFFECT only the EXTERNAL dollars profit and the printer LOSES.

Absolutely they would rather contend with hyperinflation! That is, the PRINTERS would!! China would rather contend with deflation of the dollar, but they know this is NOT IN THE CARDS.

This is a great game of "chicken" underway right now. Do you know the game "chicken"? It is when two drunk idiots race their cars HEAD ON to each other on a single lane dirt road with a ditch on either side. Sometimes they go 100 mph with a closing speed of 200 mph. The LOSER is the one who "chickens out" at the last minute and ditches the car. The winner continues on down the road with his car still intact.

There have been MANY cases where neither one chickens out first and they both die in a head-on collision.

It is also a serious model in game theory. "The principle of the game is that while each player prefers not to yield to the other, the outcome where neither player yields is the worst possible one for both players."


Remember the movie WarGames? Nuclear war brinkmanship is also a form of "chicken".

The secret is that the REAL winner in the game of chicken is the one who ditches the car. Because he will never play again.

In this case, the US ditching the car would be to all of a sudden show restraint. For Congress and Obama to back off on their spending spree and for the Fed to back off printing. This will hurt the US in the short run (wreck the car in the ditch), but death would be avoided.

China ditching the car would be dumping the dollar. This will hurt China in the short run by devaluing its dollar reserves, but survival would be assured.

The US has proven it is not letting its foot off the gas. China's only choice is head-on collision or dump the dollar. That speed you are feeling is the "closing speed".

"What seems apparent is that the inflection is coming faster than anyone expects."


Anonymous said...

Yes, exactly. Tax it or a similar perversity otherwise I can't understand why they are still selling it to private gold consumers.
We can never fight a battle against this organism. They are organised, this has been planned for a long time ago otherwise why should they sell gold to peasents? Just in order to get it away from them in another way: taxes, confiscation, imposed value depending on this or or that.
There will be only a short momentum to make a good valuable bargain with it and afterwards God help! What worries me is also that in Japan cash should be replaced by digital money which is a real orwellian appication. RFID, money control,cyber censorship - all this is no longer conspiracy but reality. Maybe it takes a while, but the evolution ist startling in her velocity. Therefore we are in great need of networking to try to understand the process, to organise some modest think tank that might help when it happens.

A happy Fauvi who only here finds ways to communicate and have some exchange


FOFOA said...

Fauvi et al,

The secret of FreeGold is the WIDE SPREAD of gold!

Imagine you owned ALL the gold in the world. What would your stash be worth? NOTHING!

This is why CB sales of gold (REDISTRIBUTION) is so important. The wider gold is spread, THE MORE VALUABLE IT BECOMES!!

Imagine you owned 8,000 tonnes of gold. At current prices your hoard is worth $242 billion. But if you DISHOARD some of your gold and spread it around the world it will be used by ALL mankind as a wealth reserve (FREEGOLD) and it will find its true value.

Let us speculate the FreeGold "price" in today's dollars would be $100K/oz. You would only need 75 TONNES to retain your current value of $242 billion. That's less than 1 PERCENT of the weight of gold.

If the FreeGold "price" is $50K/oz., you must hold on to 2 PERCENT of your gold.

If the FreeGold "price" is $25K/oz., you must hold on to 4 PERCENT of your gold.

So let us look at the process of dishoarding 90% of your stockpile. You can KEEP all your gold and have a value of $242 billion dollars. Or you can SELL 7200 Tonnes, keeping only 800 Tonnes for yourself and your value will RISE by 500% to $1.2 Trillion dollars.

What if you dishoard 50% of your stack? Then your new SMALLER stack may become worth between $3 Trillion and $12 Trillion!!

This is what the Eurozone rebalancing is all about. This is what the gold vending machines are all about. This is what the removal of the VAT is all about. I said in Dead End, "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."

Securing the future flow of oil is NOT about getting MORE gold. It is about getting gold to EVERYONE so as to RAISE the valuation to its TRUE PLACE as a wealth reserve!

This is why ANOTHER said that in the future, our government will ENCOURAGE gold ownership. This is FreeGold!


FOFOA said...

My honest belief is that the "dollar faction" has literally become the KEYSTONE COPS.

People are so fearful that the future is being manipulated to some Orwellian nightmare.

Just look at Bernanke, Paulson, Geithner, Summers and Obama. They are the KEYSTONE COPS!

Bumbling idiots.

Sure... the bankers engineered the THEFT OF THE CENTURY.

But don't think that means they can engineer the future. They have LOST CONTROL!

If things seem to be continuing on the status quo, it is either DUMB LUCK, or it is that those who are TRULY IN CONTROL now are not yet ready to let the system fail. They are still battening down the hatches as they SUPPORT the system a little while longer.

Why do you think the US Treasury has become a big GRAB BAG of money for the bankers. Why do you think the Fed's balance sheet has become a $T pile of garbage?? This is NOT a sustainable PLAN for the future. It is a SCORCHED EARTH RETREAT!!!!!

Do not fear the NWO. It has been castrated!

In my humble opinion.


Anonymous said...

China and India (2,5 Billion people) are still distributing goldmetal amongst their citizens (gold liberalization).

The same is true for the entire Middle East and many other states (Turkey, Signapore, Indonesia, Russia, etc)

Gold is far from death. It is the dollar that has to give way.
The $-system never succeeded in stopping goldmining. Gold still is the dollar's antithesis for more than 3/4 of the global population.

Dubai's melting/refinery capacity has doubled in order to redistribute the traded precious.

Gold will decreasingly be associated with primitive 3th world regions. The ECB is not a banana CB.

The sale of IMF gold is also a redistribution that must bring a revaluation (tr-marking to market)of the goldprice as to balance with the remaining gold reserve.

Mainstream media never put the goldactions in such a context.

Only FOFOA does this "passionately". And I like it :)))

Anonymous said...

Thanks for your comment and even more thanks for your explanation. Of course it is pure logic what you say but fear is all along with me. That might be because it is not long since I've got these revelations about the true nature of our enviroment. When I read Global research ca. and see at what extent the militarisation has arrived and compare to their alledged helplessness to ease this crisis - which of course you are right they seem no longer to have an absoloute control of - I cannot understand where the power, the force comes from to still conduct the empire. How happens that the whole Europe still stick to them? I don't look only upon Gold and its evolution, I think the key is geopolitical. For my understanding as long as PNAC still has European support it cannot be so bad for the rest of their policies. As long as they dictate the rules and these rules are followed, it cannot be so bad in economical sense that they might lose supremacy. I probably don't understand very well the connection betweeen these two aspects, but when reflecting back on history, the Romans lost control of their provincies as they faced their financial downturn. Am I wrong and if, what is today different? Don't you believe that they may have a hidden anchor somewhere? Do I see them too strong as I am too small and insignificant? I was not actually brought up to give in by fear of regimes or consider them infailible so I hope you are right and it will not take to long to see a better world for our children, thought which most occupies my mind...Sorry for my clumsy English, I live in Merkelland

Anonymous said...

From Max Keiser (snip) :

The optimists that have long assumed that the dollar will continue to reign supreme due to lack of alternatives have just have their sanguine views challenged as China threw down the gauntlet on coming up with an alternative, >>>> non-country-specific, reserve currency.

>>> " non-country-specific, reserve currency " !!!!!!

Exactly what Another (consulting the Chinese) already said in 2000.
Then Duisenberg : The euro currency severing its link with gold AND the nation state !!!

And then I repeat the same mantra once again : A new global financial system architected to have a level playing field.

The end of modern $-colonialism that became dysfunctional through total mis-management.

That's why FOFOA concludes correctly that the NWO is castrated (by the dys-functionality of its $-system)

Bedtime for Eurolanders...Thank you all for the insights.

FOFOA said...


My response...

"...but when reflecting back on history, the Romans lost control of their provincies as they faced their financial downturn." Yes! Study the Roman Empire. And others as well. Martin Armstrong papers are good in this respect.

"Am I wrong and if, what is today different?" Different from the fall of Rome? Not much.

"Don't you believe that they may have a hidden anchor somewhere?" The US may still have 8,000 Tonnes of gold. Let's hope they do. Or even 1,000 Tonnes would be plenty. This will allow for a smooth transition to FreeGold.

"Do I see them too strong as I am too small and insignificant?" Yes. And you are not alone!


FOFOA said...

SEC Investigating Illegal Naked Short Selling

This blog post is not about gold. But it may be another sign.

FOFOA said...

Could this be related to those confiscated bearer bonds? Could this be a backdoor clawback? I'm just sayin'.... something stinks like rotten sushi here.

FOFOA said...

Another sign the end is near: When international primary dealers decide it is smarter to follow China's lead and sidle away from the US Treasury.

FOFOA said...

Switzerland skating on thin ice!

The Mad Scientist said...

Great Post.
I think the next 15 years may be very interesting for Gold Oil ratios.
i wrote about it over here (as you are aware)
A lot really depends upon the timing of USD troubles.
Immediate troubles would probably mean death to oil prices in other currencies and certainly in Gold.
Intermediate Time frame may allow both Gold and oil to outperform all other assets while staying neck and neck with each other.
If Chris Laird is right and we can approach 200% Debt to GDP without going under ( don't you think he changes his mind too often) then who knows what will go up more.

S said...


I have been thinking about the ZH post on CS. On the one hand it could be simply the other side of a hedged position (arb, swaps etc). However then the tin hat comes out and one begins to contemplate the quiet cold war between the the swiss and the US. When the Fed was putting in place its swaps lines I wondered whether this was a matrix like move to buy players deeper into the system. Lock in cross border liabilities as a mechanism for control. The swiss line was rumored to be put in place to help fund the USD liabilities of the big swiss banks. perhaps. But what if the swiss are deflecting that liquidity into a leveraged long position in the US markets? doing so would be the equivalent of strapping on the suicide belt and walking into the middle of the casino. Of course the great irony would be that it is being done with the Fed's own money. Think of the implications: (1) $ would get annihilated when the sell signal is given and the unhedged swap line would be paid back at a fraction of the cost. Substitute virtually any surplus country for the Swiss and the rationale stands(notwithstanding swap lines).

Perhaps you could comment on the the likley moves by the GCBs. If anything is clear the Gov't will never give up control and never never never go to some constrained system. Exploring the hypothetical however, what if they a fractional gold resevere gold simply settle of fall or rise on such an announcement?

What would demand and supply look like? One thing is for certain, those populating the Fed have "better" information . Therefore, it is not as if they don;t understand the situation. Thus the US must be realize the dollar regime is ending. As such, and considering your reference to game theory, what are the tradeoffs the US is willing to make to preserve some semblance of balance? Is it abandoning Taiwan, ceding back Russia;s sphere of influence etc.. Whot would be the ultimate grand bargain?

S said...


On the primary dealer issue it should not be lost that the bank in question is German. The aerticle in De Spiegal re demand oist and the rumors of German repatriation all fit a narrrative. I read somewhere which i have since forgotten that during that brian williams day in a life special, as tapes rolled Summer and Geithner came into the rook and mentioned something about the Germans. The cammeras were then shut down.

Poetry in motion

FOFOA said...


Good thoughts once again.

I did notice that bank has headquarters in London and Frankfurt.

You are correct that it fits the narrative. There are narratives developing anytime we hear about Italy, Germany, Japan, China, Russia and the Middle East. Isn't that interesting!!

EVERYTHING is connected!

"doing so would be the equivalent of strapping on the suicide belt and walking into the middle of the casino."

Sharp observation! Although suicide is unlikely. They would have to have an out.

I'm not sure I understand these two paragraphs...

"Perhaps you could comment on the the likley moves by the GCBs. If anything is clear the Gov't will never give up control and never never never go to some constrained system. Exploring the hypothetical however, what if they a fractional gold resevere gold simply settle of fall or rise on such an announcement?

What would demand and supply look like? One thing is for certain, those populating the Fed have "better" information . Therefore, it is not as if they don;t understand the situation. Thus the US must be realize the dollar regime is ending. As such, and considering your reference to game theory, what are the tradeoffs the US is willing to make to preserve some semblance of balance? Is it abandoning Taiwan, ceding back Russia;s sphere of influence etc.. Whot would be the ultimate grand bargain?"

Can you explain your question or you point a little more?

What I see happening is those in government are securing their own PERSONAL well being, not that of the state or the government. What tradeoffs? They will give up almost ANYTHING they can get away with if it helps them or their friends and relatives.

There are still a few checks and balances in place though, preventing total scorched earth. So the sooner "shit happens" the better for everyone.


FOFOA said...


>>> Will the real green shoot be a sudden $-devaluation !? Coming soon ?

Yes! Dollar devaluation WILL be the green shoot!!! And the spinners can blame China all they want, because the rest of the world will be THANKING them once the dust settles!

A devalued dollar will NOT retain reserve status. It is the equivalent of trying to get a new credit card right after bankruptcy. The only credit card you can get is a PREPAID one!

Did you ever take the collar off a cat by sliding it over its head? It will complain and fight, and try to scratch you and get away, and then when the collar comes off it will run away from you to avoid further "torture". But in no time at all it is very happily purring in its newfound freedom from bondage!

FOFOA said...


I watched your video. It is an unusual tribute to the King of Pop! I doubt we will see that one on MTV.

SatyaPranava said...

wow...beautiful place to be. so many people and comments now, i don't even know where to start.

suffice it to say re: japan and denninger, i had the exact same thought earlier. and fits us dumping $$ for real assets, as i had mentioned in the original discussion here. again...too much is unknown, but it's still interesting.

also, fauvi (sp?), i, too, have seen what these guys are capable of and do give them a lot of respect. hence i am more than a bit fearful, but at the same time optimistic that the answer is there, and it's not dependent on the masses waking up (if so, i think we're fu-ked). fear is a good thing, as long as it doesn't paralyze you. keeps you on your toes, w/your eyes wide. sharp.

i also know that when i watch movies i cannot figure out the specific mechanism the writers will use to enable the good guy to win against impossible odds, but it happens. i'm hoping this site will help set off the epiphany for me. there hasn't been an epiphany just yet...but more and more things are clicking.

I feel like this is boxing, we might be winning, but no one knows the score for sure, and we sure know the judges are bought off, so we just have to keep scrapping for a knockout punch.

here's to knockout punches, FOFOA, A/FOA, and all of those who strive to make a difference.

FOFOA said...

Hello Prana!

The good guys win because the bad guys always have a fatal flaw, an Achilles' heel.

In the case of reality, this happens less often because time is a factor that can be bypassed in the movies.

What we are seeing right now has been a long time coming. Time has already been spent. The water is now boiling.

The West won a rightful place in history after WWII. Sick minds will dispute this, but I don't.

But the advantages won with blood have been ABUSED by pansies during the long run of peace. Look no farther than Goldman Sachs and $500,000,000 golden parachutes for producing NOTHING BUT PAIN for the proof.

I am not envious of the rich. Never have been. I have carved out my own comfortable niche in life through hard work. But it makes me MAD AS HELL to see the scorched earth retreat that is now underway.

This is the fatal flaw! That those you fear have NO MORALS guiding them anymore. Only self-preservation.

It is out in the open now. Hate it, but don't fear it. They are on the run, like cockroaches in the light.


SatyaPranava said...

dear abby (or fofoa and others...another/foa: you're welcome to comment too!),

sure they have a fatal flaw, but i don't see many chasing after them. i see them simply running into their fortified city-state.

w/re: to they "have no MORALS," when i was walking in front of treasury, and the white house, just after some explosive events in israel some 12 years ago, i asked myself the question, if nice guys finish last, how in the hell do we rule the planet? how does a "democracy" (or constitutional republic, if you will, but at least a country which at least pays lip service to its demos, beat all the bad guys who are willing to use any/all tactics w/out any moral framework? the only answer i could come up with that fit what i understood of history, is that we were willing to use even more shady tactics time and again. obviously, this puts "us" as in the wrong, collectively.

so, for me, the question still stands: how does one defeat the bastards who have no scruples whatsoever, and wish to depopulate some 95% of the earth? to submit the majority of people into slavery, and treat as chattel? to create etheric digital currencies that are managed by chips that can be turned on and off? and are willing to turn the military, or a bioweapon, on its own people? i'm not saying any of these things is necessarily going to happen (again), but how does one defend that?

these are some of my concerns. and irrespective, i am really seduced by the perspective that you/anoth/foa seem to offer. i just wonder how the rothschilds, who own practically the entire world, allow their vision to go down the tube.

FOFOA said...

Those "shady tactics" you speak of... the West's "secret weapon" is [HAS ALWAYS BEEN] the international banking system!!

It had a flaw [FROM THE BEGINNING] which GREW [out of proportion TO ITS GOALS]!

You must disconnect (in your mind) the West... from the West's BANKING SYSTEM.

It is the SYSTEM... the secret weapon... that has collapsed. Think of it as the TESTICLES being cut off of the horny bull that has been RAPING THE HERD.

"i just wonder how the rothschilds, who own practically the entire world, allow their vision to go down the tube."

"They" have gold. Don't worry about them. They will be fine. They will have to start scheming a new plan to take over the world, if that is still their game.


FOFOA said...


I know that geopolitics is your arena. But I really believe that today's geopolitical landscape is a "derivative" of the dollar. I'm not blaming the US for all the world's problems. But I'm blaming the global reliance on a fatally flawed system... an UNBALANCED system... for the geopolitical situation we are in. The world is UNBALANCED!!!

This $ystem is now in transition phase. So there should be a discontinuity in geopolitics when the shift occurs.

I believe the shift will be soon and I believe it will be earthshaking.

Of course I could be wrong about this and therefore we must continue to monitor the geopolitical landscape. It, TOO, plays a role in the transition.

But I don't want "to put the cart before the horse".

When we talk about the evolution to Freegold, we should talk about its effect ON the geopolitical landscape, not the geopolitical effect on Freegold.

Freegold is a shift of THOUGHT at such a basic level, on such a global scale, that it supercedes all geopolitical considerations. All such considerations MUST evolve once paper wealth burns.

This is why I cringe when the discussion turns to geopolitics. Not just because it is not really my area, but because I believe we are discussing something much DEEPER.


SatyaPranava said...

so much food for little time. geopolitics/economics is definitely the prism through which my curious mind sees the world.

my questions for you, though, are the following. historically speaking, when centralization occurs, even w/the best of intentions, a party/person/company/institution, etc comes along to take control of that centralized system for its own agenda (recent historical example would be german unification in 1871, which led to the western-financed, National Socialists to take control of that system). A similar centralized system is being put into place nationally (on the US level) for sure, and also appears by rhetoric, policies, and energy, to be happening moreso globally.

so if we're at a fork in the road between centralization/decentralization, and freegold representing the latter, (can, and if so) how does one generally prevent a power very quietly (maybe not so quietly) waiting in the wings to just take over that system and continue its trend? I'm thinking of China here.
in other words, FOFOA, why do we necessarily (or likely) head down the path of freegold (vs more centralized global empire), and how does this help to prevent (nearterm) future attempts at global consolidation?

so transition is obvious, but: why necessarily transition to balance?

FOFOA said...

Hello Prana,

Things are infinitely complex. It is never as simple as one or the other. But at the same time as complexities rain chaos, inevitabilities emerge as patters. Emerging fractals if you will.

Freegold is not dependent upon the outcome of centralization or decentralization. They can source a new currency if they want. But the cannot force the world to SAVE in it. Even if they destroyed all gold (purely hypothetical), they gathered it all up and nuked it in a big hole, they still couldn't force everyone to SAVE in their new currency.

This is what they (NWO) has lost. They neutered themselves with this crisis.

Centralization always leads to less efficiency. Centralized power always sucks to the center that which is needed most on the periphery. This FLOW moves in waves. The wave has now reversed and is heading outward. Obama's centralized healthcare and cap and trade are doomed to failure because they only pretend the wave has not yet peaked. They fail to recognize the emerging pattern.

Marty Armstrong had it right when he said this is the Collapse of Socialism. Remember the great article you read, When Trust Runs Out? We are watching the death knell of socialism in Washington right now. It is already dying elsewhere, in Russia, China and Europe.

Centralization has burned itself out with its own corruption and greed.

Identify the pattern emerging from the chaos.

Nothing will EVER be in perfect balance. This was the fatal flaw of Socialism. Waves and Cycles move through society. This is why China is free to prepare passively. It is not necessary to actively fight against that which is dying from its own obesity!

In 1997 Another said, "There are nations that will try to "resource a new currency" as the old financial system implodes. Oil or gold or both may be used. If it is done at the correct time, much will be gained by all! Fail this Attempt, and gold will never trade on an open exchange again, in our lifetime! We will see this end in our time."

I think it is clear in 2009 that it was not done at the correct time. Perhaps this is why Jim Sinclair has had to adjust his rhetoric in 2009 regarding the "Federal Reserve Gold Certificate ratio, modernized and revitalized".


FOFOA said...

And the DEATH KNELL tolls

Martijn said...

I watched your video. It is an unusual tribute to the King of Pop! I doubt we will see that one on MTV.

Haha, I agree. Just posted it because I know you enjoy watching an underpinned alternate take on things. That's also all one can say about the video I guess. However, thought it'd be a welcome variation these days.

FOFOA said...

I watched video #2 as well. Lenon Honor is out there.

Martijn said...

However then the tin hat comes out and one begins to contemplate the quiet cold war between the the swiss and the US.

Here is a bit more. It's not so secret/cold anymore.

An economic war has broken out between Switzerland and the rest of the world after the crackdown on Swiss banking secrecy, according to one of Geneva’s leading private bankers.

In rare public comments, the Swiss private banker said: “There is a feeling in the banking community, and also in the population . . . that we are in an economic war

Martijn said...

I still have to watch more of his. Was planning to, but since I switched to Linux I have yet to install a codec to get the sound of his vids working. Didn't feel like doing it yet, but I surely will this week.

FOFOA said...

Is this you?

Martijn said...

Haha, it is not limited to computers. Such a great program!

Martijn said...

Lenon Honor btw has quite a bunch of movies.

Martijn said...

Finally managed to install Linux on my bike, and watched the second movie "The Creator, the gods, Evil, and the Manipulation of Humanity".
Lenon Honor is out there.

Andrew said...

Nice post!

I hope you're right about gold and oil reuniting as early as this fall (for selfish reasons -- I have a bet I'd like to win :p).

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