Saturday, October 12, 2013

"Special" Drawing Rights

One of you asked me the other day about a couple of SDR theories floating around right now that you thought might somehow be a threat to Freegold. I thought I'd share my email response with everyone:

My basic approach to the SDR is, who cares? It doesn't matter. It would be worse than irrelevant to Freegold, it would be superfluous. It's just marginal speculation by people who haven't thought things all the way through. First of all, the SDR is only a unit of account, by design. If they make it into something else, then it's no longer a true SDR. It's something else. Might as well call it a bancor or whatever. If you hold an SDR, you hold drawing rights to a basket of currencies, but the SDR itself is nothing but a unit of account used to calculate how much of any one of the individual currencies in the basket it is worth. If you ask for one of those currencies, they will likely be printed for you by that currency's issuer and his SDR count will increase. Here are a few of my past SDR references:

From Synthesis in 2010:

Freegold is our destination with or without the euro. Even on the outside chance that an SDR or a similar super-sovereign currency is accepted as the new global reserve currency, it would have to contain gold at Freegold valuations in order to be viable, accepted and trusted, in the same vein as Randy's comment about an EMF. So any way you cut it, the future comes to us with really high value gold by today's standards.

From Unambiguous Wealth 2 in 2011:

"Virtual reserve currency" means something—like the SDR—that's primarily a unit of account for the purpose of providing monetary stability. But with the primary and secondary media of exchange becoming separate but symbiotic counterparts, stability will be automatically achieved, and a "commodity-based" super-sovereign unit of account comparing fiat M3 with a centrally managed gold price will be completely superfluous and unnecessary (i.e., as unused as the SDR).


The point is, there's a turn-key problem-solving system waiting in the wings. So whenever you hear anyone in the hard money camp or the Anglo-American press talking about something that sounds like the SDR with "gold backing" (watch out for that word "backing") don't buy it for a second. They simply don't have the full picture and, therefore, don't know what they're talking about when it comes to macro solutions. But even so, they're still right when they recommend that you get your butt out of that reclining black office chair and take personal responsibility for your wealth.

From Freegold Foundations in 2011:

So, the point about currency is, and mainly for those of you that fret over a NWO currency, or "whatever currency," an Amero or SDR or euro-whatzit... chill TF out! Currency is no big deal. Currency is not the issue that matters here. What matters is what we, as a planet, choose to save.

RS Comment: So often in commentaries of this sort that propose a “solution”, the author is strangely obsessed with the notion of replacing the dollar (as a reserve currency unit) with simply another institutional emission of similar ilk (such as currencies of other nations, SDRs, bancors and whatnot). Their avoidance of any meaningful discussion of the most obvious remedy is almost pathological in the extreme. To be sure, we don’t need to invent any manner of universal reserve currency to fill the role of a unit of account because that role is already served in a fully functional capacity for any given country by its own monetary unit.

What IS desperately needed, however, is a universally respected reserve asset capable of filling our current void with a reliable presence that serves as a store of value. And far from needing to be conjured or created by complex international committees, that asset is already in existence and held in goodly store by central bankers and prudent individuals around the world — it’s known as gold. From amid the ruins of a chaotic financial crisis that was brought about by its own complexity, a degree of sanity will prevail, and gold as a freely floating asset will arise in stature as THE important element of global monetary reserves. The floating aspect is the vital evolutionary improvement over all previous structural monetary failures which tried to use a gold standard at a fixed price (i.e., unit of account) perversely joined to the very elastic money supply of any given country’s banking system.

And from The Return to Honest Money in 2011:

The point is, once "Freegold" (nature's wrath) inflicts itself upon us all, it won't really matter what is chosen/used as the super-sovereign or supra-national currency to lubricate international trade. It could be the euro, the yuan, the SDR, Facebook Credits or even the dollar! Triffin's dilemma will be gone. And you shouldn't worry so much over the transactional currency question, because that will be chosen through the market forces of regression, the network effect and game theory's focal point discovery at the international level.

You also have to understand why the SDR was invented in the first place. Robert Triffin, as in the Triffin dilemma, was actually a proponent of SDRs and helped create them in 1969. They were "paper gold" for the time, because there wasn't enough gold at the fixed price. But once you truly float the price of gold, there is always enough gold. In essence, today's paper gold is similar to the SDR of 1970. There isn't enough gold, so you have a gold proxy to fill the additional demand. But once the price of physical gold floats, the paper proxy becomes redundant, superfluous and ultimately irrelevant.

So, suppose they have a big monetary conference, à la Bretton Woods, and decide to use SDRs. Then you also revalue gold. Whether it's a part of the SDR basket or not, anyone running a surplus, sufficient enough that it requires centralized long term settlement, could then choose between the real thing and the proxy. Proxy gold credits in any form become superfluous for settlement when there's enough of the real thing.

Also, something other than gold will likely be used to temporarily settle short term imbalances. That "something" will be either currency or currency debt. It could be something like the SDR, or it could be the euro, or it could simply be debt or base money in one of the two currencies of the trading partners. But this doesn't supplant the need for true settlement.

There's no such thing as perfect balance in the short run. There's always a little imbalance in trade, and so you need a way to account for that until later when it reverses and goes the other way. There are many ways to do that, as I mentioned above, and the SDR would be one way. But then it comes down to choices at the centralized international level. Do you want your trading partner's currency, debt in your currency, debt in your trading partner's currency, some third party currency like the euro, debt in some third party currency, or debt denominated in SDRs which is a unit of account that takes several currencies into account, administered by an international organization?

Even if everyone agrees to SDRs, that still has nothing to do with Freegold. Because in Freegold, that temporary short-term role that would be played by the SDR is still a role that must be played by something in the symbolic currency realm. And I'm not talking about "Freefiat" here! That's a very different "alternative" theory.

True settlement at the micro level precludes the need for centralized balancing at the macro level. But even individual exporting net-producer savers will carry a currency balance for the short run and, in general, that would create a (much smaller than today) current account imbalance that would need to be temporarily accounted for at the central bank level. That's where SDRs might come into play.

Savers wouldn't hold gold for the short run in Freegold, not because it fluctuates wildly, declining in real purchasing power at times as "Freefiat" predicts, but because the transaction cost of moving between currency and gold will cancel out even perpetual appreciation (similar to the performance of the best of the best collectible physical assets, i.e., stores of value, only available to the super-wealthy today) for a quantifiable period of time. So for anticipated expenses in the short run, currency balances will be the best choice. And currency balances resulting from inter-regional trade will likely be accounted for (not settled) in some form of fiat currency, which could even be the SDR.

The reason for using currency rather than gold at both the micro and macro levels in Freegold is that it is easily and cheaply reversible, because you expect temporary imbalances to be reversed in the short run. There are no transaction, transportation, storage or insurance costs, and the temporary nature of short-term imbalances reduces other well-known risks like currency risk, default and the unknown. Short term imbalances need to be accounted for, not settled. And that's what the SDR is, a unit of account that takes multiple currencies into consideration. It is for accounting, not settlement.

Physical wealth is the only means of settlement, currency is simply for accounting imbalances in the meantime. The problem today is that we perpetually accumulate trade imbalances (on all scales, from the individual to the regional) and call them savings. This exposes the entire system to the obvious risks -- currency risk, default and the unknown.



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Attitude_Check said...

So potentially the SDR as the unit of account, other national fiat as medium of exchange, and gold as the store of value. Is that the general idea?

mcmagicfly said...

Yep, as of Q3-2013 (latest speech in Bratislava) J.G.Rickards still mentions SDRs in his top list of possible outcomes. But many players, notably from the BRICS universe likely ditched such avenue soon after first QEs. So, only two other options remain here on the table: total chaos (his most probable pick - he said that on other venues as well so he means it) or the outcome of some variation on FG/RPG.

We know something went sideways since the A/FOA times, namely the launch of naked resource wars in 2001, the hyperphase of globalization with China, and the stall of progress on the federalization of the EU.

So, this exactly fits with what I wrote previously on "delayed FG/RPG", however, some groupies here are unable to face the reality, that world is in constant motion, incl. the positions of heavy powerbrokers and their propensity to steearing an outcome.

onedayfly said...

Currency swap with ECB and PBOC

Any thoughts how this effects freegold?

mcmagicfly said...

The IMF Proposes:
A 10% Supertax On All Eurozone Household Savings

Another excercise in futile can kicking just for dancing another day or few years in the limelight of so-called civilization? Just a rumor of 10-30% IMF supertax scheme?

These bozos locked in climatized skyscrapers clearly have FG/RPG as the ever distant and very last meassure of anti-vampire nucler bullet. They will delay freegold again, again, again to a point of no real effect to clear the frikin system. There won't be no stinking system by that time.

Place your bets folks, there will be no IMF by 2020 nor BIS by 2025, I'm willing to propose gentleman's agreement on the prize of symbolic value. These Giants will be by that time either dead, in jail, or most likely managing their feudal estates in the country or running small fenced up city states.

And you ask, what about the frontrunning shrimps?
In the dustbin of history.

罗臻 said...

SDRs are the next step, but effectively having a global central bank will concentrate risk. Practically, I'm not sure that SDRs are likely due to the increasing international tensions, but I firmly believe it is the next step for central bankers preparing for a larger crisis. If they have a shot, they will try for the SDR.

I doubt it would hold for much more than a decade though because it would be a license for every central bank to print money (since you can exchange it for SDRs that are a basket including Swiss francs and other well managed currencies) or issue debt in SDRs. Are the Chinese, Russians, Americans, Japanese, Germans, etc. all going to give the IMF sovereignty over their debt and currencies? The EU couldn't keep Greece in line, the IMF will be unable to police the world. If SDRs show up, set your watches because the clock is ticking down to the final crisis.

Dante_Eu said...

Well, why not issue 2 more currencies on top of SDR. For example:

II. VSDR - Very Special drawing rights

III. SDSDR - Super Duper Special drawing rights

Talk about recursive currencies!

PS You may think logically: "Why not 3, 4 and so on, on top"? That's because with 2 more you get holy trinity. :-)

Gary said...

The video is (sadly) not Frankie Goes To Hollywood, as it is lacking their original frontman, Holly Johnson. Here's how it sounded back in the day:

Much better than the pale imitation of recent times.

Gary (not the evil one!) said...

These bozos locked in climatized skyscrapers clearly have FG/RPG as the ever distant and very last meassure of anti-vampire nucler bullet. They will delay freegold again, again, again to a point of no real effect to clear the frikin system. There won't be no stinking system by that time.

Why do you feel FG/RPG is the last measure?

If FG is driven by Market forces, how can it be delayed?

What evidence do you see that it is being delayed?

This year alone I see the paper price dropping, GLD draining, international confidence in the USD waning and debt reaching further untenable heights. It seems to be transpiring on a consistently accelerating timeline.

Where do you see that there will be 'no stinking system' left? Please explain.

I don't think anyone accepts that FG will solve all the problems. Surely it won't but the mere fact that they have held the system together for so long suggests it is more resilient than most give it credit for.

These Giants will be by that time either dead, in jail, or most likely managing their feudal estates in the country or running small fenced up city states.

Do you think allowing it to get to this level would be in their best interests? If 'THEY' have the power to delay or advance FG - what makes you think they don't have the power to control the system not devolving to the unhealthy civilization you export?

The fact that FG hasn't happened yet, seems to be the crux of your argument. But would you agree that it is closer than ever? What, specific event, made you throw the towel in?

Franco said...

Every time I start wringing my hands thinking that this bullshit status quo will be carried on ad infinitum, I remind myself that the rest of the world became net seller of US debt back in April. The dollar has a time bomb strapped on, and the button to detonate has been pushed already.

mcmagicfly said...

Gary, refer to my early posts from previous thread, read that one by SP, about the position - viewpoint - it has been clearly explained there. Moreover, read 10x times over the short response from Indenture, one of the best few line ever on this blog, I'm glad I helped to dug it out, that's basically the essence right there.

The background, some of the "energy agencies" in view of evidence by retired oil industry scientist and managers started backpedaling on the beyond rosy energy scenarios in the mid 2000s, couple of Giants realized they have been probably badly taken for a ride by the propaganda machine of the industry/production states. In response several governments, usually via mil/security research dept. hastily ordered their own studies into the question of reserves and future depletion rates (scenarios), that was around the mid decade. They were stone cold terrified what they found.

Another delay..

You see, in fact I wasn't that negative and gloomy there at all. The real kicker is that crude depletion rates could regionaly well be above 5-7% p.a., that's simply the fun of secondary-tertiary field recovery. However, there is also the killer shark, additional effect of ELM, export land model, which dictates when supply driven shortages occur producers will hoard the spices, no easy flow baby! This combined cocktail is just beyond our comprehension as how bad it could be for many importing countries at the moment of reckoning.

You desire some truth, I'll give you the deal budy, the international crude market by 2020 is going to be beyond recognition from now, and virtually no supertankers leaving ports by 2030 or earlier. Sounds like "policy" managable situation from the polished desk office? No way.

There were multiple windows of opportunity to glide the system on less suicidal path, say after 1971 or around EUR launch. But to no avail they messed up in such fashion we are now heading into hugely compressed time frame where everything (end cheap oil + financial system clusterfuck) has to clear up almost at once and on the first go.

Franco> that's likely all true, but that "strapped on" person is also perhaps in his last effort before retiring, scheduling to run a triathlon for next 2-4yrs, not very nice for the bystanders and cheerleaders of any sort near the podium, shall we say pandemonium?

Grumps LaBastard said...

The following video may explain why gold has not been allowed to flow. All kinds of good stuff here. Enjoy.

Frank O'Collins-Western Roman Law Pt 4/4 .

Grumps LaBastard said...

I wouldn't put much merit in the energy analyses by security/military think tanks. These outfits are mouthpieces for this Neo-Malthusian Agenda 21.

Sam said...

Man needs food, water, and shelter to survive. Beyond these essentials, man's life is exponentially enhanced by specialization and trade. Efficient trade will utilize credit and settlement (stacking credit is not settlement). These are the basics. The cheapness and abundance of man's energy sources may effect our lives dramatically, but they do not alter these basics. Short of an event that reduces man to forage for basic necessities (an event I suspect nearly everyone will predict with the skill of Pompeii) there will be specialization, there will be trade, there will be credit, and there will be settlement. The system man will choose to use will be the most modern and efficient method we know, built upon the wisdom gained from past mistakes. This I know with certainty. What's the energy situation going to look like in 15 idea.

Phat Expat said...

There's enough established energy resources for my lifetime and quite likely many lifetimes beyond. Why the sudden fear mongering? And not just from newcomers. Lot's of baggage here (Indoctrinates?). Solutions abound, all things in time.

Sam said...

I agree Phat. Most doom forecasts also seem to discount our collective ability to adapt and invent to meet our needs

Edwardo said...

Young Grumpy just makes your head spin
How proud must be his kith and kin
Such ideas, such theory
Why it makes one just bleary
Though evidence is notably thin

Grumps LaBastard said...

I'm just a grumps. Your friendly neighborhood spidergrumps.

Hey, hey, here come the spidergrumps.

mcmagicfly said...

Sam> nice theoretical concepts there, the only problem with that escapism is the following sober reality: modern man of "western persuasion" has been boxed for past several generations into chain of livelyhood dependencies beyond his skills, knowledge, understanding, control. In short he is the massproduced product of assembly lines of the modernity age. I'm no oraculum, I can only speculate about the megatrends in next 15 years and beyond on the "energy markets", but the next few years are visible from here. You have chosen not to look there, ok.

IMF's new +10% bail-in plan> any ideas, no comments so far?, could it be just another policy trial balloon, perhaps even stick to kick out some PIGS out of the eurohouse on their own volition. Something else going on there..? Or even first salvo for widespread bank run panic falsflag to help with lanuching FG?

Sam said...


You have chosen to own no gold and instead seek to acquire non-oil based farm equipment. With all due respect, I would say the visibility of the next few years are beyond your "skill, knowledge, understanding, and control." Unfortunately for you, the energy question is a minor exercise in imagination and speculation in which any simpleton could participate. Understanding Freegold is a major exercise in deductive reasoning and "slow history" research. The amount of gold you own is confirmation of the amount of effort you have put into the latter.

Grumps LaBastard said...

If depletion rates were running say just 3% per annum since 2006, that would be a 23% since then. Yet the oil keeps coming to market. If we indeed had passed the peak and production from the giant fields was in decline by just a modest percentage, then wouldn't you think we would be seeing some dramatic measures taken by the military and governments? We really aren't. It's business as usual. For me that was the tell that this peak oil was a bunch of nonsense.

That 2008 fiasco with the phony round trips on the ICE to send false price signals was 1) a scam for the banks and 2) an econometric probe to see at what point the American economy would break. The priests wanted to see what price of gas we could tolerate. 4 bucks was the line.

Attitude_Check said...

So the disinformation and dust in the air crew has targeted this bog I see. FG may be close.

Indenture said...
This comment has been removed by the author.
Gary (not the evil one!) said...

Sometimes, it feels like it is all a dream...
"It feels like the presidential bond, legal or not, is a less patently absurd solution than the trillion-dollar coin. And if it comes to that, TMN will go on record as saying that such a bond, paying a substantial premium to regular U.S. bonds, would be a terrific investment. "

MIA said...

I'm with Franco
"Every time I start wringing my hands thinking that this bullshit status quo will be carried on ad infinitum, I remind myself that the rest of the world became net seller of US debt back in April. The dollar has a time bomb strapped on, and the button to detonate has been pushed already. "
you can't fool all of the people all of the time and those that are fooled are fools...

mcmagicfly said...

"..the energy question is a minor exercise in imagination and speculation in which any simpleton could participate. Understanding Freegold is a major exercise in deductive reasoning and "slow history" research.."

Hm, sounds like single digit dollar preacher pulpit talk to me. Nicely illustrating the megaton hubris of our time in the evident lack of comprehension to even form logical contra argument. So you are evidently of the "western persuasion", lol.

Let you live in interesting times, the chinese way.

Sir Tagio said...


I have been catching up with the blog entries for the last few days and ran across your posts. I just want to thank you for broaching this topic about the effect of peak oil on FG theory, and, more notably but more difficult to foresee, the possible huge negative effects of pushing out the timing of the FG reboot until the time that Joe Q Public finally starts figuring out the significance of depletion and finally starts connecting dots, with a possible corresponding severe collapse in the economy. A la Kunstler, just imagine the massive dislocations that will occur when a significant number of people finally figure out that suburbia and its big box stores are history?

Another and FOA clearly wrote in advance of the actual peak of (cheap) oil and, while they refer to the oil sheik story of their multi-generational roundabout to and from travel by camel, so that clearly they foresaw the significance of the fact that the Giants understood that they had a finite resource and needed to acquire a real weatlh asset of the ages, FG is centered on the necessity of preserving international trade, and not "sustainability" or stewardship of rapidly depleting resources. And international trade can and will continue with sailing ships when there is no more oil.

I have never understood the FG idea that, after FG, one ounce of gold would acquire 550 barrels of oil. Seems crazy! IT just doesn't fit in with the fact that it's a rapidly declining resource. Once it starts getting costly to obtain, it will start being hoarded, not gifted away in streams for a single oz!

Your point that the value of a currency depends on the nature of the economy and does not have some kind of intrinsic value above that, is key.

If instead of having a smooth draw down and transition to a smaller scale, non-fossil fuel based economy (back to the pre-industrial 17th century!), we have a rapid, abrupt collapse, those precious might not have quite the purchasing power that FG postulates.

OR, it's heightened purchase power and time in the sun might be of pretty brief duration. Which I understand to be your point of the delayed roll-out.

Like you, I believe that the rollout of FG was clearly delayed, and has continued to be delayed, even though in theory it could be implemented virtually overnight by BIS is they simply chose to do so. The question of why they have not done so, despite the massive capital misallocation that results each passing day from the current $IMFS is a question of the utmost importance, particulary given the problem of peak resources, because, unless it truly is the end of the world, it is the greatest irresponsibility to be destroying and misallocating capital in our current predicament. It is important to know why FG rollout continues to be delayed, because it seriously impacts the view that FG is "inevitable."

Sorry for going on, but I want to commend your courage in facing up to the possible severe negative effects - on shrimps - of a delayed rollout of FG to more or less coincide with mass realization of the significance of peak cheap oil. And your courage for doing what you think you need to do, now, instead of risking the future. My own hope is that I will have some time to take a similar path.

I know all this is off topic from the perspective of this blog - the FG theory of Another and FOA - but I hope you continue to share your thoughts.

Sir Tagio said...

I meant, the value of currency and of wealth assets are a function of the economy, not just that the value of the currency is

Phat Expat said...

"Let you live in interesting times, the chinese way."

Doesn't support your position any better. It's like waiting for FG; in the interim, you go on living your life, knowing there are better things on the horizon, but living in the moment. All the rest is an unnecessary gut churning waste of time. Because, those who can, do. ;-)

Gary (not the evil one!) said...

McFly seems limited to only believe his vision of the future is correct. Anyone else is oblivious, uneducated, ignorant of the facts he has researched. I recall a guy, Dr. Pete Peterson (interviewed by the Camelot Project), has been living on a farm, self-sustaining fuel etc. for decades. He thought the system was going down in the 70's. And I wonder if those who live in a bunker with 20-year's worth of food, preparing for a nuclear winter, could look down their noses at McFly who's farming self-sufficiency won't do much good if he is irradiated. Hey, if we have an energy crisis and 3/4s of the world starves/perishes - we will still have some form of finacial system. Your AU could save your life. You can't prepare for all outcomes and the guy who takes his prepping a few steps further shouldn't come across as superior. It's in bad taste. We're all awake enough to be aware that the future, if you keep staring hard enough into the crystal ball, can be terrifying.

S P said...

I agree in general with mcmagicfly and sir tagio, but let's not get too much into energy depletion here, there are many blogs for that. But we should point it out and let the freegolders digest it. If anybody here has already read through another/foa/fofoa and thinks they understand economics, or is maybe just bored, go to steve from virginia's "economic undertow" blog and prepare for quite the education.

Our present system is dependent on interest rates going to zero, and bond prices going to infinity! It's complete madness. We are about to meet head on with reality and freegold is a part of that.

So why hasn't it happened yet? Because everybody is terrified of America. To this very day, Europeans, Russians, and Chinese, and everybody else, proud and strong peoples of old, quiver in front of Americans. Nobody wants to disturb the present dollar system, for fear of how Wall Street, the military, and the American populace will react.

As far as SDR it's another can kicking gimmick.

Naughty Slumdog said...

The SDR's seem to be a false topic. First: they exist, but are not used. Reality check! Second: how the money supply will be controlled ? The central currency printing planning failed to bring stability, the only working control is the fear of inflation, and this function well when a currency floats against other currencies, which is not the case of a global wide-spread SDR's. Three: currency is a convention used to get in the future something concrete, some tangible asset or service. The lesser the link between "real stuff" and money is, the worse is for the respective currency stability. Existing currencies are already volatile due to lack of coordination with theirs underlying economies, how this might work for the "global economy"? Worse, IMHO. Currencies are backed by the value of assets that can be obtained in that currency, that's why is good to have stacks of gold, that everybody wants, aside from production of Mercedes cars, Burgundy wines, natural gas and Cisco servers.


JC said...

Sir Tagio - "I have never understood the FG idea that, after FG, one ounce of gold would acquire 550 barrels of oil. Seems crazy! IT just doesn't fit in with the fact that it's a rapidly declining resource. Once it starts getting costly to obtain, it will start being hoarded, not gifted away in streams for a single oz! "

Freegold and peak oil are two different events. A good way of getting your head around this is to consider the differences between the physical plane and monetary plane. After freegold oil, in similar amounts will trade with all other goods and services in similar amounts, not much of a change there because that is all going on in the physical plane.

It's when we consider what the monetary plane is currently doing, trying to hold producers savings, all that extra oil being produced above what producers need to extract for their daily consumption of goods and services and how that reserve wealth will be held by the oil producers. This idea of reserve wealth is how freegolders get the 550bbl to 1oz idea. That's the topic of this blog with lots to read and learn on that perspective.

Peak oil and finite resource management is a different event. That could lead to a declining global economy or even outright collapse, Mad Max style. I believe everyone here would agree that a declining global economy would see the purchasing power of gold also decline, but from a freegold valuation downwards.

The key to this discussion between freegold and resource depletion is what is the best way to hold a reserve of wealth into the future. Is it to hoard oil which seems to be a conclusion of peak oilers, unfortunately doing this would restrict the global economy, meaning oil producers would then have access to less good and services from the global economy, or is reserve wealth best held as physical gold which is the conclusion of freegold?

Phat Expat said...


"So why hasn't it happened yet? Because everybody is terrified of America. To this very day, Europeans, Russians, and Chinese, and everybody else, proud and strong peoples of old, quiver in front of Americans. Nobody wants to disturb the present dollar system, for fear of how Wall Street, the military, and the American populace will react."

It's an interesting observation though I don't believe it is fear; but there is something there, I just don't know what to call it. I watch some of the news here, such as the ASEAN meetings, and I am puzzled at how stiff the participants are. Maybe it's just a period of adjustment, as experienced by new kids on the playground, but I'm uncomfortable just watching, so I can only imagine how the participants feel. It's almost like each representative walks into the room, checks for plastic on the floor, breaths a sigh of relief and shuffles quickly to their respective area. I don't recall the US-led meetings ever having such awkwardness. Weird.

Sam said...

@Sir Tagio
“I have never understood the FG idea that, after FG, one ounce of gold would acquire 550 barrels of oil. Seems crazy! IT just doesn't fit in with the fact that it's a rapidly declining resource. Once it starts getting costly to obtain, it will start being hoarded, not gifted away in streams for a single oz!”

I’ll set aside my personal thoughts that there is plenty of oil for the next couple centuries because I don’t want that baggage to come into play for either of us with what I am writing you. So please try and do the same.

Now…To an oil producer the currency price of gold does not matter. This is an important freegold concept so I’ll repeat. Oil producers want gold and they don’t care what value we decide to place on it. Does that seem crazy? It did to me when I first found this blog. In, It’s the Flow Stupid FOFOA cleared it up for me by writing we should think of it like a currency exchange. If someone wants $100,000 worth of oil what does it matter if that sale converts to one ounce of gold or 1000 ounces? The value received for the transaction is still the same. In other words you can’t cheat an oil producer by giving him less gold, because the only way to do that is to give his gold more value, and in the end he remains Even Steven with $100,000 worth of gold. With that point fresh in your mind understand that if gold undergoes a 55x isolated increase in currency value it wouldn’t all of a sudden cause 55x more oil purchases. The two events are completely unrelated.

“I believe that the rollout of FG was clearly delayed, and has continued to be delayed, even though in theory it could be implemented virtually overnight by BIS if they simply chose to do so.”

Europe stopped paying for the delay of freegold over a decade ago. For them to take some kind of unprecedented action to force its emergence would be seen as a malicious form of sabotage. That would be unwise don’t you think? For the last decade China has paid to hold things together (not anymore). Do you see them as stewards of the planet and concerned with sustainability? No, it's more likely that they weren't prepared for the transition and bought some enormously expensive time.

DASK said...

The idea of peak oil is an incredibly interesting one to me as well: partially because it is related to my work and partially because it is how I originally got introduced to the gold blogosphere.

While peak-liquid X,Y or Z can be debated easily with current data, what is extremely likely now is that we have hit peak net-energy flow from oil resources because of declining EROI and we have long passed peak per-capita oil no matter how you define or argue it. The EROI is not a problem yet as according to my best guesses from multiple uncertain data sources, the plateau is declining at a rate slower than we can substitute with increases in gas and renewables alongside the slow march of efficiency e.g. effectively the status quo. This could of course change in the future, but I think that the current march of technology means that there is a soft landing in forty years or so as solar continues its century long scale up process. The export land model (ELM) for oil is a shorter horizon issue, but all it means is that those that import will have much less leverage as they compete for a shrinking export pool.

It doesn't necessarily mean collapse though: I've seen some fairly credible estimates that most European (even in Sweden where I am) cities could reduce petroleum consumption 30% overnight with zero quality of life impact, simply through better planning of car trips, and low hanging fruit carpopoling etc. There is a lot of wasteful buffer that has been built up, and what I foresee is a long period (two or three decades, give or take, beginning in 2008) where this excess is slowly squeezed out. What I do not foresee is zero marginal product workers continuing to command a share of what oil is left, as the slowly and inexorably rising real cost of oil will prohibit this and there will be nothing that governments can do about it. In such a world, I cannot see people being content with future promises as 'settlement' for very long, and I see it as a fundamental force towards squaring trades away in terms of physical capital/resource flows on shorter and shorter horizons. I think this is a powerful argument for freegold, not against it.

Not saying that the effects won't be traumatic, because as real resources and output are increasingly demanded as settlement for real resources and output, a lot of people that think they are 'producers' are going to be reclassified. And I think that there are some big risks to this whole shebang such as mass unrest in the middle east, or American 'exceptionalism' etc. But I think that once the American dollar is no longer the reserve currency, their military will operate on a far tighter cost/benefit basis and I think that the decline in exports is manageable. Still, I'm actually feeling like panicking hard early was a good idea; it's a lot easier to pontificate on these issues once one has awakened their family, and prepped to as comfortable extent as possible.

Sam said...

FreeGold hasn't happened yet because the debt bubble hadn't burst.

Jean Paul Rodrigue's stages of a bubble.

America's debt.

If gold is going to compete with bonds (or replace them) then the bond bubble must come down first. This could very well begin to move this thursday if a deal isn't struck on the debt limit.

I'm not predicting a date but surely the credit bubble will have to end, before we can see the interest rate swap and futures markets get taken down also.

Bonds as THE tier 1 reserve and credit driven speculation are the opposite of FreeGold and the credit and speculative markets are attached at the hip. FreeGold will arise out of the pain of this siamese twins falling.

The world has energy. Right now as we speak Europe is pressing toward nuclear fusion. Why would they want to introduce that into a debt based dollar monopoly though?

I'm not the same Sam as the other poster. I'm 2nd Sam
(My first post after being a long time spectator)

Dante_Eu said...

That we see things very differently is no stranger. That's how it is supposed to be.
Well worth 9 minutes: Chaos Theory / Butterfly Effect

mcmagicfly said...

Gary (the living in a concept box one)>

Few posts back I thought there was perhaps a light bulb moment coming on for you, so I tried to expand in even more approachable terms. Again, I did not mention a word about preps, farming (for pages now). It was all based on the center of the argument, about the FG interactions with our material world, based on intensive (often primary) researcher done by others not me. Yet you spin it again back as somewhat my own projections, my biases, linking it even to some fringe doomer scene of the past and present etc. I concede I am human, so I added some visions based on the trend and data on top of that, but that certainly doesn't make the core argument less stronger for that.

Clearly, after several attempts, this is not a debate by any adult standards, that's just classic hubris defense on your part. So, lets declare the case closed, everybody crawling back to their trenches.

Sir Tagio> thanks for these kind words, I could not present some of your written ideas more eloquently than you, especially liked your 2nd paragraph.

DASK> interesting comment and balanced perspective, thanks for that, however I gather you well understand the huge biomass/raw materials/landmass:population ratio of "greater" Scandinavia bottom line issue here. The end of cheap energy mitigation strategies there will likely be on order of several factors easier than for the other less blessed regions, societies. In my vocabulary, Scandinavia will be the primary candidate for the renewed concept of "city states" of the future in terms of the propensity to shield from many of the negative effects, basically able to project a safe perimeter around both in its material and cultural traditions. In that case "FG ready portfolio" is a much safer bet, no question about it.

michael3c2000 said...
Multi-Trillion Dollar Question: How Much of Our Debt Is “Odious”?
Sunday, October 13, 2013 at 7:40PM
By Don Quijones - Excerpt:
"If there is a two-word combination that strikes primal fear into the hearts of global senior bankers and representatives of international financial institutions, it is “odious” + “debt,” a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation shouldn’t be enforceable..."

Victory said...

Morgan Stanley Sees Gold Lower in 2014 as Goldman Says Sell

Gold will extend losses into 2014 amid expectations the Federal Reserve will pare stimulus as the U.S. recovers, according to Morgan Stanley, adding to bearish calls from Goldman Sachs Group Inc. and Credit Suisse Group AG.

“We recommend staying away from gold at this point in the cycle,” Melbourne-based analyst Joel Crane said in a video report received today. Bullion will average $1,313 an ounce in 2014, down from the $1,420 forecast for this year, Morgan Stanley said in its quarterly metals report on Oct. 7. "

“Our forecast profile heading into next year is relatively flat against our expectations of rising real interest rates and the U.S. dollar,” Crane said in the video. Bullion will average lower every year through 2018, Morgan Stanley forecasts. "

ANOTHER: The Western governments needed to keep the price of gold down so it could flow where they needed it to flow. The key to free up gold was simple. The Western public will not hold an asset that going nowhere, at least in currency terms. […]

- got em'

michael3c2000 said...
This is similar to Gerald Celente's interview with Goldseek Radio's Chris Waltzak last weekend. GC didn't require profanities or rants, unlike his Trends Journal You Tube videos, because this interview, a gentlemanly exchange kicking off Waltzak's weekly show, had chemistry and content, albeit fatalist. The main thrust of Celente's and Bonner's arguments are that little will change but the downward spiral of self-defeating current events.- health care and defense industry magnates will be accommodated with their co-enabling financier hegemons and civil service oligarchs. (Celente sees a false flag, war intiating distraction "by March 2014") Prepare for the worst, laugh at the rest. Nod to Nietsche. Date your destiny...

Roacheforque said...

A good article concerning the SDR. I agree with it completely.

As for peak oil, it is really more a part of "Peak Fantasy" --that is, how much longer can forces that manipulate perception continue to manipulate capital?

Answer? Forever, depending on your definition of "capital"..

You see, it is our definitions that are changing. But then, that is merely the same phenomenon as "perception management" breaking down.

It's not so much a metaphysical point of "what is reality?" but more of a case in point in "what the Hell were we thinking?".

In the end, when we look back on the present from the future (then being past) we will wonder how and why freegold didn't come sooner.

We will wonder, with fascination, how debt could ever have held so long, as a store of value, and a means of settlement.

Even in the here and now, it is hard for me to imagine that the obligations of a debtor nation which has defaulted in the past, and is well in the terminal stages of decline, represents the reference point for global wealth.

Clearly that is changing, and yet the old support systems that defend that statement are slow to fall away.

The complexity of "more appealing debt" terms rolling over older debt will give way to an old simplicity reborn. New debt will be repudiated despite it's attractive packaging, and the asset backed equity system will be reborn.

mcmagicfly said...

JC> sound and stimulating logic there, have to think these more through, thanks, also in relation to DASK an idea perhaps emerging here, that from distant global macro view FG will work like in clusters, shrimps in some regions will benefit more with different prealocation levels, mixed strategies. That would almost be cosmologist's - naturalist view of things to come, I like that.

S P> interesting observation, I think it's part cultural, the western make believe joviality how to proceed with diplomacy is sometimes at odds with others. On the other deeper point, the asians have clearly not put all the ghosts of past wars and deep insults to rest, and smart global power would always like to play that with sticking wedge there, hm seems exactly what's Washnington trying/tried to do in that playground. Hm, perhaps they are in stage, well finally we kicked the "round eye" from the table, and now what to do first, we have to start serious cooperation, anyone volunteering to start?

Motley Fool said...


As one example of alternative energy how about Thorium. We currently have enough to supply our energy needs at current consumption rates for 5000 years. Also it is a non-runaway type of nuclear reaction, so meltdowns are impossible.

Peak energy is a theoretical likelihood, but I don't think its as much of a worry as some make it out to be.

Attitude_Check said...

Peak oil is real, even if the date is questionable-it will happen. Peak energy is what should be feared, and it is not a given into to forseable future. Niether peak has anything to do with FG which is a monetary system reboot. The economy will change due to each peak, individual wealth will change, that doesnt mean that the underlying monetary structure must change form radically. The folks debating peak oil and its effect on FG (or any monetary structure) do not understand either very well let alone the complex interactions between.

Indenture said...

There's a theorem of rationality called Aumann's Agreement Theorem which shows that no two rationalists can agree to disagree. If two people disagree with each other, at least one of them must be doing something wrong.

mcmagicfly said...

AT> indifference of dominant financial system reboot timing to material world you say, what a novel idea, several past non existing empires and cultures would like to have a chat or two from the graves about it though..

Dante_Eu said...

Here's a new interview with professor Antal E. Fekete from Oct 8, 2013. I am happy to inform you that good old professor has coined another word: Hyper-DE-flation!

Now, everyone that has followed FOFOAs work ought to know that Hyper-IN-flation has much more to do with DE-flation than with IN-flation. Or was it other way around? :-)

Anyway, Enjoy: E507, Antal E. Fekete at Keiser Report Oct 8, 2013

DASK said...

Contrary to the Agreement theorem, 'it is the mark of an educated mind to rest comfortable with the degree of precision with the subject admits' .. it is perfectly rational to say we can't resolve this here, and still fruitful to explore the parameter space. While freely conceding my ignorance, I will offer that I believe the logic that FG would happen independently of the larger energy/resource picture, but I also think that larger picture will contribute 'landscape pressures' that will favour an help maintain a freegold-like solution if they don't lead to chaos.

I agree (as per my previous post) that various 'peaks' are real, and some are past. Peak energy I do not agree with. We are awash in solar, and have maturing systems to capture it, even as far as the near baseload concentrating plants that can now be justified even without subsidies in some areas. Where there isn't solar, there are alternatives such as Thorium or even more conventional nuclear technologies, or *gasp* coal. Price and our tolerance for various environmental issues will produce the solution mix. The end of the 90's I do believe was the cheapest we will see energy in real terms, perhaps for our lifetimes; with a lower EROI world, we will have to be a lot more careful in our rational use of energy. Those who's wealth is built on the hope of future unbridled consumer expansion will IMHO be very disappointed in how that problem is solved. I don't see reason for panic yet, and that is why I describe buying gold as my 'optimistic bet' .. a bet on the superorganism finding its way.

wrt. mcmagicfly; yes I don't think that the distribution of these effects will be neutral, and yes, Sweden/Scandianavia has an enviable position; already nearly entirely powered by fully renewable energy and capable of feeding and defending itself. My homeland, Canada, does as well, and the good 'ol USA has untold natural wealth still. The pressure cookers globally are the middle east and south asia now, and africa in the mid term;

M said...

Peak energy is a joke.

The world will come to the reality that nuclear is safer then anything else in fact. Plants that have melted down used ancient technology. They can build conventional plants now that cannot melt down.

Just look at the US military. They have been quietly using nuclear powered equipment with no issues for decades.

Franco said...

I think that the term that we should be using is "peak easy oil" rather than "peak oil". Look up a historical chart for EROI. The pattern is clear. That there are vast amounts of petroleum left on the planet seems irrelevant if you can't afford to get it out, no?

One Bad Adder said...

Dante Eu: - The good Professor has it (almost) right.
Hyper-DE-flation The abandonment of Faith in the Future in conjunction with a wholesale embrace of the Present - of necessity - will usher in FreeGold sure as eggs IMHO.

Dante_Eu said...


Yes, I agree. Let us hope that the Present comes soon. ;-)

mcmagicfly said...

DASK> yep the 1990s what a bizzaro trip, they almost paid directly shrimps to have some more energy "tonite" and do all crazy leisure stuff, that's not going to repeat for very very long time if ever..

michael3c2000 said...
Oil out west, except Australia has a frontier too LOL

Phat Expat said...

Much to the chagrin of mcdimsum and his fellow fretters, I will be driving around in the good ole USA in American muscle cars well into the future. I will be driving, with my sigos, at my discretion and just for the hell of it. I will be driving in a pollution free environment with a variety of vistas unlike any place on earth. And try as you might, that's not gonna change, happy to disappoint you. ;-)

Grumps LaBastard said...

I recommend that the peak oilers research their godfather, M. King Hubbert. This exercise will demonstrate why it is important to account for the influence of secret societies.

From 2006 here's a Tarpley video.

And so much for Hubbert's Peak:

mcmagicfly said...

Please spoil the beans for us, are you going to pleasure drive open country on the highways, pavement, dirt road or just in the final suicidal excitation pose in those short few miles before the next makeshift barricade manned by local militia, splinter army of FUSA (former usa), or just bunch of local loose it alls with couple of tons of ammo on pickups..

What an american dream to behold, happy drivin'

xcsler said...

"The reason for using currency rather than gold at both the micro and macro levels in Freegold is that it is easily and cheaply reversible, because you expect temporary imbalances to be reversed in the short run. There are no transaction, transportation, storage or insurance costs, and the temporary nature of short-term imbalances reduces other well-known risks like currency risk, default and the unknown. Short term imbalances need to be accounted for, not settled. And that's what the SDR is, a unit of account that takes multiple currencies into consideration. It is for accounting, not settlement."

Bitcoin by itself solves this issue. It can be used both for accounting and immediate settlement.

Phat Expat said...

mcdimsum, your lack of world experience and travel is evident. If your fellow fruits and nuts care to dialogue with you, that's great. I know what you are, and more importantly, what you aren't. Please continue to play to the low hanging fruits; it is most entertaining.

mcmagicfly said...

Sheer comedy factor aside, which you have started first by lucid driving postFG dreams, what is evident is that someone is just beyond his rocker in terms of future expectations and reality in general..

Phat Expat said...

Yes, but enough about you...

byiamBYoung said...

As a proud member of the low-hanging fruits, I must say that I have moved on.

I wish you all the best, McFlyfurter.


John said...


That was perfect.....maybe you can acquaint Phat with some of his fellow entitled Homeys that he'll meet along the way on his those wholesome EBT-powered shoppers going postal at the Walmart this weekend....a uniquely priceless American cultural spectacle.

Phat Expat said...
This comment has been removed by the author.
Phat Expat said...

Yes, the ex-priv of the ROW has been tough on some sectors of the US. Thankfully that is ending. Having traveled extensively, there is poverty everywhere I've been. Even and especially in good ole Europe, or should I say, Islamo-Europe? Juan apparently doesn't get out much or perhaps only stays in resort areas for fear of interacting with the general populace. That is fine, but that doesn't exactly make you credible. Know what I'm sayin there homeslice?

sp correction (for the grammar nazis)

Phat Expat said...

Interesting posture in some of the metals right now. They appear to be setting up for a significant move. Inflative or Deflative? Tick, Tock...

Sam said...

Good video Grumps. I think I shall call you Gollum. After all the coughing and puking you served a worthy purpose in the end after all.

Phat Expat said...

:) Have to agree; a rather good video indeed.

And, your comment about "round eye" was extremely offensive. Your, shall I say, short-comings (snicker) were blatantly evident. To devolve to such a level of discourse is base and trite; and not one worthy of this site, or any site for that matter.

Attitude_Check said...

Those nonexisting empires and cultures failed not necessarily thier monetary system-until the entire system collapsed because the empire no longer existed. Monetary systems change because the basis for the system becomes no longer viable. Empires and nations end because either they are conquered from outside or ripped apart from the inside. Economic failure is often a trigger. That is different than financial failure which will result in the end of a monetary system.

Attitude_Check said...

This was in reply to mcmagic

Roacheforque said...

And the PAPER ... is GOING DOWN !!

Marco Polo said...

Just one question, or statement rather: cannot escape the logic that the first thing all governments will do after a 'reset' is sieze privately owned bullion. Or draft draconian laws to force the handover of any not in vaults. How do the freegolders suppose this is unlikely?

mcmagicfly said...

Quite remarkable to watch indeed.
Apparently doing the god's tedious work overtime, lol..
Is this lcn. guy going to earn paper billions in few month time out of this or what?

Jeff said...


Your chart confirms that peak US oil occurred in the 1970s, just as predicted by Hubbert in 1954. Global conventional oil production peaked in 2005, as predicted by Hubbert in 1974. The worlds largest current producer, Russia, peaked in 1987. Peak oil is in the rearview mirror now.

Marco polo,

There was a discussion of confiscation in the comments on the last thread.

Motley Fool said...

Marco Polo

Let me link you 2 relevant posts.

Roacheforque said...

Pete hadn't posted in so long I had thought him a victim of some foul trickery "behind the curtain" .... But this scheme of shorting the paper ... not exactly original, and all we get from that action is more paper ... to be traded for gold of course.

Debt for gold here. Trade irredeemable paper promises for real gold right here folks. Just make sure you have enough left over for beans and chips. That's right folks step right up and witness the amazing debt for gold swap here before your very eyes.

If I didn't have the DESIRE to PRESERVE my wealth above and beyond all around me, even up to the exclusion of my own demise, I just wouldn't have believed it. But that's human nature for you, in all it's majesty ...

Jesse McL said...

If only it were this simple...


ein anderer said...

ECB stresstest will become tougher:

Basics of ECB Banking supervision:

Banking supervision starts November 2014:

ein anderer said...

Addendum: EU Backs New Joint Banking Supervision (Oct. 15, 2013)

ein anderer said...

May be the ECB will support the Dollar until the European banking union is ready November 2014? Shouldn’t European banks become very strong before Dollar hyperinflation/Freegold?

Roacheforque said...

That's funny Jesse, I had a similar dream last night that a MASSIVE TREASURE was buried somewhere inside my pants, and I just need Amy Smart and Denise Richards to take turns trying to unearth it.

It may not save my countyry but it would do my lons a WORLD of good!!


Roacheforque said...

God, let's try this again, evcen the thought causes my fingers to stray (apparently).

It may not save my COUNTRY, but it would do my LOINS a world of good ....

KnallGold said...

Did you catch that from Xinhua, about China wanting a de-americanised world?

Sounds like calling for an end of exorbitant privilege.

POG having dropped now so strongly, it should(!) make a bounce back going into resolve of debt-ceiling/budget crisis.

onedayfly said...

And... there's a swap deal between PBOC and BOE..

Instant revaluation of gold to freegold prices is an option now.

No need for hyperinflation in the US.

KnallGold said...

From your keyboard to HIS ears...

While we're skeptics and been disappointed many times, I must say all the signals coming from the authorities look like they wanna press this through now.

Quite apropos lyrics here...

The only way out is through
The faster we're in the better
The only way out is through ultimately
The only way out is through
The only way we'll feel better
The only way out is through ultimately

Roacheforque said...

The "authorities" no doubt have an agreement to keep the [dollar-debt] "price" of gold between W and X ... until Y's stack = Z.

And in the meantime, Goldbugs are screaming that the World is NOT flat (I mean, excuse me, the gold "price" is being manipulated).

Ya think?

Roacheforque said...

Oh, and BTW "real" news isn't free anymore, only propaganda. Pay up.

mcmagicfly said...

Blast from the past, how the soldiers for the Man, accidentaly blew the cover..

Mikael Charoze, whose various tasks included the "management of the liquidity for big amounts" primarily interventions and portfolio diversification, as well as "holding and managing proprietary positions on all currencies including gold."

mcmagicfly said...

Wtf ?!, after the latest post the swiss ip incomming traffic spiked here, lolz. Please don't drone me, you master race boys, no offence!

ein anderer said...

Unusual: German SPIEGEL is starting to talk about Dollar crash:

Franco said...

"Wtf ?!, after the latest post the swiss ip incomming traffic spiked here, lolz. Please don't drone me, you master race boys, no offence!"


I've enjoyed your posts on this blog, but you have to keep the nutjob factor down, man. Your last post makes no sense.

Franco said...

Knall Gold said:

"Did you catch that from Xinhua, about China wanting a de-americanised world?

Sounds like calling for an end of exorbitant privilege."

It seems to me that China shouldn't have to "call" for anything. They could make it happen today. Just dump the $1.3T and be done with it.

Indenture said...

Franco: China will not dump Treasuries. No country wants 'the blame'.

Grumps LaBastard said...

And this from the LEAP2020 boys ( Google Translate):

GEAB N ° 78 is available! The Americanization of the world began - emergence of solutions to a multipolar world by 2015
Today , October 15, 2013 , 2 ​​hours ago | LEAP/E2020
- Public announcement GEAB N ° 78 (15 October 2013) - There are moments in history or is accelerating . Whatever the outcome of the negotiations on the shutdown and debt ceiling , in October 2013 it is one of those . It is blocking too who opened the eyes of those who still supported the United States . A leader is followed when it is feared , not when it is ridiculous.

"Building a world desamericanise " there few years , the statement would have a ready smile. At most, it was going for a challenge Hugo Chavez. But when we see live the bankruptcy of the United States and that an agency official told the Chinese press (1 ), the impact is not the same. In reality it describes aloud an already widely begins process : simply , it is now tolerated to speak publicly. Blocking the U.S. government has at least the merit of delier languages ​​(2 ) . Let there be no mistake, this analysis is not published in a Chinese media by chance, it reflects the hawkish operates in Beijing .


Grumps LaBastard said...

While the world holds its breath before the pathetic play of U.S. elites , not by compassion, is to avoid being prevails in the fall of the first world power. Everyone is trying to influence the American decoupler and loose U.S. definitely discredited by recent episodes of Syria, tapering , the shutdown and now the debt ceiling . The legendary power of the United States is no longer a nuisance power and the world realized it was time to desamericaniser .

This perspective and the verbalization of the unspoken (3) finally free you a range of solutions that were previously in the state of the first fruits , or even repressed by some. These solutions accelerate the construction of the world and open -according to a multipolar world organized around major regional blocs. After a review of American setbacks , our team analysis in this issue of the GEAB forces shaping this changing world . We also back in the " Telescope " on the real state of the U.S. company that , behind the mirage of the stock market and finance, said the collapse of the American way of life and participated in this distancing with American model . Finally, we give the update of our annual assessment of country risk to complete the global picture , and of course the traditional recommendations and GlobalEurometre .


mcmagicfly said...

Dominique de Villepin, neo deGaullist, exfrench PM and his asian and Russian friends see global credit rating system by 2025, ehm 12yrs to FG? Mr. O'Slowly we hardly knew ya, lolz.

Grumps LaBastard said...

Plan the full article :
1 . "No we can not "
2 . Crisis burst
3 . Shutdown : the laughingstock of the world, but a forced laugh
4 . Americanization to all floors
5. The petrodollar is dead, long live the pétroyuan
6 . China takes Euroland hand
7 . Russia, South America, following the westernization

We present in this public announcement Parts 1, 2 and 3.

"No we can not "
As times change . The world has forgotten the words freedom , hope or the famous slogan "Yes we can " representative of the American Society in the eyes of previous generations to mention now that type , shutdown or ceiling . This is not exactly the same dynamic and positive image became frankly negative .


Grumps LaBastard said...

It is striking just how the current American situation confirms the adage that misfortune never comes alone . In a month and a half , first a slap on the Syrian issue by Russia itself. Can a central bank admits the impossibility of reducing the quantitative easing ( 4). The inability to pass a budget , which means the closure of the federal government . A shutdown that extends well beyond a reasonable (5). A negotiation on the debt ceiling impasse in the two days of the deadline. The United States are the G20 to ratify the reform of the IMF they block for three years, and by the World Bank and the IMF to put their finances in order (6). And now the Chinese shot across the bow .

Crisis burst
This succession of attacks is quite inquietante for the country and testifies to an unprecedented acceleration and impending shock. There was the fatality in these crises. But there is also a dose of strategic recovery . The shutdown was able to be instrumentalized by Obama to put pressure on the Republicans into voting raising the debt ceiling , much greater maturity in the United States . This is obviously a half- success , but it is all the same to expect a temporary enhancement , which reports a few weeks all the problems (7), it is still possible that the tragic path is chosen because it is no longer the domain of a rational decision and that could be anticipated.

While commentators focus on the Tea Party , which even we can say that the minority shareholders are able to control a company through a holding company , has managed to hijack the Republican party and the American Society , another reading can be made . Many Americans see the reality in front of their country was bankrupt. From then , it is better to delay the confrontation to reality , even to amplify the problems , or is it better to resolve them now? A large part of the population does not see a dim view of a default of payment ( 8). What other solution , moreover, a term? No he has not the will among Republicans to precipitate the crisis? This is the perfect opportunity they can to blame the Tea Party who stated bluntly that " no deal is better than a bad deal " ( 9) . What we want to say is that this time, or probably another occasion in a very near future , they may well be tempted to cut the Gordian knot.

Similarly, a strategic recovery has certainly occurred when the Fed did back machine to the reduction of its quantitative easing. Why was it suggested that decrease through QE3 , without making the final ? This is the first time she took investors by surprise all 100% convinced of tapering , she had made the forward guidance a well established principle . There he has no connection with the offenses of coarse AVERES insiders at the time of the announcement of the Fed (10) , who are worth billions of dollars to their authors? All this confirms our hypothesis of beleaguered American financial institutions that need to be bailed out discreetly by operations of this kind , even to put a hurt the credibility of the Fed. Even the short-term solutions that worsen the situation, but pushing a little fatal maturity . On these americaines banks, we're not the only ones sounding the alarm: the Bank of England expects bankruptcies of major banks as it would have lost the status of " too big to fail " ( 11) . So we reiterate our warning about it.

As a boxer, these balances shots made ​​the groggy country and there is no lack for a last defeat . If it does not come with a default of payment American in October , it will be another maturity that has been repulsed but , that it does not yield .


Grumps LaBastard said...

Shutdown : the laughingstock of the world, but a forced laugh
When we wrote in GEAB No. 77 on the budget vote , " no doubt a compromise will be found at the last minute , or more likely a few hours or a few days after the deadline ," it is clear that we still underestimate the political differences in Washington as the "few days" we had in mind were transformed into weeks. Le Monde as even in one of its site, " the sorry spectacle of Washington " ( 12). But ultimately it does not have a shutdown demesure on financial markets (13) impact , so it's all for the better, many Republicans seem to think that adapt well to a paralysis of the federal state and the reduction public expenditure that follows.

This is not the opinion of the country possessing a high amount of U.S. treasure bills , which feel like hostages ( 14) in the United States . They are stunned by the unbearable lightness of the United States and by the irresponsible attitude of what recently was still "the boss" . If the country does default on its debt , indeed, the shock wave will certainly terrible . Nevertheless, it would not be the end of the world since eventual default could simply take the form of a late payment of a few days, also the different parts of the world would be affected very unequally according to their degree of decoupling with the U.S. economy . No, the countries that suffer most from this solution ( and any other for that matter) will be much the United States themselves. For the record , remind held by them two-thirds of their own debt.

This is why most countries have already begun rudders this great decoupling , in which China head who knows from Sun Tzu that "when the thunder breaks out , it is too late to ears . "( 15)"

Did you catch that line about the petroyuan?

Excerpt: "On Thursday, Sept. 6... just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar."

Ok. Chuck again, I bet you're asking where is China going to get the Oil to sell to these countries? Ahhh grasshopper. Let's not forget about the trade agreement that China signed with Russia last year. Russia has told China that they'll send them as much Oil as they need."

You know what this means for peak oil? It's a bunch of nonsense. It was a scam to prop up dollar demand via high a high oil price. Our owners are just going to rearrange the flows of gold and oil. Long live Human Farming! Long live Hydraulic Despotism!

Grumps LaBastard said...

Global oil production 2005....73.2 mbd
Global oil production 2010....74.0 mbd
Global oil production 2013 pace....75.6 mbd amidst a global depression.

David Morgan said...

This is my first post. I would like to start by saying thank you to FOFOA for hosting this site. I have only read a portion of the blog, maybe a third, but I feel like I have a fairly sound understanding of the concepts discussed here.

It has been an incredible journey. I have always been interested in money, since I was a little kid. A few years ago I realized that my understanding of it was superficial and started a new leg of my journey. It began with realizing the nickel's metal value was slightly higher than its face value. I moved on from thinking that copper and nickel was a great store of value to silver. I stumbled upon this blog about two years ago and have gradually made the transition to understanding the ideal way to preserve wealth.

I have a fair number of areas that I do not understand well. I will start with three questions all along the same lines. First, how many giants do people here believe there are? How many giants would a place like Saudi Arabia count for? Why could this group of giants not continue trading at a revalued price while leaving the price everyone else trades for around where it is now?

Thank you to the posters from the pieces I have read for furthering my understanding.

Reality Show said...
This comment has been removed by the author.
Reality Show said...

Grumps, a link works just fine. Follow this link to see the method.

Phat Expat said...

Looks like the place is lost for the moment; we have been overrun by Zeke.

But at the same time I am heartened by this; the more a crowd predicts a certain outcome, the less certain it becomes. Long live the Zekes; for without them, I couldn't profit nearly as much. ;-)

Bright aurum said...

@David Morgan
''First, how many giants do people here believe there are?''
There are giants of a different order of magnitude and importance. E.g. royal families and financial giants of old (the Rotschields) that are holding various degree of power in many countries. So it is more a question of quality than of quantity.
''Why could this group of giants not continue trading at a revalued price while leaving the price everyone else trades for around where it is now?''
The system will not allow it because either/or/and 1.) golf flow will disappear. 2.) The world reserve currency will tumble together as most other currencies that are reserve dependant on it (the yen) thus breaking the crucial comparative evaluation system that most people in the Earth hold in mind for all things physical that are being traded. So stable anchoring must be found dear enough to recapitalize all other assets (- physical gold because it will be enticed to flow once again) thus expanding in value through the 'network' effect and the fact that it asset-side backups the value of the remaining world currency - the euro, that cannot be printed at will in the race to the wheelbarrow dustbin alongside the dollar.
'' How many giants would a place like Saudi Arabia count for?''
How many giants are out there that trade at FG evaluations? Guess we`ll soon find out?

byiamBYoung said...

Yo Phat,

"the more a crowd predicts a certain outcome, the less certain it becomes."

This kind of statement always intrigues me. Is there any proof that this is on the whole true, or is this a "gut hunch" kind of assessment?

And, I thought you had morphed to Phat Repat. What up?


Bright aurum said...

golf cannot flow gold can..
recapitalize all other assets - by flowing in the quantities required the opposite way of the net balance of goods and services between major trading partners

Franco said...

Is there a way for me to put a poster on "ignore" so that I don't see his posts anymore?

Reality Show said...

A major bank advert has just begun airing on UK television promoting first-time buyer mortgages. It includes a flattering shot of a pile of LGD bars. Most unusual.

Roacheforque said...

Things are getting stranger by the minute. Hmmmm.

Phat Expat said...

Nah, dawg, decided to chill back in China for the moment; unfinished biz. But I expect to be back on the slopes in the not too distant future; got me some black diamonds to slay. ;-)

Just a contrarian by nature and something doesn't feel right with all the chatter in the MSM.

And then we have our Zekes (and Zeke-o-philes). I appreciate their appearance as it gives me comfort knowing the direction I have chosen, the decisions I have made, are the correct ones. I think I'll drink to that, but only the cheap stuff, Hennessy VSOP this time. Servus!

Michael dV said...

I've said this before here and I'll say it again...Remy Martin VSOP ($36 a fifth, Sam's club) . Hennessy is drinkable but RM is just...well better.
Actually if you find something inexpensive you like you are a rich man.

Michael dV said...

David Morgan welcome...are you the 'silver' david Morgan?
If so you will find here a unique point of view (interrupted (at all times) by at least one troll) don't let that disturb you.
The ideas here have been hammered out over 5 years. They are based upon the perspective of bloggers from the late 1990s and most of us started out with skepticism and a desire to keep and grow wealth.
A few core tenets have been elaborated upon and have been challenged over time. Many of these are the same ideas that the trolls can't accept (they are common ideas and have been explored in great depth.
One of the big ones is that silver does not have a role as a monetary metal. It may/will thrive as a commodity but it will not particate in a revaluation.
If you are the 'silver' David Morgan, and you stay here, you will lose you followers unless you decide to transition them out of silver....especially those who hold silver purchased at $42/oz.
I got lucky on May 2 or 3 2011 I sold my AGQ and lost only 25% (still ahead) I found my way here and have switched to gold.
If you are not 'silver' David Morgan, shit howdy, pull up a chair and worry with the rest of us.

Phat Expat said...

Yes, darn it, just back from shopping since the stash was running low. Thanks for the rec, will pick it up next time. Absolutely, price is not the only measure.

michael3c2000 said...

Jeffrey Christian: “Large Institutional Investors Are Not Yet Convinced That Silver Has Stopped Falling”
Tekoa Da Silva's printed interview with Jefffrey Christian- Does he have ample proof that silver is being unloaded the way he describes? I'm unsure, but it may mean a bolstered case for owning physical gold.

mcmagicfly said...

Prof. Bardi at Cassandar's legacy blog has got a new post, some "factual" tidbits, e.g. Cicero's villa in the imperial district was valued at the minimum of several 100kgs, which translates to post FG level of todays low hundreds of megabucks, which roughly fits the contemporary price levels in these circles today as well. History certainly does rhyme there..

Moreover, no reactions to that de Villepin story so far? (my small post & linked article lost inside Grumps plastering), which could be explained that the world is not prime for full flashed new global financial system, but temporary - transitory arrangement is indeed already in the making by some euroelites, russians and chinese.

mcmagicfly said...

FG delays "explained":

This Universal Credit Rating Group development is kind of important to watch closely, since they specifically mentioned the euro project failed to become the prime deamericanized alternative so far and that there is no more time to waste while wait for the US to self reform.

So, either this is confirmation that euro is finised (nord - south split coming), and or some of the europeans are about to willingly switch sides and go under the sinorussian umbrella, like these frenchies. Perhaps even backdoor option was agreed upon in top echelons of EU structures to develop on such separate trail.

Obviously, the timeframe 2020-25 is not cheap oil crunch proof ready by any means.. so such long delay is likely just propaganda tool, and they are working harder-faster or clueless. But that's not what I'm after in this post.

ein anderer said...

you can subscribe to "Post Comments (Atom)"; pls see the footer. In your mail client you can use a filter.
But best practice for ignoring is—ignore! :D

Indenture said...

David Morgan: Welcome! "Why could this group of giants not continue trading at a revalued price while leaving the price everyone else trades for around where it is now?"

The question is where do these Giants get their physical gold when flow has been constricted by low paper gold prices? Gold will always flow to strong hands and if the paper price is too low to coax gold out of hiding who will supply the Giants? Once the weak hands are empty what will the strong hands do to quench their needs?

mcmagicfly said...

Hm, they even recorded that event in HK.

You have heard it here first, although I'm just stealing the work of Testosteron's blog, who brought it to the spotlight. Let's declare the EMU centric view of FG concept as dead as of now for ever. Sorry folks, the world has moved on from the A/FOA hopey of late 1990s, the europeans just lost the opportunity to act in bold fashion at the right time, say 1970-80s, perhaps it just wasn't in the stars for them from the start.

Beer Holiday said...

@mcmagigfly Let's declare the EMU centric view of FG concept as dead as of now for ever. Sorry folks, the world has moved on from the A/FOA hopey of late 1990s

Let me guess,,,,, however you won't be moving on from this blog dedicated to the discussion of A/FOA!

You're the worst kind of commenter - one who abuses the blog host's kindness, while spewing unreadable troll rubbish at the same time.

You're a new kind of troll - one who stands for nothing! It's so boring, and you're basically abusing the flaws in blogger that we can't filter by user.

You're one these asshole trolls:

Sir Tagio said...

Michael dV,

My understanding is that agreements between countries to swap currencies indicate that a global reset of the international financial system is urgently needed, but is not sufficient in and of itself to trigger the roll out FG. What is needed is a bank reserve asset that can be used cross borders to settle the trade imbalances betweeen countries. Currency agreements among two or more nations to accept one another's currencies are a way to get to an accounting for the trade imbalance that leaves the US $ out as the middleman, minimizing the distorting effects of having to rely on the $, but at the end of the day still leaves the final imbalance to be settled and paid for. (One of the problems with the $/Treas. bond structure, we know, is that it doesn't really "settle" an imbalance, it rolls it over in the form of a promise to pay.)

Gold could serve that function, and it is my understanding that the Euro could replace the dollar's intermediation function between currencies in international trade, because of its structure, and maybe the SDR if, as Fofoa explains above, it has the "correct" relationship to gold..

These country currency agreements indicate that others are desperate to cut ties to the dollar, but they are not sufficient to indicate that the transition is imminent, IMO.

Btw, there was an excellent article the other day by Chs. Hugh Smith on why the yuan cannot become the world's reserve currency. If you look at the functions that he explains a reserve currency must have in order to BE a reserve currency, you can see that the options besides GOLD are pretty limited.


Regarding the "timing" of FG, I agree the rollout of the Universal Credit Rating Group is a significant harbinger, the more so because a Frenchie is behind it. Like you, I think the timing de Villepin suggests (2020 - 2025) is pure smokescreen to defect attacks from the establishment, who will thereby think that they have oodles of time and immediately ignore it.. However, Richter's article states that de Villepin said that the UCRG's operations would/could begin earlier if there was another crisis. For "if" substitute, "when."

The best explanation I have heard for the delay in FG rollout is a combination of analysis from FOFOA and statements by Rickards. Things were set for a rollout in the 90s but then the Chinese economy took off and China, probably unwittingly, extended and boosted the exorbitant privilge even higher by plowing its surplus into Treasuries.

Rickards has indicated a few times that all the major economic players know we need a global reset of the international financial system, and know it will be founded on or involve gold, and are more or less cooperating until the major players, mainly China, acquire sufficient gold reserves so that the major players all have reserves more or less correlative to their current economic status, after which a new international conference will be called to design (announce) the new system. No one seems to know exactly how much gold China has or is acquiring, but on Rickards' floated theory, now - 2015 seems plausible.

Another btw, Rickards' latest interview is pretty interesting. So much of what he says is SO CLOSE to FG, but he continues to argue that currencies in the next system will be on a gold standard with a fixed gold to currency convertibliity ratio, albeit in other places he states that this ratio will be periodically adjusted. Geez Jim, how about we adjust it quarterly?


Marco Polo said...

MF: thank you for the links. Do see the impossibility of forced gold sales to government IN THE USA. Not so sure about ROW that has never tried this tactic. Despots being what they are, likely they will try anything and everything to get their greedy paws on something suddenly many times more valuable than before. Forcing locals to use local currency only. The despots will, of course, carry out any gold trading 'on your behalf' at national level. Foresee it taking time for deregulation to take place everywhere. For years now, it has been highly risky travelling anywhere with currency 'worth' more than $10 000. Amazing how consistent that figure has been, and not changed in a long time. This is the one problem I feel has been underestimated. Lesson is your gold is better held in relatively small units? Especially if you live in less liberal parts of the globe.

Dr. Boer said...

As a European I tend to agree with the demise of an the EU-centred freegold. This not the same as giving up on freegold altogether. Mr Fly doesn't say that; he just remarks that the optimal time window for EU is past. Like it or not.

Roacheforque said...

I don't quite agree with your scolding of McFly. The pointing out of alternate views is a healthy excercise for debate. Rather than to restate my views, I am open to the understanding that elements of Drosophila's argument appear correct to me, in that the dolllar has been "collapsing" for quite some time now and oil isn't exactly rushing to the Euro, it is more discreetly if not covertly bidding for gold as we speak.

And yes, the Eurasion Union is established and well under development according to more than one ridiculable source; though we could completely discredit that fact just because we think JW's "a jackass" and it's comforting to hop aboard that FOFOA-is-the-ONLY-definitive-expert-and-everyone-else- sucks-ass bandwagon in the comments section.

But, outside of the comments here ... I think there's gold over there, in amounts that are not offically reported, and I do believe the aim here is to outstack the Euro member sovereigns as the global monetary authorities continue to do what they do best: GRADUALIZE collapse.

We can credit them for that, by way of perception management, in turn by way of the derivative price steering mechanisms of the major TBTFs and their systemic counterpart(ie)s.

The entire system at this point is in a slow motion collapse by design, by intent, and by reason of the ONLY way out and away from a total systemic hard landing of the chain reaction events in my oft-described domino theory.

Gradualized collapse.

A term to get used to, as all the so called "powers that be" are fully concentrated on THAT strategy, and the most effectrive way to orchestrate it over the longest time frame possible to ease the pain of change.

Phat Expat said...

This is truly macabre theater now; the Zekes are running the asylum. They're so blinded by their own ideological shortcomings that, if they even own gold, they won't be around for the reset; as I have postulated so many times before.

Marco Polo said...

BTW, on that thread in 2010 was a comment on how the USA needed a war to distract attention. We damn nearly had it in Syria, but the UK refused to play ball. Wonder if the current 'crisis' would have unfolded if there were a war with American boys dying in the background......

Roacheforque said...

And also, somewhat pertinent to Rickards, while FOFOA has constructed (from his ionterpretations) an extremely elegant solution involving gold, it doesn't seem to be EVOLVING as naturally as a "market breaking free from manipulation" would like.

Keep in mind. Governments have misunderstood and/ or abused the role of gold before. Who is to say they won't somehow fuck it up again.

We had a chance to put FOFOA in the chairman's seat. Now we have Yellen.

Oh well. On with the Gradualization ....

Roacheforque said...

And Sir Tagio,
"Rickards has indicated a few times that all the major economic players know we need a global reset of the international financial system, and know it will be founded on or involve gold, and are more or less cooperating until the major players, mainly China, acquire sufficient gold reserves so that the major players all have reserves more or less correlative to their current economic status, after which a new international conference will be called to design (announce) the new system. No one seems to know exactly how much gold China has or is acquiring, but on Rickards' floated theory, now - 2015 seems plausible."


Roacheforque said...

This cooperation includes the maniplation of dollar denominated gold at price X, in return for China's treatment of dollar debt holdings (and related strategies) according to agreement Y in some form I think.

Marco Polo said...

Now for the ultimate confession: do not have any physical gold. About £30 000 in Bullion Vault. Want to buy as much as can afford in next few days. In UK, Sovereigns attract no CGT. So questions are: anyone recommend a dealer? And bullion or coins? Please, no ridicule, only a newbie...

Roacheforque said...

Find a local dealer, leave no paper trail, tell NO ONE.
Do not try to bend the gold, that is impossible. Only seek to understand that there IS NO GOLD.

There CERTAINLY is NONE in the possession of Roacheforque ...

KnallGold said...

Distorted reality (check): Things here are getting stranger by the minute, yeah Wil. Of course the timing with the US Budget crisis clearly coincidental.

I'm rather reminded of Jacob's Ladder flashbacks instead of Matrixian enlightenment...

Exorbitant Privilege, Triffin's Dilemma, international reserve question: Its all centered around America, so its the proper and rational way to deal with it when the spot IS on the USA.

Shutdown, showdown, debt ceiling lift countdown ala Hollywood: this is a nice distraction since the implied solution of "raising debt(ceiling)" is not the solution to the debt problem in the first place. Black is white....

But we know that they're trapped. Is abandoning the debt ceiling altogether/opening all spigots the most probable way? Is the unavoidable crossroad here to HI? I can't really tell what short term influence on POG could result. Or if still a scenario exists without HI, ie the controlled approach as per Ari's mail to FOFOA "if one HAD a chosing". Something I deducted he prefered because 2010 was abandoned.

Something we could make thoughts around, what one would do if one HAD the choice. And I would say one has it now.

Sir Tagio said...


"Do not try to bend the gold, that is impossible. Only seek to understand that there IS NO GOLD."


Michael dV said...

APMEX has served me well.

Michael dV said...

The obvious problem with Rickards system of even periodic revaluation of gold price is that it would not be the market doing the revaluation but an appointed body. This would be like Stalin determining who counts the votes.
No, it must be the market dealing in actual physical gold that sets the price of gold in freegold.

Motley Fool said...

Marco Polo

I agree it is best to leave no paper trail, so try and source a local supplier.

You might also consider reading this :

There's one more, but I can't recall the title, where fofoa speaks about looking at the world from the perspective of an ant. Help?


Indenture said...

Sir Tagio said...

Michael dV,
Agreed, on the problem with Rickards' approach. I view him as an insider, pro U.S. military, and as such I take his "analysis" as an expression of what certain of TPTB are hopingto engineer, because it lets the parties to continue to play games with their own currencies, and provides less than the full accountability for their actions that FG would impose.

How he believes that the ROW is going to be fooled again into accepting a return to a meet the new boss, same as the old boss pre-1971 Bretton Woods style system , however, is beyond me.

mcmagicfly said...

De Boer & Sir Tagio and others from the awaking majority>

That deVillepin's speech is quite a bombshell (incl. Q&A session) indeed, let me clarify the previous point, there is certainly no insult meant in revealing the sober reality based observation that the former plan (as of 1990s) of EMU playing some sort of 1st, or even 2nd most important global role are over, the clock has simply ran out.

The ROW demands today nothing less than a status
of "equals around the table" - obviously with some "naturally"
emerging superpower later on in next steps, namely China.

He addressed it all with time urgency repeatedly from the debt bubble, expriv, credit, even tangential refference to SWF savings mechanism for crude producers in their post exporting days..

Sober up, look what's going on in the streets now as it could be even worse, the EMU franco-german axis is rotting away from within with accelerating speed, and the frenchies are couple of steps in the front of germans. French paupers are leaving the mainstream socialist camp desillusioned
in swarms and joining the antieu parties. Where obviously the stated aim of the owner class is the goal of
leaving the EMU and devaluating the new franc 20-30% to keep their local industries humming, however with some sort
of limited europan community in place.

So, when even "lite" globalist and internationalist with neo deGaullian pedigree like deVillepin run for exits, plus the factor of those anti EMU "crazies" getting closer to power,
it's completely different ballgame from now on.

Welcome to the brave new world of pure macabre.

KnallGold said...

Euro is not political.

Jeff said...

The anti-euro view isn't new. Judging the euro's performance while we still live in a dollar centric world is premature. Time will prove all things.

Indenture said...

Does 'Rickard's Theory' include a Dollar Collapse? Because if it doesn't how does he explain other commodities rising in price to reach consensual equilibrium with gold?

onedayfly said...

We know now at least 5706 tons of gold is held in China, or ,divided by 1.3 billion peeps, 4.3 grams per capita.

Marco Polo said...

Thanks to all for suggestions. Unfortunately here in UK, all gold coin/bullion sales over £5000 in a single transaction or more than £10 000 cumulative per annum must be recorded for Her Majesty's Revenue & Customs. Dealers websites do not say if the info is merely recorded or actually sent to HMRC. Not particularly bothered as not doing anything illegal - yet!
And no, it is not 'dirty' money!

mcmagicfly said...

Koos has done some important reporting as of lately. Quite interesting that "nobody" has done the expert translation services from these chinese sources before in the westerm mainstream or blogosphere on the subject. Therefore couple of "systemic" gems were revealed with notable delay.

Franco said...

Beer Holiday:

I don't think that mcmagicfly is the worst kind of troll. There have been (and still are) much worse than him. Actually I don't think he is a troll at all; he just needs to remember to take his meds before he starts going off about swiss ips and droning.

In any case, I think that we should attempt to seek the truth, wherever it leads us. I think that it's great that FOFOA created this blog, and that it's a tribute to the thoughts of Another and FOA, but...they are gone, and it's incumbent upon us to move on without them.

Attitude_Check said...

Not according to the politicians and founders. It is first and foremost political. It is goofilly noneconomic in its present structure.

Marco Polo said...

Last one for today. Getting late in UK.

What mechanisms have kept the system from imploding? Reading posts from 2010, it seems difficult to imagine we would make it to 2013. But we did. And all over the MSM, good news or green shoots stories abound. Auto industry in US working 3 full shifts, UK unemployment figures down. My wife is convinced you are all a bunch of sad conspiracy theorists and these things have a way of working themselves out without the drama you describe. She thinks you are brainwashing me and I am susceptible as admittedly more cynical / pessimistic than most. Love her to bits but her idea of good TV is X Factor, Great British Bakeoff, Strictly Come Dancing. The ONE thing that will help me take heart is a couple of lines on how the great deception has been kept alive. Would all agree it was by politicians making it look they were still in charge and restoring confidence? Cannot see any other mechanism. Hugs and kisses. Marco

burningfiat said...


Thanks for your letter to the and welcome to the cult!

Your wife obviously doesn't know her place. You need to teach her who's the man in the house.
Firstly you need to tell her to stay out of your economic affairs as long as she refuses to study. Also set her allowance down by 90% as long as she watches those stupid shows!
Next step is to get into some S&M where you play the dominant of course. Tie her up for instance. Perhaps she struggles for the first few hours, but after she calms down, you'll be able to give her a proper lesson! Be creative!

Good luck! Please tell us how it went!

Best wishes, Hugs and kisses


Totara said...

@ Marco,

This UK outlet is worth a try.

Motley Fool said...


Thank you.

I am fairly certain that is not the post I had in mind. I skimmed it earlier, and skimmed it in more detail this time.

Paraphrasing, I recall a post with a sentence or two about the giants from the perspective of ants. How their world view/experience is that the sole purpose of giants is to bring them pain and kill them. And how by shifting perspective, one can see this is not necessarily true.


Ps. @marco polo...there is always the shall we call it black market, of gumtree or the like. Else simply (haha) find six dealers who accept cash and do not ask ID.

mcmagicfly said...

Our "italian" friend is getting a bit gross here. Seriously Marco, perhaps try to weed out the TV dunk first, but as with any addiction you have to start with methadone programme, so first get her on "quality" TV like BBC Restoration Home, Edwardian Farm, Monty Python etc. And then very slowly ramp up the dosage of dense political economy stuff..

50sQuiff said...

It's been posited, in opposition to the 'bugs, that GOFO is a short-term interest rate story and has practically nothing to do with physical gold demand.

But if that's the case, shouldn't GOFO have risen into the debt ceiling deadline like IRX? IRX has gone vertical to a three-year high.

By comparison, GOFO has plunged rapidly in a move coincident with spot gold's move below generally accepted all-in cash costs. GLD has also been coughing up small chunks again.

Perhaps this indicates that GOFO is genuinely related to physical/allocation after all?

byiamBYoung said...


I've clearly been doing this marriage thing all wrong.

Marco, I've read (on this blog) lots of well written discussion about why Freegold hasn't arrived yet. Keep digging!

Here's a few thoughts that rang true for me...

Giants don't really need Freegold to happen, so they don't have a reason to force it.

Also, the transition is likely to be messy at best, so no one is likely to want the blame for it happening. Everyone is just quietly moving toward the exits, hoping someone else triggers it.

Plus, for some, like China perhaps, the longer it takes, the better prepared they are! Although China is starting to get pretty noisy lately, so maybe they are feeling a little more ready for the transition.


mcmagicfly said...

Finally, after years of painstaking deliberations
I've found the key: U.C.R.G and U.N.C.L.E.
are spawn from the same globalist dark cave.

/Sorry, couldn't resist, low on the meds now.

One Bad Adder said...

Au-contraire 50sQuiff: - This 3 Yr $IRX (weekly) identifies the recent "high" Yield you point to as indicative of the $IRX - GOFO disconnect however, the game is still afoot.
The latter half of '11 saw a similar "spike" which very quickly retraced to Zool in July - Aug ...and stayed there until (miraculously) returning to an acceptable level thru '12.
We're coming from a much lower "mean" this year and it'd not be too pessimistic to assume we'll again be plumbing the depths sooner rather than later IMHO.

victorthecleaner said...


shouldn't GOFO have risen into the debt ceiling deadline like IRX?.

I agree that this is a plausible objection. Honestly, I don't know the answer. Here is one excuse: Those whose actions are responsible for the negative interest rate effects in GOFO are not willing to hold the T-bills whose yield has increased during the debt ceiling struggle. Perhaps they operate with dollar reserves directly.

The reason I am trying to make up an excuse is that I still have to major objections to the view that GOFO shows some sort of "scarcity" of physical gold.

1. GOFO is determined by swaps of paper dollars for paper gold (London unallocated). So the only thing that's scarce here would be paper gold.

Are BBs unwilling to write all the paper gold that investors are demanding? Possible. Perhaps they have a reason to feel uncomfortable about expanding their position.

2. If there was any doubt that the gold will be delivered, the implied risk-premium should be larger the longer the maturity of the swap. This means that GOFO should be inverted, i.e. longer term GOFO more negative than short-term GOFO. This is not what's happening.

The only type of scarcity that I can see is a scarcity of paper gold that everyone knows will be temporary. That doesn't make much sense to me.


Blake said...
This comment has been removed by the author.
Blake said...

Question regarding the mechanics of the FED purchasing MBS and how it ultimately funds the USG:

Initially, the FED and commercial banks swap reserves for MBS. Then, the commercial banks swap those reserves with Treasury for newly issued Treasury assets (bills/notes). Lastly, those commercial banks turn around and swap those newly issued Treasuries assets with the FED for more freshly printed reserves.

Is my understanding correct?


burningfiat said...

Blake, perhaps my understanding is lacking but why is your last step needed?

Banks just got crispy new FRN's from the printing press (in good measure) in return for their lame MBS's. Why should it be necessary to involve Treasury? Banks already got liquid cash in first step... no?

burningfiat said...

... Although I see the banks _could_ purchase treasuries with the proceeds if they needed something "safe" in lack of better investment opportunities... #yield #low

Blake said...


Yes, but our premise is that QE is really just a mechanism to monetize USG debt. If true, then banks simply swapping MBS for reserves does not seem to fund the USG absent those reserves being used to buy USG debt...

burningfiat said...

If that's the premise, yes I agree on the two step mechanics...

Originally I would have thought that the premise of QE was to make sure there was enough liquidity in the general economy (which first step would ensure by swapping dead assets at mark to fantasy prices for cash). But it is entirely possible I was just too well indoctrinated on that point by the official propaganda :)

Michael dV said...

Sir T
It is indeed a much different world than it was in 1945 at Bretton Woods. It will be the USA who sits quietly and listens to the way the new order will be arranged.

Michael dV said...

I think QE alos serves the purpose of keeping the GDP numbers out of the negative range. Yes the Fed's purchases did match up very closely with the USG's need for funding but part of the 'need for funding' was spending on stupid stuff that did little but it did show up in the GDP.
If those go to less than zero there is all kind of talk of recession and depression and that must not happen. We are in the range of less the 2% growth though and that is way to close to zero for politicians.
I know politicians like to spend on their own favorite projects but I also think there is some though given to the GDP numbers. I suspect this is why the USA has gotten so generous with disability, food stamps and other social programs. There is a human need but any spending counts. To see any drop off must horrify those who would take the blame for a HGDP number too low.

One Bad Adder said...

...for the short-enders: -
THIS is a summary of the recent Treasury Bill Auction results - not much Bang for your Buck in evidence lately eh?
...whilst THIS is the schedule for CMB's. There seems to be a decided build-up of sub-30 day maturities in evidence nowadays which is consistent with the reduced level of Bank / Cash guarantees - FWIW.

M said...

David Morgan has a valid question.

"Why could this group of giants not continue trading at a revalued price while leaving the price everyone else trades for around where it is now ?"

That is what happened in the 70's essentially..

M said...

BTW I took the advice to just live life. Instead of buying yet another traunch of gold, I bought a Corvette.

Aaron said...

Hi M-

David Morgan has a valid question.

"Why could this group of giants not continue trading at a revalued price while leaving the price everyone else trades for around where it is now ?"

Let's imagine this two tier market emerges and a Giant or two decides to dip into the "everyone else's" market for a discount. What happens next?

Monetary Matrix meets Physical Reality

Aaron said...

Posted by FOFOA on March 25, 2010 2:45 AM


Think of it this way:

Since 1933 there has been a thin membrane that separates sovereign entities (SE) from private entities (PE) when it comes to gold transfers.

Gold moves from PE > PE as a commodity. And it moves from deficit running sovereign entities (SE-D) to surplus running sovereign entities (SE-S) as a monetary asset; a balancing function in the monetary system. SE are different than PE because they can print money, and they collect foreign currency surpluses.

Whenever gold starts to pass through that membrane, no matter in which direction, a phase transition starts to occur. If a SE-S tries to buy gold from the PEs, gold starts to phase-shift from a commodity into a monetary asset. If a SE-D tries to sell gold to the PEs for the foolhardy scam of lowering its commodity value, gold starts to phase-shift to a monetary asset because it is clear what SE-D is doing (especially to SE-S).

Freegold will be the elimination of the membrane. All players will be on a level playing field. This is not a gold standard. But it is a shared function for gold between SE and PE.

By the way, think about $6,000 gold trading amongst the giants with this membrane in mind.


byiamBYoung said...


Boy o boy, I hope to someday be able to buy a Corvette! When that day arrives, I'll buy another traunch of gold.


Phat Expat said...

You devil dog. Good for you! Which model? I'm looking at the new Camaro upon return. You know, the one that just smoked the 911. ;-)
Chevy Camaro Z/28 outruns Porsche 911 in wet Nurburgring lap

I wonder what the mpg is? Ah, heck, no I don't! lol

Grumps LaBastard said...

Phil_O_Dendron said...

Phat Expat said " I wonder what the mpg is? Ah, heck, no I don't! lol"

That should read "what the gpm is? No.

Grumps LaBastard said...

Phat Expat said...

Watched the video again and when he's building to 161, there's some serious pucker factor going on there. Whew!

Hmmm... Now, is there a CNG option? The US is awash in that stuff. Unlike others. ;-)

Blake said...

Anyone have any input on Chase Bank limiting cash withdrawals and banning international wire transfers starting Nov. 17!?!

Michael dV said...

One comment on ZH said he had called the bank and verified...though I thought it was JPM. The ZH article was linked to Infowars.

Motley Fool said...

Marco Polo

"What you see is the result of the perspective you choose

A small-minded ant's only interaction with Giants may be getting stepped on or sprayed with deadly poison. So from the ant's limited perspective, this activity of killing ants is what Giants live for, what motivates them, and what they spend their time scheming and planning for. Don't limit yourself to the ant's perspective. If you want to find the tasty morsels left by Giants, you've got to start thinking like a Giant."

Since it is from another of the must read posts, you may as well read it if you haven't already.


Good for you. :)


Phat Expat said...

So, how's that go now; Buy the rumor, Sell the news? ;-)

mcmagicfly said...

Long term super cycle of economic expansion, steady-state and stall (nowadays), followed by terminal contraction.

Marco Polo said...

burningfiat: the wife and I are already into S&M

She sleeps and I masturbate........

Marco Polo said...

Anyone heard of the Bankcor? Found this today

SLK said...

A separate question I'd like to ask FOFOA,

From your premises:
1) Dollar gets printed into oblivion and die a valueless dealth,
2) Euro survives,
3) Gold goes towards Freegold price,
4) Hyperinflation,

3) and 4) are consistent with each other, but doesn't this mean prices of everyday items in Euro terms will be a very large number as well? Is this how it will survive - prices stable at a large number?

Grateful for what u see on this - i assume u already have the answer.

Marco Polo said...

A minor Eureka moment: why the "reset" is delayed. Fear. Remember, politics is show business for ugly people. Politicians have 2 principle tools: sell a rosy vision of a glorious future or sell FEAR. The giants are not fearful, but as stated above, do not want the blame and are quietly taking out insurance. It is the populace who are uneasy, but do not yet quite know why. Their fear of the future is allowing all the current political BS in the face of irrefutable logic. People still trust the politicians to 'sort something, anything'. FOFOA site has all the technicals and logic anyone ever needed, but the one thing that no-one can predict or control is the mood of the herd. The latter are just not ready yet and false optimism abounds in MSM. Think it will take quite a bit longer for herd to panic.

mcmagicfly said...

Since the past age of exponential moderenity of roughly 400yrs was one of the classic giant pyramid schemes: resources in from everywhere and oppulence out for some, with the obvious side effects of overpopulation and biosphere degradation, what now?

The fear factor both on shrimp and giants level has been mentioned numerous time here and it's certainly a player. The overall issue is timing though, if there is enough resiliency and time in the system to offload the scheme on another engine now, i.e. emerging markets, stackers can reasonably expect wealth preservation, plus perhaps some windfall coming in their directions as well. However, if the new giant boss of the east is in fact standing on clay legs it's a completely different proposition.

The life itself is and always will be a gambling machine, you have to make these decisions all the time in trivial matters and sometimes also decide in those not so easy to grasp concepts of high volatility outcomes, especially in times near systemic shifts.

Don't sweat it and don't be angry about yourself, the numbers on the loosing side are and will be very close on the order of 99.9% so keep it easy kind of in tranquility deterministic ways.

Marco Polo said...


Sorry if I missed something but I understand you invested in farm equipment, not PM? That right? If so, why?

BTW, like your reasoning of selling the dream to new markets to keep it alive. Rinse & repeat, rinse & repeat. Spiced up by the odd war here and there. To my mind, the single factor that has changed the paradigm is the internet. Makes it harder to fool all the people all the time. FOFOA would not exist without it. Finally how's this for a chuckle (from Infowars)

RevoltBeginsNow • 3 hours ago −
Businesses should start saving their worthless USD in Bitcoins. They're at $150 now despite all the naysayers. It's going to go supernova at the same time USD crashes and FED naked shorts Gold & Silver into oblivion. Gold & Silver are a dud evidence has shown!

Roacheforque said...

M has seized the moment.

It's the only fitting revenge. Enjoy life.
Live long and prosper ...

Woland said...

It's spelled Bancor. Keynes proposal was rejected by the
U.S. at the Bretton Woods Conference in 1944. There are
many explanations of it just 1 click away. Cheers.

Jeff said...


Good question. It's nice to see someone thinking and asking about the blog topics, rather than just posting their pet theories and offtopic links in comments.

I would rearrange the order of your numbers, to 4, 1, 2. I don't think 3 fits, as the price of gold we see will probably move in the opposite direction of the freegold price, then we will have no price, then a freegold price. Poof, it's gone, then it's there.

To understand why, there are a wealth of posts on the euro. I recommend Euro conversion, Freegold foundations, Euro gold, and Synthesis.

But here's a tease to answer your question, from Synthesis.

FOFOA: All the benefits and architectural innovations of the ECB stand in place now as a kind of safety net for the Eurozone for whenever the $IMFS collapses under its own weight. And the signs of this happening sometime soon are ominous and many.

It is easy and convenient for the financial press to blame the Eurozone problems on the euro itself. But I am here to show you that they are actually caused by the dollar system, counterintuitive as that may seem...

Unsustainable Deficits

The pressure on the $IMFS is building EVERYWHERE! From Greece to California, from the ECB to DC. And what exactly is all this pressure? It is unsustainable deficit spending... DEBT!

And what is the ONLY solution to this? What is the pressure release valve? It is different depending on whether you are a sovereign net creditor/saver or if you are a sovereign debtor. For the creditor/savers the ONLY solution is CUT OFF THE CREDIT and thereby FORCE AUSTERITY. If you are a debtor, the ONLY solution is DEVALUE THE CURRENCY, or more precisely, ALLOW the currency to hyper-depreciate. Yes, default is an option, but not for a sovereign that prints its own money, and not for any too-big-to-fail entities under the umbrella of such a sovereign...

The US dollar MUST devalue (one way or another) against the entire physical world. Think about this. The euro, on the other hand, might just hyper-depreciate against only one specific asset. An asset that happens to also be a MONETARY asset held by its member debtors.

The hyperinflation of the dollar is already a done deal. It has been since the 90's at least. Massive quantities of perceived dollars already exist stored in debt held globally and inside the US. Europe knows this. They have known this was inevitable since at least the mid-90's when they changed plans and went with higher gold reserves for the new ECB. They have always been willing to wait for it to happen naturally, unless the EU itself faces an existential threat from debt brought on by the $IMFS. And in this case, I believe their only option is a targeted hyper-depreciation of the euro.

By "targeted", I mean that the euro devaluation would be targeted to go only into gold. Gold can absorb a devaluation if you do it carefully, and in turn devalue the debt without causing inflationary havoc.

Of course this would cause the hyper-depreciation of the dollar as well. Only the dollar's collapse would be against all of creation, not just one asset."

mcmagicfly said...

Marco> all has been explained before recently, that holds true even for the point of much faster information highways of today. Yes, that will be a huge factor, many people don't realize how much satured is the 2nd and 3rd world in terms of mobile phones and financial info and services available now, it grew even more since the 2008. Obviously speaking about the segments in these societies able to spare a buck a or two for rainy days. So, the next crises or collapse at the intensity beyond contagion "by the authorities" will be truely massive, global in nature, spreading like a wildfire on these networks. Hopefully, we will know the direction of resolution fairly quickly in hours, days, not months, i.e. certain governments and players declaring "enough is enough" and in practical matters, e.g. no refueling allowed for US blue navy fleet in int. harbours, importing countries inbound crude and LNG tankers changing routes midway etc..

KnallGold said...

Sound reasoning here from China, since the US credit agencies can't do their work anymore because USG suing them like they did S&P. Another dysfunctional $ thing revealed.

"China's Dagong Global Credit Rating cut its credit rating for United States debt by one notch to A-minus from A on Thursday, saying a deal struck by Congress to raise the government's borrowing ceiling failed to solve the cause of its debt problem. ..",0,2509722.story

Oakay Nobmilka said...


Marco Polo said...


The Euro could deflate against only one asset e.g. gold. Does this not, however, mean that Eurozone gold, held by ECB /Sovereigns, can no longer be traded?

Marco Polo said...


The Euro could deflate against only one asset e.g. gold. Does this not, however, mean that Eurozone gold, held by ECB /Sovereigns, can no longer be traded?

mcmagicfly said...

At this stage is preposterous to believe any .gov data at all. For instance the Germans lied (silence) about their partial repatriation for a decade. While it could have happened in number of different ways and reasons, and or their current stack could be completely different number today anyway, perhaps FG might push for some expedient cross-audits among the big players, boy am I still too naive.

Jeff said...

Marco Polo,

Why would that be the case?

FOFOA: …The ECB, however, which does not guarantee a redemption of the Euro for a fixed weight of gold, can engage in various types of Gold Open Market Operations.

Firstly, in absence of a liquid market for physical gold in Euros, the ECB can act as a market maker and, say, bid for a fixed weight of gold at € 8745 per ounce and offer to sell a fixed weight at € 8755. If they bid for and offer more than 10 tonnes each at any time, they are able to make a liquid market for physical gold in Euros, a market in which other central banks can trade the quantities that typically arise in the settlement of international trade balances. As soon as it turns out that there is more weight of gold sold than it is bought (or vice versa), the ECB adjusts the bid and offer prices accordingly. This amounts to assisting the price discovery for large quantities of physical gold while the reserve of the Eurosystem remains essentially unchanged.

Jeff said...

Oops, that's a Victor quote from a FOFOA post.

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