Four years and three months ago I stumbled upon an extensive archive of ten-year-old posts by anonymous writers with names like ANOTHER, FOA and ARISTOTLE. Prior to that momentous stroke of luck, I'd been poring over anything and everything I could find that was attempting to explain a series of events that I found very troubling.
I had already been exposed to personal losses a year earlier due to the reversal of the real estate market which initially caused me to sit up and pay attention. And so I was hyper-aware during a string of alarming events related to sub-prime and its securities in August and September of 2007.
As time wore on I started to take notice of other odd occurrences in the markets. In late 2007 the Canadian dollar suddenly became more valuable than the US dollar… for the first time in 30 years. Then in February of 2008 an entire market collapsed for a specific kind of security that had been marketed to conservative investors as "safe as cash—kind of like money markets but with higher interest rates," cutting little old ladies off from their savings. And then one month later Bear Stearns collapsed.
I quickly read any book I could find in the small (but growing) financial crisis section at my local book store. I read "America's Bubble Economy", "Crash Proof" and "Financial Armageddon" in early 2008. Online I spent a lot of time reading the likes of Jim Sinclair, Peter Schiff, iTulip and anything that came up on forums like the old Gold Is Money forum. But I had yet to purchase my first gold coin.
With such a rush of new ideas coming in over maybe a six month period, I found myself struggling to make sense of it all. The message I was receiving seemed complicated and disjointed. I knew there was something important in there, but for some reason it felt like an incomplete puzzle. Something was missing.
Then one day someone posted an excerpt of ANOTHER (THOUGHTS!) on the GIM forum with a link to the archives. It was a strange quote, but something in it caught my attention like a beacon as bright as the sun, so I clicked on the link. And for the next two months I stopped reading everything else I'd been reading while I worked my way through maybe a thousand-pages-worth of USAGOLD archives. Then I went back and read it again.
In August of 2008, while still digesting it all, I wanted to talk to someone about the most amazing and mind-blowing ideas I had ever encountered. The markets were teetering on the precipice of an abyss, Hank Paulson had his new "bazooka", and all I wanted was to talk to someone about Freegold. So four years ago today, I started this blog.
Four years, 370 posts, 37,000 comments and millions of hits later and we're still talking. All I can really say is THANK YOU to everyone who showed up to chat! Well, almost everyone. ;D Those of you who have been here any length of time know that I certainly attract my fair share of detractors. And I do realize that the subjects I write about are controversial. It's not easy to encounter a foolproof argument for something you never even considered before.
It's not easy because it runs counter to all the baggage you've picked up elsewhere. I've seen the baggage, so I know what it looks like. There are myriad morality plays based on a poor understanding of money, and wonderful stories of monetary and financial intrigue, depraved intent and consummate, destructive comeuppance all over the internet. But the truth, as it is revealed first logically and then empirically, is so much more remarkable, so utterly amazing, a beacon as bright as the sun.
These are not my foolproof arguments. I take no credit for them. They come from ANOTHER and FOA and I simply distill and extrapolate from their posts because they are no longer doing it themselves. My blog is a tribute to them. If you believe the arguments are not so foolproof, then by all means, bring it! I have never shied away from a worthy debate, but I do tend to ignore tired old arguments which I already dealt with so as not to waste any more precious time.
But if you are one of the many people who incessantly email me requesting that I address Martin Armstrong's failed attempts to bring it, I'll waste a little time for you now. I have read a few of his recent posts and it is clear that he thinks I am using hyperinflation as the reason to buy gold:
The presumption here is you move in a straight line until HYPERINFLATION somehow makes gold $50,000 and ounce, everything else remains the same, and this is better than a Miracle of 34th Street. This is being marketed trying to suck people in like those who are broke sitting in a casino desperately trying the pull that leaver and become a millionaire. This a just pathetic preying upon those who can afford bad advice the least. [sic]
This, like his many other remarks directed this way, is so preposterously off the mark that it is not even worth a comment. He apparently considers predictions of dollar hyperinflation to be a scare tactic meant to frighten you into buying gold:
So Don’t Worry – Be Happy. Gold is not going up because of all the conspiracy claims nor because the real gold will conquer the paper gold. This is all about reality.
But then he delivers his own (less scary?) prediction:
It is not… HYPERINFLATION we need to worry about. How about plain old fashioned extinction of society as we know it today?
That's not scary? Well, fear not, because three paragraphs later he lets you know that you'll soon be able to purchase his famed computer prediction system so you'll know when the plain old fashioned extinction of society will arrive:
Institutional clients seeking the stand-alone systems to monitor the entire global portfolio are nearly ready. We will be providing those systems at $25 million annually.
We will be providing only three global systems fully covering everything worldwide for $100 million. We guarantee that the long-term forecasts will be correct or your money back.
Umm, give me a break? As for his argument that hyperinflation is impossible in a core economy, he is not only way too focused on the monetary plane (bondholders, financial assets, capital flows), like the deflationist that he is, but he is also apparently completely unaware of FOA's slam-dunk rock-solid reasoning for inevitable dollar hyperinflation which I extrapolated in these posts among many others:
Peak Exorbitant Privilege
Inflation or Hyperinflation?
Another one of my more notable (albeit indirect—he simply dismisses me as an anonymous blogger and then says I'm wrong) detractors is Gary North, ever since I caught his attention by extracting a concession from a prominent deflationist with whom Gary had argued for years. You can read more about it (along with references to me) in these two posts:
Rick Ackerman Defects to the Hyperinflationist Camp After 30 Years
by Gary North
Wherein Gary North Rallies My Deflationist Side by Rick Ackerman
Anyway, Gary is an inflationist and he therefore argues against both deflation and hyperinflation. Just this month he wrote separate posts against the arguments for deflation and hyperinflation. I mention this mainly to demonstrate how those arguing against dollar hyperinflation from any side are apparently completely unaware of FOA's slam-dunk reasoning. If this was not the case, I'd expect someone credible to critique it.
My case in point is that Gary's latest (and therefore presumably toughest) argument against hyperinflation is that the Fed cannot solve the USG's problem of unfunded future liabilities of $222T through hyperinflation and it therefore will not adopt a policy of hyperinflation. Furthermore, he believes that the Fed will be able to somehow resist the USG's spending addiction if push comes to shove. He writes:
I am convinced that, unless Congress nationalizes the Federal Reserve, the Federal Reserve will not adopt a policy of hyperinflation. That would be to the detriment of the banking system in general.
Now I realize that his post was not directed at me because I'm just an anonymous blogger who's wrong, but if it had been, just like Martin Armstrong's attempt, it's so far off the mark it's hard to know where to begin. My (which is FOA's) hyperinflation reasoning is not about a Fed (or USG) policy decision to solve the debt problem. It is simply the corner that the dollar is backed into and there's only one way out.
The rationale is so remarkably simple that I'm surprised no one like Gary or Martin who believes dollar hyperinflation is anything less than certain has attempted to tackle it. It's not a difficult argument to understand. It's basically that the only thing preventing high rates of dollar price inflation is foreign support for the dollar. Take that away and you'll have a high rate of dollar price inflation. And then, partly because the USG budget deficit eclipses the trade deficit today, the government will be forced to quickly hyperinflate the dollar simply to maintain its status quo. The alternative would require the government to shut down, but it won't even consider that option. Simple.
I'll add one other post to my above recommendations for anyone who wants to "bring it":
Peak Exorbitant Privilege
Inflation or Hyperinflation?
Like I said, these are not my foolproof arguments. I take no credit for them. To prove it, here are a few quick quotes from FOA in 2000 and 2001:
So, dollar hyper inflation never arrived and gold did not make its run because world CBs bet your productive efforts on supporting the dollar reserve. In the process, the US standard of living was raised tremendously on the backs of most of the world's working poor. But this is not about to last!
Central banks gorged themselves with worthless dollar reserves and prevented a hyperinflation of the dollar in the process. They did this, because they knew that gold had the ability to completely replace any and all loss of dollar reserve value once a new system was in operation.
We are only just now arriving at a time period that will bring about "The Currency Wars". Everything prior to this was only a preparation period to build an alternative currency. The years spent traveling this road were done to prepare the world for an escape medium when the dollar finally began its "price" hyper-inflation stage.
Few investors can "grasp" that in reality, our dollar has already been hyper inflated, but without the higher price effects. Years of deficit spending, over-borrowing, debt expansion have created an illusion that the dollar was immune to price inflation. This illusion is evident in our massive trade deficit as it carries on with no negative effects on dollar exchange rates. Clearly other investors, outside the Central Banks were helping in the dollar support process without knowing they were buying into a dying currency system.
The only thing that kept this process from showing up in the prices of everyday goods was the support other Central Banks showed for our currency through exchange intervention. As I pointed out in my other writings, this support was convoluted at best and done over 15 to 20 years. Still, it's been done with a purpose all this time.
A grand hyper inflation of prices is now directly ahead on the trail. It should be ushered in with a large "crackup" in the currency derivatives market. Once this event is "in process" the paper gold markets will quickly rush to discount against physical gold. A discount that will break our gold market pricing and physical allocation system.
This country is diving head first into a grand hyper inflation and no amount of Fed maneuvers will stop it. People that learn this early on, before the physical comes into short supply, will be miles ahead. Buying gold between $400 and $200 will be like knowing a member with Masters Tickets.
Our recent American economic expansion has, all along, actually been the result of a worldly political "will" that supported dollar use and dollar credit expansion so as to buy time for Another currency block to be formed. Without that international support, this decades-long dollar derivative expansion could not have taken place.
For another currency block to be built, over years, the current world economy had to be kept functioning. To this end the dollar reserve system had to be structurally maintained
The game is to let the US economy suffer from its own bloated expansion by moving slowly away from supporting foreign dollar settlement with CB storage. This is more than enough to end the dollars timeline as we are already stretched to the leverage limit. They know that Greenspan has but one policy to use and that will be super printing. He is doing it now, right on que!
Again; this all works as long as the world "buys into" using our dollars. As I said; an expanding fiat works to grow the economy thru expanding credit buying power because the fed can support the system with credit creation that has no "inflation premium". That lack of premium only exists as long as Americans can exchange free credit for real physical goods. Once this perception changes it's over. Once the world understands that it's not local US goods that stands behind dollar growth, but less expensive foreign goods,,,,,,,,,, the stage is set for our "supporters" to sell to themselves!
The evolution of Political will is now driving the dollar into an end time hyper inflation from where we will not return. That is our call. Bet your wealth on the other theorist's call if you want more of their last 30 years of hard money success.
Of course, as I mentioned earlier, hyperinflation is not the main reason to buy gold. You can get the same "hyperinflationary gain" by buying artwork, antiques, classic cars, baseball cards or any other hard asset. The reason to buy gold over those other choices is Freegold. Freegold is gold revalued in real terms, independent of hyperinflation. Those are my two main topics, Freegold and hyperinflation, because those were ANOTHER and FOA's two main topics. I'm not really going into Freegold in this post but I will give you a quote that a reader named Steve sent me. It comes from Bill H at Lemetropole Café and I think it captures the relevance of Freegold to shrimps like us:
We used to be a nation of "choices". Many many choices, good ones, bad ones, whatever, but there were multiple choices at every turn.
Now, do we as individuals have "multiple choices"? Not many. Many are unemployed, many have negative equity in their homes and cannot move even if they want to, many rely on food stamps to eat, savers are being forced to "eat" their balances or take on the higher risks of the rigged stock and bond markets. The only "choices" that we as individuals have left are those involved with protecting ourselves and families. It is no longer about living the American dream, living within your means and enjoying your "golden years". No, it is now about "keeping what you have" or just plain outright survival. I believe that even today's current circumstances will be looked upon in the future with "too bad it can't be like it was back in 2012".
It is not however ALL bad, we will "reset" and hopefully go back to a rule of law and respect where everyone is not looking to rip everyone else off. Right now it is imperative that you be ready for this coming reset because once it happens there will be no "do overs". You will "have what you have" to start out in the new system and nothing more. Think about it, how many times have you thought back and said "gee, it really would have been nice if my Great Grandfather had invested in oil wells" or "if my parents had invested in coastal real estate or IBM back in the 1950's". What if you had the smarts to invest in Gold back in 1971? As I said, there are no "do overs" but it would be nice. What we have coming in our immediate future is not only "one" of these past opportunity moments in time, this era, right now, is THE moment in time where futures will be altered... permanently. You are either locked and loaded...or you are locked out. This as I see it is the last "choice" that investors can still make that will affect the rest of their lives and probably several generations to follow.
And lastly, you Martin Armstrong fans might be interested in this. FOA critiqued Martin's public/private dichotomy, one of the core foundations of his Economic Confidence Model… back in 1999! And if that doesn't draw some ire, I give up!
So that's basically what I do, and what I've been doing here for four years now. Please click on the gold bar below if you'd like to send me a little blog birthday present and encourage me to keep this thing going for another year. Or, if you'd prefer that I "make like 'N Sync and quit while I'm ahead" (which someone actually suggested by email this month), then don't click on the gold bar. I have only been here this long because of your generous support. I have no other income.
FOFOA Playlist #4
As it has become a personal tradition, I periodically gather my favorite YouTube song selections from the last few months into a playlist with links to the posts. Here is where you can find my #1, #2 and #3 playlists. And here's #4. Enjoy!
Glimpsing the Hereafter
…this is a deep concept, a timeless truth, a little bit of wisdom from the ages. Savers are not investors, traders or speculators. And since this post is about glimpsing the hereafter, give me a few minutes while I consult my crystal ball. Here's some music while you wait…
…my crystal ball does work for the monetary and financial future. It paints a nice, clear picture, yet on timing it's still a little hazy. But one thing it does make perfectly clear is that it's just a question of time.
Superorganism Open Forum
…in a wild colony of ants these individuals end up specializing in what they do best which leads to a collective intelligence far greater than the intelligence of any individual ant.
…an “extraordinary miracle … millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding!”
Savings & Capital Theory Open Forum
…The Superorganism's natural drive is toward economic sustainability while the $IMFS is a pedal-to-the-metal consumption binge thrill ride toward economic collapse. Savers drive the economy, the Superorganism organizes it, and the $IMFS kills it softly.
Ball of Twine Open Forum
FOA: "They will not be pushing on a string; rather picking up the ball of twine and throwing it!"
I may be crazy, but if there was a contingency plan/how-to manual on throwing the world's largest ball of twine, it might just look like this:
Peak Exorbitant Privilege
…That's right, I saved the "crazy super-hyperinflation talk" for the tail end of a really long post. Because A) people who think they have it all figured out already tend to abandon a post once they read the word "hyperinflation", and B) the stuff in this post really happened and is still happening so it's only fair to you, the reader, to give its inevitable denouement the appropriate weight of a bold conclusion. If I didn't do that, I would not have done my job, now would I? ;)
Inflation or Hyperinflation?
…The dollar is so vastly overvalued today because the rest of the world has kept it on life support for 30 years past its expiration date. It is the stability of dollar prices at that small marginal flow that sustains the illusion of wealth in the entire, massive monetary plane. And yet the modern "hard money thinkers" think that we can somehow retain this level in real terms by simply devaluing the dollar against gold and then managing that new "gold value". I wish all the modern hard money thinkers – you know who they are so I don't need to mention any names – would just take a few minutes and listen to FOA and maybe, just maybe, see how wrong they are…
The Debtors and the Savers 2012
…Thinking for yourself pays. Seeking reassurance feels good, but it doesn't pay. Waiting for official confirmation is also rewarding, but the reward isn't money.
"Change isn't easy. More often, it's wrenching and difficult. But maybe that's a good thing. Because it's change that makes us strong, keeps us resilient, and teaches us to evolve."
Fallacies – 1. Paper Gold is just like Paper Anything
…it is the very existence of the paper gold market which is keeping the price too low, because if you took it away, price alone would have to regulate the flow.
As a bonus track I thought I'd include Freegoldtube's latest creation, even though it didn't make it into a post. Here's No Time to Lose: