Friday, December 25, 2009

Merry Christmas




And for anyone who hasn't seen it yet:
An important read...

Is it all just a Ponzi scheme?
By Eric Sprott & David Franklin

"So to answer the question - who is the Household Sector? They are a PHANTOM. They don’t exist."

Merry Christmas to all!!!

Sincerely,
FOFOA

37 comments:

Jr Deputy Accountant said...

Merry Christmas, FOFOA! Keep your eyes peeled for later in the day, I'm giving you a little bit of a shout out :)

JDA

FOFOA said...

Merry Christmas to you, too, Adrienne!

I hope f^%&ing Santa brought you every f^%&ing thing you asked for! ;)

Sincerely,
FOFOA

Jimmy said...

John Williams (shadowstats) says: America is bankrupt and will surely suffer hyperinflation...


It's the interview about his hyperinflation report:


"What kind of hyperinflation are we talking about? I am talking something like you saw with the Weimar Republic of the 1930s."

allen said...

So will the first signs of this hyperinflation look like economic recover? I would think so, which will mean most people will be blindsided. The mainstream press will preach much praise that things are getting better, spending is picking up and the future looks rosy... that is until all this extra money hits the streets with low inventory.

Jimmy said...

The 100,000 dollar bill


And you could swap it for gold: "The largest currency ever printed by the United States was the $100,000 Gold Certificate, Series 1934. Printed from December, 1934 through January 9, 1935 and issued by the Treasurer of the United States to Federal Reserve Banks only against an equal amount of gold bullion held by the Treasury".


More on wikipedia


$100,000: Woodrow Wilson, equal to $1,591,521.2 in 2008 dollars.


Another explain on wikipedia


Important to know: The $100,000 Gold Certificate was used only for official transactions between Federal Reserve Banks and was not circulated among the general public.

Jimmy said...

The new pre-hyperinflation dollar 2010


:o)

Shanti said...

Great work FOFOA, your Santa seems to bring an appreciated pleonasm :-))))

"Carpe diem" while it is there !

costata said...

FOFOA,

From the Financial Times via GATA

http://www.gata.org/node/8183

"Because the dollar, to my mind, given its underlying conditions, is no longer a credible long-term store of value," said Wolf.

No kidding!

"The decline of the US dollar underscores a phase of global power transition, with the balance of power moving from the US to Europe, China, and India, Wolf argues, adding that the greenback's loss of credibility as the dominant global reserve currency is part of this messy transition."

Jim Sinclair has also linked an article quoting the Chinese as saying that they will not succumb to pressure to revalue. They claim that they believe that the calls for revaluing are attempts to limit their economic progress.

After these recent statements there would be a massive loss of face if they revalued their currency. Therefore IMHO not happening any time soon.

Q. Without a revaluation how do the Chinese prevent the Yuan/Renmimbi issuance (to soak up the forex from exports) causing inflation pressures in their economy? Q. What are the alternatives (eg. currency swaps)?

Q. Wouldn't a higher Yuan play into their apparent desire to stimulate domestic demand by lowering input costs? Q. Does this indicate that domestic demand stimulation is NOT part of their near term plans?

FOFOA said...

Hello Costata,

So called monetary (fiat) economists are delusional and arrogant in the extreme. And as it turns out, monetary authorities are as predictable as the sun rising. The early stages of hyperinflation are very profitable for the monetary authority. Just ask Robert Mugabe. And the dollar peg is a license to steal for the CPC. Asking the Chinese to float the Renminbi right now is like asking one of the LA gangs to refrain from looting their own neighborhood at the very opening of the LA riots, when there were still TV's in the stores.

It is clear now more than ever that this is where we are heading. Tim, Ben, Barack and the entire US Congress are taking us there and the rest of the world fiat administrators will tag along for the ride. A couple years ago when Peter Schiff wrote Crash Proof I thought there was a real chance that the Chinese (and the rest of the world) would come to their senses. But now it appears that Another and FOA were right all along. All paper will burn!

Q. Does this indicate that domestic demand stimulation is NOT part of their near term plans?

I believe it does. ;)

Sincerely,
FOFOA

Martijn said...

@FOFOA

That was an interesting read on household buying of treasuries you posted at the open forum.

A while ago I said that the interests aligned with the dollar were so large that they had to have some power to forestall its demise.

They will most likely invent some more tricks like this. That is what makes the timing so difficult. The moment of collapse is determined by the amount of tricks they've got up their sleeves.

Jimmy said...

@FOFOA:


It's possible to make an oversight of the best storage methods of PM?

Like safes outside banking system, like viamat, brinks,... or safe banks to place your money (like Bank of India,...)

Eric (Marketskeptics) uses Brinks for his storage.

Jimmy said...

2010 Outlook – A Tale of Two Economies

Jimmy said...

UN to produce bullion coins as world currency

Gold is Debt Free Money said...

At this moment --11:48 am PST -- the Kitco 24 hour spot price is $1,104 for gold and the ETF for gold (GLD) is $1,085. Could this be backwardation?

raptor said...

http://www.debtorsprisonblog.org/journal/2009/12/25/a-detailed-look-at-physical-gold.html

costata said...

Hi FOFOA,

".... I thought there was a real chance that the Chinese (and the rest of the world) would come to their senses."

I think that is why we sometimes seem to go over the same ground repeatedly. One looks at a situation and thinks "surely they wont repeat A, B or C error" but they do every time. Like a moth to a flame.

I am starting to think that Govt is now completely in the grip of inertia. The politicians and the sheeple will simply go in their present direction until they simply cannot proceed any further.

FWIW I keep seeing variations on the phrase "store of value" cropping up in articles more frequently. Some are like the FT article above discussing the USD's failure to retain value over time. Others are more positive ie. wondering about which assets will hold their value.

BTW I have been reading postings by Ray Long (see link below) about copper as a "micro-PM". He discusses the idea of people sorting their change and saving the pre-1982 US copper coins which have a much higher melt than face value.

http://www.financialsense.com/fsu/editorials/long/2009/1221.html

Oddly this could be a tiny rivulet flowing into the strengthening current of Freegold. If a poor person accumulated a few bags of copper might they not at some point exchange a bag for a silver coin (if only for increased portability) and so on.

Copper's recent history is instructive on another level. During the last peak in commodities Indians were smuggling copper rupees across the border to Bangladesh. The metal value was about 9x greater after fabrication into razor blades. This was draining the supply of coins in India.

How did the Indian Govt respond? They decided to mint more rupee coins.

Their people applied the logic of the free market while the Govt responds with inertia.

costata said...

Correction to last comment.

Where I referred to copper rupees etc I should have referred to "Indian coins" as they are made from various metal alloys. The ones smuggled into Bangladesh for smelting and fabrication into razor blades were obviously not copper.

Please forgive the slip. I guess because I grew up with small change being copper coins I tend to think small coin=copper.

FOFOA said...

And here I was just thinking, "thank God I don't live in India where those poor souls shave with copper!"

Martijn said...

So banks did know it all along and participated: banks-bundled-bad-debt-bet-against-it-and-won

Jimmy said...

More sprott on gold

Jimmy said...

Morgan Stanley warns us for higher yields

You have been warned, economic populist

Martijn said...

It may be printing - I cannot think off much else - but the stock markets really are different from the 1930s and most predictions.

The NASDAQ is up 75% from the low.

And how about
these
graphs
or here

Jimmy said...

I've found more info about UN and the new currency, but I don't know how to think about it...


From this article:


UN produces new world currency

Jimmy said...

Rothschilds to invest millions in Latvia

Martijn said...

Looks like some interests are not too fond of seeing gold close the year above USD1100.

Martijn said...

Interesting graph on M3 guys.

At this moment we are witnessing a quality shift of within Exter's pyramid, but those guys that called out on inflation (and I have had a least one foot in) have been yelling too loud I guess, while other guys signaling deflation have not done all that terribly so far.

Interesting to notice as another year has almost passed by, is it not?

Martijn said...

And for those interested in some more inflation/deflation: here is an interesting post on whether or not the inflation genie is slipping out of the bottle, excess reserves and then some.

Martijn said...

Snip:

1) Lending comes first and what little reserves there are (if any) come later.
2) There really are no excess reserves.
3) Not only are there no excess reserves, there are essentially no reserves to speak of at all. Indeed, bank reserves are completely “fictional”.
4) Banks are capital constrained not reserve constrained.
5) Banks aren’t lending because there are few credit worthy borrowers worth the risk.


For those enjoying a debate: please feel free to add on or rebuke the content. It might help us all in understanding todays markets.

Jimmy said...

New essay of Martin Armstrong: "The decline of the West, has western society come to an end?"

Kewl said...

As we learned that FED is almost the sole buyer of the debt with printed dollars I can't see any deflation.

This Mish is quite funny sometimes. I remember his post about crisis in China where he was laughing that they we going to build more homes to satisfy demand and avoid bubble. He was laughing that Chinese have empty cities yet they want to build more. Yet that video was about empty city where all the houses were sold! I mean who cares if the city is empty or not, they will build more to dilute demand, how is it important if houses are inhabited thereafter?

Government worldwide issuing trillions in bonds. Obvioulsy there won't be enough money to buy them, which means printing all the way.

Martijn said...

@Kewl

I do agree to all that.

Removing the cap on support for Freddie and Fannie is another such thing. Printing is guaranteed.

Timing is, however, not.

So far the deflationists have not been all wrong. Inflationists are not wrong either, unless the predicted hyperinflation before the end of 2009 - which some actually did.

Guys like Marc Faber have been quite right so far, even in calling the USD rally (which he has been doing since sept/octo I believe).

So understanding the very basic fundamentals (as laid out by A and FOA) that many others seem to miss is one thing, and connecting them to the world we observe today is another.

Chris said...

"So understanding the very basic fundamentals (as laid out by A and FOA) that many others seem to miss is one thing, and connecting them to the world we observe today is another."

This may help. Please share your thoughts on this piece, either here or on GIM.

costata said...

Martijn,

"So understanding the very basic fundamentals (as laid out by A and FOA) that many others seem to miss is one thing, and connecting them to the world we observe today is another."

Perhaps it is the effect of the widespread manipulation of markets and statistics.

ZeroHedge recently did an analysis of the US stock market stripping out the after hours price action. If you remove these numbers the market hasn't moved up a cent for three months.

I have also seen a report that said the Wall Street Big Boys have been massively shorting the USD on the ICE exchange during the recent USD rally.

I expect fireworks between now and June, 2010. Residential RE, CRE, Stockmarkets and all the other "shoes".

To top it all off a number of analysts present the gap opening up between the 30 year US paper and the shorter term paper as an ominous sign.

If Martin Armstrong is right by mid 2011 the whole mess should be impossible for even our myopic, numbskull, politicians to deny.

Jimmy,

Re: The piece about the Rothschild interests moving on Eastern Europe.

Do you see this as a sign that they believe the bottom is approaching?

FOFOA,

Re: shaving with copper blades

How did they cope in the Bronze Age?

FOFOA said...

How did they cope in the Bronze Age?

costata said...

Hello FOFOA,

Point taken.

raptor said...

>This Mish is quite funny sometimes.

I tried to commented this article on two blogs. And both blogs didn't published my comment..!!! interesting, some agenda may be ...

My point was that there can be a merit in those arguments. But what they forget is deflation acts in this black box called USA and the box is floating in the sea of dollars which the foreigners are deversifying away from and this is unstoppable long term process over which us-gov have little to no effect..

I posted something along these lines..but..!!

Jimmy said...

@Costata:


I think that Rothschild would do a takeover of the basic industry/transport. So he could control distributy of the country... Maybe the same strategy like 'shockcapitalism' (book of Naomi Klein, taking over when the misery is the highest, like the tsunami and the rebuilding the town with new hotels, casino's,... Not houses for the people...) or to do the same as corporatism...


No I don't think there's a bottom... I really don't know... I didn't researched Latvia...

But don't worry, I don't believe in the end of the world... :-)


@Fofoa:

Is that you? ;o)

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