Thursday, July 16, 2009

Rich Dad - Base Money vs. Gold

46 comments:

FOFOA said...

As Jim Sinclair says, this should really piss off the BRICs...

Joe Biden spews: "We Have to Go Spend Money to Keep From Going Bankrupt"

So......

The Department of Treasury, Bureau of the Public Debt (BPD): "seeks contractors for 'power of humor'... must 'Have the ability to create cartoons on the spot'..."

Perhaps they should also hire a MOPE coordinator.

FOFOA said...

For confirmation: Click here.

Tekin said...

Could this be linked with JS countdown?

"In its current issue, HSL reports rumors that "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. 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.""

http://www.marketwatch.com/story/schultz-paints-bleak-picture-of-future

Shanti said...

Breaking the exange €-$ between 1,40 seems significant to me, they can not hold it under the planned 1,40 as sugested by Mundell.

Things are heating up....

FOFOA said...

Tekin,

Yes it could.

Check out this GATA dispatch:
http://www.gata.org/node/7597

Then click through to one of the links at the bottom of the dispatch, either GoldSeek, Kitco or 24hGold. That linked article talks about the Harry Schultz letter as well as others I'm sure you have read...

Sincerely,
FOFOA

FOFOA said...

The Goldman Sachs Spider Web of Hell!

Another MUST--SEE--(GS)--VIDEO !

Tekin said...

Thank you very much FOFOA;

Although I am throughly prepared, I frankly did not expect any deviation from the gradualist, "boil the frog slowly" approach of the PTB.

Looks like the implementation phase has started. This sent chills down my spine.

Best Regards;

Anonymous said...

@ Tekin : Yes, I was a "gradualist" myself for quite some time. " Was ! "

But, as FOFOA mentions : The state "guarantees" come on top of the existing Debt Crisis !

This is definitely not a -boil the frog slowly- picture,...but coyote hanging over the cliff...exactly as A/FOA already described a decade ago.

In Euroland, the social state now has to guarantee almost everything ! We are simply buying time and in the process guarantee a sudden CRASH instead of a cuisse de grenouille a l'ail (frog meal).

Anonymous said...

!!!

South of the Alps, meanwhile, the Italian government was told by the European Central Bank (ECB) on Tuesday to halt plans to charge the Banca d'Italia capital gains tax of 6% annually on its bullion holdings.

Anonymous said...

The Telegraph :

IMF warns pound could be at risk from uncertainty .
The International Monetary Fund (IMF) has warned that Gordon Brown risks a run on the pound if he does not set out a clear path for reducing national debt.

>>> The article proves again that the catch-22 situation is rapidly aggravating and is "impossible".

No frogs frying,...but sudden CRASHES !

Martijn said...

Work, then die. Hello taxable assets.

Anonymous said...

The vice-President of the USofA :

Joe Biden: ‘We Have to Go Spend Money to Keep From Going Bankrupt’

Thursday, July 16, 2009
By Penny Starr, Senior Staff Writer




(CNSNews.com) – Vice President Joe Biden told people attending an AARP town hall meeting that unless the Democrat-supported health care plan becomes law the nation will go bankrupt and that the only way to avoid that fate is for the government to spend more money.

Martijn said...

This Glenn Beck show on Goldman puzzles me. This is quite open. It might very well be that they are preparing the public for a banking holiday, don't you think?

Anonymous said...

Yes Martijn, this kind of (sudden) openness is indeed puzzling/confusing/frighthening !?

It sounds as if "they" throw the towel into the ring.
...W've done/still doing everything we can...and it might not work, dearest folks.
Please don't blame "us" for the suffering you will experience...

Just saw CNBC comedy capers about the Nourbini flip-flops. Total insanity on a major spin channel.

@FOFOA : Sorry for repeating the Biden blablahaha. But this is going beyond me.
These ultimatums are evidence that a total crash is to be expected.

Anonymous said...

Have a look at another (short) video (Obama snubbed) :

http://www.youtube.com/watch?v=x1C_NWMRs8Q&eurl=http%3A%2F%2Fwww.city-data.com%2Fforum%2Fpolitics-other-controversies%2F703441-russians-snub-obama-refuse-shake-his.html&feature=player_embedded

>>> I think this never happened before !?
FRIGHTHENING !

Anonymous said...

Market masturbation :

July 15, 2009
The Derivatives Beast Is Still Destroying World Banking
Goldman Sachs and JPM are playing a bizarre game called ‘proprietary trading’ whereby they trade with themselves. This sort of market masturbation is causing their stocks to rise even as it produces absolutely nothing at all, in the real world. The Justice Department is now investigating them. I hope all the guys doing this [...]

Martijn said...

Korea to maintain position in BofA.

Why would they want to stay on board?

Anonymous said...

I hope your other interpretetations are better than the last one with Os video in Russia. He is only presenting the line, perhaps American business folks. I would not reach for his hand, but nobody asks me.

Anonymous said...

@ Anon : The same happened in Saudi Arabia...!?

Anonymous said...

no, that one seems to be genuine, although you can't see his face.

Anonymous said...

I didn't watch the video but the "Rich Dad" guy is a major hack. His book sells because the masses are stupid on finance.

Anonymous said...

Ok, I watched the video. Interesting and very scary.

And the "Rich Dad" guy is still a major hack.

FOFOA said...

I posted this video because it lines up nicely with my current thinking about the importance of base money and its unique characteristics and nature.

IF it turns out that I am on the right track, then that base money line may actually exit the building they are in through the ceiling.

Monetary theory is not exactly a settled science.

BTW, I like Kiyosaki, even if his success outran his smarts a long time ago.

Anonymous said...

http://www.24hgold.com/english/news-gold-silver-ending-the-monetary-fiasco--returning-to-sound-money.aspx?article=1989670382G10020&redirect=false&contributor=Thorsten+Polleit

1once ... If he's not crazy!

Anonymous said...

People 'like' (more like, gravitate) towards Mr. Kiyosaki because like others (Tony Robbins comes to mind), they are adaptable and possess 'unique' abilities to change with the times. Think Chameleon...

It doesn't mean that his message is necessarily wrong, it simply means that like all good opportunists, he's there at the ready to 'make the most' of a given situation.

A cursory look up shows a rather interesting financial past. In any event, guys like this never cease to amaze (or amuse) me with their 'talents'. Not the spokesman I would choose, but whom am I to judge.

FOFOA said...

That is a fair summation of Kiyosaki. He has always dealt in the present rather than the future. His business model includes many "advisors" which is quite unique. How many personalities that we know give equal weight to their advisors as they do to their own words? Very few!

Anonymous said...

Rich Dad chart :

What happened the past 15 years with CB-gold !?
Answer : A redistribution of (proportionate) CB gold reserves under the WAG/CBGA umbrella.

WHY ?

The systemic debt growth leads inevitably to MASSIVE fiat devaluation and price inflations.

Purpose : Erase the lead-heavy burden of debt fiat-digital expansions that stopped the global economy to function properly.

As Duisenberg stated : Gold will remain an important reserve asset !!!

The goldprice will readjust for its correct PP in one Big swoop together with the currencies devaluation and general price inflations. Same recipe for the same systemic problem.

The main difference today, with all the problems from the past 7 decades, is that the $-system/regime now has serious competition from other economic blocs and "their" currencies.

Meaning that the readjustments will not be of a cosmetic nature, anymore. The $-monopoly shall be reduced to its proper dimensions.

I see absolutely no flaw in Rich Dad's projection and his fundamental argument.

FOFOA said...

"under the WAG/CBGA umbrella."

Martijn, what does this remind you of?

A "controlled" redistribution?

Very significant IMO:

"the Italian government was >>told<< by the European Central Bank (ECB) on Tuesday to halt plans to charge the Banca d'Italia capital gains tax of 6% annually on its bullion holdings."

Anonymous said...

$-Breakdown in progress ?
Chart /

http://www.321gold.com/editorials/willie/willie071709/2.gif

>>> Indonesia bombs : Why would anyone refuge in the dollar because of Indonesian atrocity ?
How can this possibly be an argument for today's $-mini swing (down/up) ?

A monthly close of the USD-index below the 80-maginotline would be very significant from TA/TI and fundamental standpoint.

The MA 50/200 crossing seem to suggest w're heading to this renewed break down. A turbulent '09autum ?

Martijn said...

Martijn, what does this remind you of?

A "controlled" redistribution?


Yes, umbrella means control; I have recently invested some time in learning the meaning of the word umbrella.

"Now let me axe you..."

Smiley.


This Italian story is interesting indeed. Some things are interesting:
1. Italy has one of the largest gold reserves per capita in Europe
2. Italy does not like the European rules on budget deficits

If the would charge the taxes, would they encourage Banca d'Italia to sell some of its gold? Guess not really, as gold sales generally are coordinated on a European level. Still the Italian government is rubbing something here. This is a relevant matter.

Btw: again Italy... first the bonds, now this. A connection is certainly not proven, but we could keep an eye open.

Anonymous said...

If, for instance, US M2 were backed by gold, the resulting gold price would, under current circumstances, climb to more than US$31,000 per ounce; in the case of a 100% gold backing of M1, the gold price would exceed US$6,000 per ounce.

If, for instance, the euro area also backed its fiat-money stock with gold, as defined by M3, the resulting price for a gold ounce would be more than €26,000.

Anonymous said...

Scathing critique of "Rich Dad Poor Dad" and Kiyosaki at below link. These days he's more about hiring the brains of other people so maybe it's better that way.
http://www.johntreed.com/Kiyosaki.html

FOFOA said...

Agreed --> "maybe it's better that way."

FOFOA said...

Comments and observations from the new Jim Willie article:

"The Powerz wanted enough time delay to rework as many mortgage bonds as possible into new securities, thus rendering impossible any legal challenges to the original mortgage package process."

This is a very good point that explains the past year in a credible way.

"the USDollar will begin to see a trashing initiative starting this weekend, out of Asia. They must be impatient beyond description. This autumn is expected to see some rather tumultuous events unfold"

If the "autumn expectations" are as widespread as I think they are, Asia might want to "beat the rush".

"The nonsensical Green Shoots of recovery are recognized as a painted mirage at worst and error due to faulty information at best. More like a congame to sell bank stocks at inflated prices, an act difficult to repeat."

Not stocks, BONDS! The bond holders (fixed income retirees and pensions) will be hurt WORSE than the stockholders. That quote I posted earlier was actually about GS bonds! Theoretically (at least) stocks rise in nominal terms (though not in real terms) during a currency collapse or hyperinflation. Bonds DO NOT! They shrivel up like used toilet paper.

"Imagine a silly setup where Congress cannot find out what its central bank is doing, when acting as its own contractor, how ludicrous!"

The Fed's stonewalling of Congress is perhaps the most chilling indication that they know something is coming soon. You can't stonewall Congress for the long run, only for the short run. This tells me the Fed's horizon of focus is relatively short!

"The major question unasked and unanswered is whether the USFed gave foreign central banks the USDollars with which to bid up the USTreasurys at auction. My belief is obviously yes, for three reasons. First, the USFed was struggling at auctions with rising bond yields and bad publicity. Second, the process was applying sufficient pressure to their own stable of primary bond dealers, which was sitting on over $360 billion in gradually lower quality bond inventory, to bring down their own dealer network. Dresdner Kleinwort exited the dealer network, but two Canadian big banks entered (or are entering) the dealer network motivated by grave imprudence. See Toronto Dominion and Royal Bank of Canada. Third, they have the means, they have the ability, they have the sway, they have the bold defiant arrogance. "

I have been saying this for months. Yes, it is QE in disguise. It is PPT in new clothing, disguised as foreign CBs. It is the EVOLUTION of "the Caribbean strategy". It is COVERT printing of NEW BASE MONEY being disguised as NEW CREDIT MONEY that the Treasury can now spend on Obamanomics. It is DISCRETE Zimbabwe-ization! Interesting about the two Canadian banks. I wonder what they received in exchange. A reprieve or extension on their date of execution? Anyone know if these two Canadian banks were in big trouble in the MBS, CDS or IRSwap arena? Perhaps a backdoor bailout from the non-transparent Fed?

...

FOFOA said...

...

"Would the USFed set up accounts in foreign locations for the purpose of bidding on its own USTBonds secretly? Obviously yes. They already set up vast USDollar Swap Facilities last October in foreign locations. This ugly deception will leak out in time."

A leak may not be necessary. The suspicion is already out there. Anyone that knows anything about interpersonal relationships knows that trust takes years to build, but it can be destroyed overnight by the mere suspicion of infidelity.

"THE ONLY PROBLEM FOR THE BIG BANKS IS THEIR IMMINENT RUIN FROM MAJOR ADDITIONAL CRIPPLING LOSSES FROM ABOVE CITED SOURCES. They might masquerade as healthy solvent banks, but they are actually large seaside cottages whose foundations washed away to sea long ago."

Or... perhaps they are now propped up by IMPLICIT GUARANTEES from Bernanke and Geithner! Guarantees that ensure hyperinflation and are currently being protected by the Fed STONEWALLING Congress. If Congress were to FORCE transparency right now, perhaps hyperinflation could be avoided. I do not know. It may already be too late.

"...migrant workers who have begun to demand cash sent from Latin American home areas, never seen before."

Interesting. Very interesting if true. This is a reverse of flow, thanks to California IOU's. Next step to Zimbabwe is a Federal GUARANTEE (through the big banks) of California's IOU's. Keep an eye out for this development. A COVERT bailout of California!

"The USDollar would likely suffer a sudden quantum drop devaluation, followed by incredible pressure to avert USTreasury default. The risk of an upcoming USTreasury default is unfolding like a path growing more narrow and treacherous, vulnerable to attack from strategic high ground. The creditors will likely show their strength very soon."

This is the catch-22 of a bank holiday/devaluation. It is very hard to keep secret, and even if one isn't planned, speculation can make it a reality if the creditors get nervous. At that point it becomes a classic game of chicken. I think this may be where we are right now... game of chicken!

"The unintended consequences would be endless"

Translation: Surprises will abound!

FOFOA said...

Martijn,

Regarding a previous discussion we had, do you think this is relevant?

http://zerohedge.blogspot.com/2009/07/market-plunge-prevention-friday-lunch.html

http://zerohedge.blogspot.com/2009/07/stop-trading_17.html

FOFOA said...

Jon Stewart on Goldman Sachs

Siege said...

Zero Hedge rec'd notices to remove two postings from today; I assume they are the two you identified FOFOA. I suspect the information within is crucial to current market happenings. It might be good to save a copy. I have not posted them to your blog as I suspect you will get a similar request.

http://zerohedge.blogspot.com/2009/07/market-plunge-prevention-friday-lunch.html

http://zerohedge.blogspot.com/2009/07/stop-trading_17.html

Martijn said...

Fofoa,

On tshorting I tend to "rest my case".
However, changing the rules "on the go" will certainly cause a olt of dynamics and it highly likely to influence the market. If these stories are large scale and unusual (which I think they are), this really is manipulation.

We have also watched a lecture on naked short selling and the lack of governance - the story of a guy acquiring 110% of the outstanding shares over Overstock was a good example.

Perhaps they are trying to finally improve their oversight on this topic, but I hardly think so...

Martijn said...

Here is Max Keiser again. I've posted the vid before, but you should listen from 7:35 onward. Max makes an interesting remark there...

Martijn said...

EMPIRES ARE BUILT ON THEFT PILLAGE, SLAVE LABOUR AND FINALLY MONEY PRINTING

Martijn said...

In the next few months we will see the start of the Dark Years. For the first time in the history of the world there will be a synchronized downturn affecting all nations (although some a lot worse than others).This is the culmination of the world and especially the Western world, living above its means for decades in a mania of credit bubbles, asset bubbles, real estate bubbles as well as excesses leading to decadence and a society with very weak moral and ethical values. (Of course no society recognizes this as it is happening but only afterwards). Governments have fuelled this process by printing unlimited amounts of paper thus destroying the money and purchasing power of most nations.

I still believe many of these statements are way overdone. The financial system is busted, yes, but that does not mean that the real world will explode.

FOFOA said...

Video - Dark Pools and The Great Reset

DiverCity said...

While gold prices/value might actually rise exponentially when priced in fiat currency, joe six pack won't understand that it really meant the currency was devalued and gold remained constant, which will allow the evil, knowingly conniving politicians to tax these terribly unfair "windfall profits" obtained by those who were prescient enough to understand how those same politicians were destroying the currency. I'd guess we'll see a tax on these "speculative windfalls" in the range of 80-90%. So, how can we win? We can't.

Anonymous said...

If you want to understand why inflation wont happen even in the face of unprecedented debt creation, read Karl Denninger. Money has to have velocity-banks wont lend to unworthy borrowers anymore. We'd already have inflation if banks were lending.

When inflationists can explain how gold can go to $15k/oz with massive unemployment, crashing asset prices, banks not lending, consumers not spending, Ill buy gold. Ridiculous.

Anonymous said...

this video is BS because the ammount of paper dollars in circulation M0 did not increase 3.75 times in a year, physical dollars were not printed in that ammount

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