Thursday, June 26, 2014

Fiat 33



"Sir, I would say, "Old World Order" to return.
To understand/explain better: A very easy way
to view this "order", would be to simply say that
the American Experience is reaching the end! As we know,
world war two left Europe and the world economy destroyed.
Many thinkers of that period thought that the world was about
to enter a decades long depression as it worked to rebuild real
assets lost in the conflict. It was this war that so impacted the
idea of looking positively toward the future. The past ideals of
building solid, enduring, long term wealth were lost in the
conception of a whole generation possibly doing without! In
these fertile grounds people escaped reality with the New Idea
of long term debt, being held as a money asset. Yes, here was
born the American Experience that comes to maturity today."


_________

In 1933, President Roosevelt issued Executive Order 6102 "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States." That restriction stood for 41 years until it was lifted in 1974 by an act of Congress "to permit United States citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad."

In 1935, the United States Treasury had 9,000 tonnes of gold, 8,998 to be exact. Then, in 1971, when President Nixon officially closed the gold window, the US Treasury was back down to 9,000 tonnes, 9,070 to be exact. In the middle of that 36-year span, US Treasury gold hit its peak at 20,663 tonnes.


I know I haven't written a post in a while, but my plan right now is to write a series of posts, this being the first, that will hopefully paint a nice big picture for you of what Freegold is all about. I've had the idea for a while now to write a post about what, precisely, constitutes the overvaluation of the dollar today, as that relates directly to the deflation versus currency collapse/hyperinflation debate.

In order to see how the dollar can collapse against the physical plane of real goods and services, you must understand how and why it is overvalued today, not just in the monetary plane with its monumental overhang of "financial savings", but also in the very real physical plane of production and trade. In the end, you might be surprised to discover how the dollar would still collapse in value even if we could hypothetically erase, block or sterilize the massive overhang of dollars and "financial wealth" that has accumulated in the monetary plane from rushing out into the physical plane.

As it turned out, this topic was much bigger in scope than I could possibly tackle in one post. In fact, I believe it encompasses virtually everything required for understanding what Freegold is truly about. And again, in the end, I think you may be surprised to discover how simple it really is, but it's going to take me a little while to get there.

I don't know how long or how many posts it will take me to explain what I have in mind. I'm not working off an outline. But here's a bit of a spoiler for those of you who are impatient, don't like to read, or don't care about understanding it deeply and would rather just have an abstract that can be easily dismissed so you can get back to tradable technical analysis.

Freegold is all about gradual, natural and automatic adjustment mechanisms in the modern world of fiat currencies. An adjustment mechanism is quite simply anything that periodically corrects physical plane imbalances. In economics, the term adjustment mechanism is often used to describe the flow of gold between different countries back when gold was used as base money in those countries. But this is not at all what Freegold is about, so I am using the term in a much broader context that applies at any scale, from the global scale on down to the individual.

Whenever you buy a gold coin, or even a coffee at Starbucks for that matter, that's a simple example of an adjustment mechanism at the individual level. Monetary plane balances (like "financial wealth", the "idea of long term debt being held as a money asset", or even cash in your wallet) represent physical plane imbalances. Whenever monetary balances are reduced, real world imbalances are reduced. Likewise, when monetary balances are accumulated, physical plane imbalances increase. It's a simple concept and a simple view.


The flow of money within a common currency zone, like the United States for example, is the most basic and automatic adjustment mechanism. Other adjustment mechanisms include changes in wages and in the prices of various goods and services in general and in different locales, and the movement of people and capital from one location to another.

Wherever multiple currencies interact, like on planet Earth for example, changes in the exchange rate between them are the primary adjustment mechanism. Fixing, pegging or otherwise manipulating the exchange rate of different currencies does, in fact, preclude other adjustment mechanisms and causes imbalances to accumulate, often to the point that abrupt adjustment becomes unavoidable, economically disruptive and financially destructive, in other words, painful.

Currency collapse and hyperinflation are natural but not gradual adjustment mechanisms, as are controlled devaluations. Floating exchange rates are a more gradual adjustment mechanism between different currency zones.

These adjustment mechanisms have always been with us, so the real change in Freegold is the "gradual, natural and automatic" part. Gradual (or ongoing) is self-explanatory, but what I mean by "natural and automatic" is that these ongoing adjustments will be allowed to happen or made by choice, not forced or induced by a central bank, because such ongoing adjustments will be in the self-interest of anyone in a position to choose, on any scale.

I know that some of you are skeptical about what I am saying. You're probably thinking that Freegold relies somehow on gold and whether or not it is embraced by the masses. But here's another thing that will probably surprise you in the end. Gold has little to do with "Freegold the monetary system"! Gold is not a key part of the monetary adjustment mechanisms in Freegold. The price and physical movements of gold won't even matter to the monetary system. Any movements of gold in price, ownership or location will be irrelevant to the monetary system of the future.

Freegold is the true unshackling of gold from the monetary system. In Freegold, a properly functioning monetary system requires nothing of gold. In Freegold, the international monetary system won't require gold to change price or location in order for it (the new IMFS) to function. That's why it's called Freegold. Gold is finally and truly set free from its shackles to the monetary system.

There is an idea floating around that, because gold and money used to be directly linked, that Freegold essentially means the opposite, an inverse link between gold and money, such that an oscillating price of gold will have a damping or stabilizing effect on the monetary system. But Freegold is neither a direct nor inverse link, it is the complete severance of gold from its former duties as part of the monetary system.

To understand the complete severance of gold, it is helpful to understand how gold interacted with the monetary system in the past. Before WWI, gold was base money in the monetary system. That is, it was commercial bank reserves. And as such, the flow of gold worked as an adjustment mechanism even between different countries without changing the exchange rate of different currencies.

It worked like this. Say you have one country with a strong economy that is running a trade surplus with another country that has a weaker economy. Some surplus amount of goods and services flows from the stronger to the weaker, and net monetary payments flow from the weaker to the stronger economy. Gold was a hard base money that couldn't be created at will, so the flow described led to a surplus in the base money stock and thereby an increase in the effective money supply—the effective money supply is the aggregate of commercial bank liabilities (credit money) and base money circulating outside of the commercial banking system—of the stronger economy, and a deficit in the effective money supply of the weaker economy.

Changes in the money supply corresponded to demand for goods and services from each country, so eventually the trade flow reversed and the imbalance corrected. It didn't matter that the two countries used different credit money currencies because the base money was the same currency, gold. So as money flowed, even across different currency zones, change in the local effective money supply and its corollary—demand—was the adjustment mechanism.

That was before WWI. After WWII, it was quite different. Gold was no longer base money reserves in the commercial banking system. Instead, it was reserves in the central banking system, and central bank liabilities were base money reserves in the commercial banking system. This was a big difference in terms of adjustment mechanisms between different currency zones. Gold still flowed, but its flow had the exact opposite effect—it effectively blocked the adjustment mechanism from working on the economies in different currency zones because its flow was a de facto manipulation of the exchange rates of the currencies.

This was deliberate, and it's what Another was talking about in the quote at the top of the post. Following WWII, productive capacity in Europe had been devastated and needed to be rebuilt. The Bretton Woods monetary system was the first fully negotiated international system of fixed and/or pegged exchange rates between various currencies. This new monetary system (in concert with the World Bank and the subsequent Marshall Plan) effectively provided support for Europe while it rebuilt its productive capacity such that, as Another put it, a whole generation of Europeans wouldn't have to "do without" during the reconstruction process.

American productive capacity was in good shape following the war. After all, other than Pearl Harbor and a few minor attacks, the theaters of destruction were not on US soil. So, by fixing the exchange rates of European currencies to the dollar, Europe was able to maintain a standard of living that its devastated economy would otherwise have been unable to provide.

The only way this was possible was for Europe to run a trade deficit with the US while it rebuilt its own productive capacity following the war, and the agreement between the Allies, signed in Bretton Woods a year before the end of the war, created the mechanism that made this possible. Understand that there is no difference between "fixing" and "manipulating" when we're talking about exchange rates. "Fixing" and "pegging" are euphemisms for "manipulating". We often think of "exchange rate manipulation" as a unilateral act to gain some perceived advantage, but there is no effective difference whether it is unilateral or a bilateral or multilateral agreement. Bretton Woods was a coordinated system of manipulated exchange rates.

As I already mentioned above, there is a fundamental difference between gold being the reserve in the commercial banking system and gold being a reserve at the central bank level. The difference is the effect caused by the flow of gold. Gold did flow this way and that during the Bretton Woods years, but it wasn't an effective adjustment mechanism nor was it physical plane settlement. It was actually an anti-adjustment mechanism and a mere monetary plane operation to effect the desired exchange rate manipulation.

Here's a tough concept which I'll explain in greater detail later. At the central bank level, any change, up or down, in "foreign reserves including gold" is essentially a currency exchange rate manipulation. "Foreign reserves including gold" can be simply called "reserves" as opposed to "domestic assets" on any central bank's balance sheet. The asset side of every central bank's balance sheet contains two things, reserves and assets. "Assets" are denominated in the CB's own currency, and "reserves" are not. That's the critical difference between reserves and assets.

Any time the asset side of a CB's balance sheet increases or decreases through purchases or sales, its liabilities increase or decrease as well. This is simple accounting. So any time a CB purchases or sells reserves, it is effectively manipulating the exchange rate between its own liabilities and one or more foreign currencies including gold. Manipulating exchange rates is the sole purpose of CB reserves. It's a bold statement, I know, but I'll show you that it's true.

In Freegold, CB reserves will not change much if at all, just as you'd expect in an unmanipulated (clean) floating exchange rate regime. CB reserves will just sit there, unchanged, static, with a sign on them that reads "break glass in case of emergency." Below a prudent amount, CBs do need to accumulate reserves by weakening their currency (manipulating it lower) so that they have them later to strengthen (manipulate higher) their currency's exchange rate in case of an emergency. But beyond that prudent amount, CB reserves are not necessary, and any change in a CB's reserves will signal to all others that the CB is manipulating its currency's exchange rate one way or the other.

WWII was just such an emergency. We can tell, simply by looking at the gold flow during the Bretton Woods years, how long it took Europe to get back on its feet after the war.

"Fiat 33"

"Fiat 33" was a term that FOA used to describe the bifurcated dollar system after 1933. Inside the United States, the economy that represented the dollar, gold was no longer an option as a money asset for net producers. Executive Order 6102 criminalized the possession of monetary gold by any individual, partnership, association or corporation. Thus, fixing the exchange rate of European currencies to the dollar was ideal for "the New Idea of long term debt, being held as a money asset."

"As we know, world war two left Europe and the world economy destroyed. Many thinkers of that period thought that the world was about to enter a decades long depression as it worked to rebuild real assets lost in the conflict. It was this war that so impacted the idea of looking positively toward the future. The past ideals of building solid, enduring, long term wealth were lost in the conception of a whole generation possibly doing without! In these fertile grounds people escaped reality with the New Idea of long term debt, being held as a money asset. Yes, here was born the American Experience that comes to maturity today."

Bretton Woods was a negotiated, coordinated, multilateral exchange rate fix. America was the strongest economy at that time and it therefore had the strongest currency. A currency reflects its economy, and an economy that's capable of running a trade surplus (producing more than it consumes) is going to have a strong currency that will rise in its exchange rate with other weaker currencies. An economy that is not capable of producing more than it consumes will have a weak currency relative to stronger economies and its exchange rate will decline. By fixing the exchange rates of all weak European currencies to the strong American dollar, this adjustment mechanism was neutralized.

We tend to think of the dollar as "fixing" its exchange rate with gold during this time. But, in fact, that was not precisely the case. The dollar was actually defined as 1/35th of an ounce of gold, and the gold price was in fact fixed in London in pound sterling. The London gold fix was generally a simple reflection, via arbitrage, of the exchange rate between the pound and the dollar. So the dollar wasn't technically "fixed" to gold, it was simply defined as a certain weight in gold.

So the European currencies fixed their exchange rate with the dollar, which was defined as a certain weight in gold, and London fixed the exchange rate of its pound sterling to the price of "street gold" (another term favored by FOA which refers to the non-monetary physical gold marketplace). Now, the way you fix (manipulate) an exchange rate is to supplement either supply or demand so that supply equals demand at your desired price.

In the case of Bretton Woods, that meant either supplementing the supply of dollars and/or the demand for European currencies wherever dollars and the various European currencies were exchanged. This is exactly what happened. Theoretically, the US could have simply printed dollars and bought up 40 different foreign currencies to supplement dollar supply and foreign currency demand, or it could simply buy gold. Alternatively, the European CBs could have bought up their own currencies with their dollar reserves.

Well, the European central banks didn't have enough dollar reserves, but they did have gold! So the US printed dollars which it used to buy gold from the European CB who then used those dollars purchased with their gold reserves to supplement the supply of dollars and demand for their own currencies at the currency exchanges keeping their exchange rates locked at the desired level. This exchange rate manipulation gave Europeans and their currencies the same purchasing power as the strong dollar, even though their economies were war-torn and needed to be rebuilt.

FOA made the distinction between "fiat 33 cash" and "the more golden foreign cash." On the surface, the distinction seems quite simple. Dollars within the United States were not redeemable in gold after 1933, but dollars held by foreigners were. Still, your average foreign exporter couldn't send his surplus dollars to the Fed in exchange for gold. That official exchange window was only open to foreign CBs. But foreigners could exchange their dollars for their local European currency—at the fixed exchange rate—and then buy gold on the open market in Europe where it was still legal to do so, and where London did its best to keep the price of "street gold" fixed to the pound which was fixed to the dollar which was defined as a certain weight in gold. Is your head spinning yet?

The thing is, this wasn't even an issue until the European economy got back on its feet and was finally able to start running a surplus (producing more than it consumes) once again. That was around 1958.


The numbers above tell a story. A lot of European gold was moved to London and the US for safekeeping during the war, and the incomplete accounting of the time shows it as belonging to the Bank of England and the US Treasury. As you can see, perhaps close to 10,000 tonnes were moved to New York and Fort Knox by 1940. Following the war, the US number drops a bit, but the numbers that I think tell the real story are 1935, 1952, 1957 and 1971.

In 1935, US gold is at about 9,000 tonnes. In 1952 it peaks at over 20,000 tonnes and sort of plateaus for five years through 1957. Then it begins a dramatic 14-year decline back to 9,000 tonnes at which point the Bretton Woods gold exchange system abruptly ends. Notice that the US Treasury is listed as having almost the same amount of gold in both 1940 and 1956, about 20,000 tonnes. The difference is that, in 1940, the US was holding half of that gold for safekeeping on Europe's behalf, but by 1957, the US owned it all.

The numbers tell me that Europe must have run a significant trade deficit with the US from 1945 until about 1952. Then, from 1952 through 1957, trade between Europe and the US was roughly balanced, requiring only minimal exchange rate intervention. But by 1958, Europe was back on its feet and running a surplus.

This meant the opposite of the previous situation. The European CBs now had to supplement the supply of European currencies and the demand for dollars in order to keep the exchange rates fixed at their established levels. This meant printing European currencies and using them to buy dollars from their European exporters.

It wasn't clear at that time that this US deficit situation would carry on indefinitely, so it sufficed perfectly well for exchange rate manipulation purposes for those European CBs to just accumulate dollars. In fact, according to the agreement at Bretton Woods, dollars and gold were equal. But the agreement also required, under specified circumstances, the repurchase of foreign-held balances if requested by the CB holding the balance.

The CB being asked to repurchase its own currency had the option "to pay either in the currency of the member making the request or in gold." The IMF worked kind of like a multilateral "currency swap" facilitator, and with the IMF, such repurchases of one's own currency above a specified amount were obligatory, and usually had to be paid for in gold. This repurchase of one's own currency as it built up abroad was a good practice which kept the aggregate monetary base from exploding. Every bilateral repurchase reduced the monetary base—and therefore the balance sheets—of both CBs.

I think it's a fair assumption that the initial transfers of gold from the US Treasury back to the ownership of European CBs in the late 50s were essentially a bookkeeping exercise to keep the dollar monetary base at a reasonable level. After all, the gold didn't physically move, only its allocation at the Fed depository changed. But something else quickly changed that situation. That something else was the reality underlying FOA's "fiat 33" concept.

1945-1957

There wasn't much pressure in the West on the price of "street gold" fixed in London at about £12.4 per troy ounce which was equal to $35 during these years. The reason is that Europe as a whole was net-consuming and therefore not saving, and in America saving in gold was prohibited—American net producers earned "fiat 33" and it worked out spectacularly for them.

There are stories of gold trading as high as double the London price in certain places in India and China during the 40s, and of some Saudis taking advantage of this arbitrage opportunity. But much of the gold flowing to the Saudis at $35 per ounce came out of the US gold stockpile via Saudi Aramco rather than from the London "street gold" market.

So what we have during these years are two major players running surpluses in the West, America and Saudi Arabia. American net producers earned "fiat 33" and grew accustomed to "the New Idea of long term debt being held as a money asset," while the Saudis received a little bit of Europe's gold via official channels that passed through the US Treasury. But this situation changed once Europe was back on its feet and started net producing in 1958.

1958-1971

The purpose of this post is to give you a new perspective on the Bretton Woods gold flow, the transformation of the dollar, and the early years of "the American Experience that comes to maturity today." There are often many different ways to view an event, none of which is necessarily more correct than another.

For example, the transfer of gold ownership to the US Treasury following WWII could be viewed as the United States printing dollars and buying European currencies (which Europe then had to repurchase with gold) in order to support the weaker European currencies while weakening its own. Or it could be viewed as the European CBs buying dollars from the US with their gold reserves in order to flood the exchange with easy dollars. Or it could be viewed as a necessary concession for the $13B in loans and grants the US gave to Europe between 1948 and 1951.

In any case, 1948 through 1952 was the fastest period of growth in European history. Industrial goods production increased by 35%, and agricultural production surpassed pre-war levels. The poverty and starvation in Europe at the end of the war quickly ended, and Europe entered what the French called "Thirty Glorious Years" of economic growth. 1952 also marked the absolute peak in US gold, and 1958 marked the beginning of its decline.

Sometimes viewing something in a new light reveals a deeper truth about what actually transpired. There is debate about how much of Europe's quick recovery should be credited to the Marshall Plan loans and grant. I say it doesn't matter. Perhaps it gave Europe's economy a turbo boost, but Europe was rebuilding regardless. What matters is that the fixed (manipulated) exchange rates agreed upon in Bretton Woods elevated the European standard of living above what its economy was capable of producing during those early post-war years.

It is precisely the same mechanism, official exchange rate manipulation, aka structural support, that later elevated America's standard of living above what its economy was otherwise producing. The big difference, and why no one ever called it an "exorbitant privilege" for Europe in the late 40s and early 50s, was that Europe was in a state of emergency, poverty and starvation when it began for them, and America, on the other hand, was the strongest economy in the world when Europe began supporting the dollar's exchange rate in 1958.

Another different perspective I want to share with you is that FOA's "fiat 33" concept has less to do with the official convertibility of the dollar than you probably thought. It has much more to do with "street gold" than with the official flows of "monetary gold" held by the CBs.

Buying gold with your surplus income is a choice and a preference. That's what it's really about. Practically speaking, there's no difference between an America where it's illegal to buy gold and an America where no one wants to buy gold.

As I said, the European CBs technically could have hoarded just dollars, not gold, and the Bretton Woods exchange rate manipulation scheme could have gone on indefinitely. But something else happened after 1958, after Europeans started net producing and saving once again in aggregate. Suddenly there was upward pressure on the price of "street gold" in London.

To manipulate the exchange rate between pound sterling and gold meant, as with currencies, to supplement the supply and/or demand of each such that they were equal at the desired price. And for the London gold fix, this suddenly meant supplying official gold reserves from the Bank of England (BOE).

Throughout the first decade and a half of Bretton Woods, the price of gold in London rarely moved more than a penny or two a day, and was easily kept within its desired range of about $35 to $35.20 without any problem. Then, on one day in 1960, the price of gold in London jumped $5 to $40 per ounce.

The irony of this situation was that the European CBs had to sell gold to the US Treasury during the early years of Bretton Woods while Europe was running a trade deficit, and now that Europe was back on its feet running a surplus, they had to sell gold to their own public (as well as to the Saudis who were no longer receiving official shipments via Saudi Aramco). But notice that the gold being purchased by net producers in Europe was not being purchased in dollars. It was being purchased in the local currencies wherever gold was sold, but those local currencies had the same purchasing power as dollars due to the fixed exchange rate regime.

The point here is that the distinction between FOA's "fiat 33 cash" and "the more golden foreign cash" is not so much about the dollar and its official convertibility at the central bank level (the gold window) as it is about the preference, choice and ability of individual net producers who want to buy "street gold" with their surplus income. As I said, the CBs would have been fine just buying dollars in terms of the agreed-upon exchange rate manipulation scheme, but because of the preference of non-American individuals for gold, the European CBs found themselves in a position of selling their gold reserves whether their economy was running a deficit or a surplus. So gold had to flow, and it had to flow from the US Treasury which still had almost half of all the CB "monetary gold" in the world.

That was the beginning of the London Gold Pool. The way the pool was to work was that the BOE would supplement the supply of physical gold as needed in the public "street gold" marketplace whenever the price started to rise. The BOE would then be reimbursed its gold from the pool according to each member's agreed percentage. The pool started with 240 tonnes of gold, and the contribution percentages were as follows:

US - 50% (120t)
Germany - 11% (27t)
England - 9% (22t)
Italy - 9% (22t)
France - 9% (22t)
Switzerland - 4% (9t)
Netherlands - 4% (9t)
Belgium - 4% (9t)

The gold pool started out with 240 tonnes in 1961. On its final day in 1968, the fix required 225 tonnes from the pool. The day before, 175 tonnes. The day after, they declared a bank holiday and closed the London gold market for two weeks.

All told, the gold pool reportedly lost 3,000 tonnes of CB gold to "the street". On paper, the US Treasury covered 50% of it, but in reality, it all came out of the US stockpile because the US owed gold to the other pool members due to the Bretton Woods fixed exchange rate regime. Gold rarely moves physical locations—it just changes ownership—but in this case the US actually had to fly several planeloads of gold over to London to cover its debt.

That was the end of the dollar—and all other fiat currencies by proxy—being defined as a certain weight in street gold. When the London gold market reopened, the price quickly rose from $35 to $44 per ounce. But even more significantly than that, in my opinion, is that when it reopened the London gold fix had switched from pound sterling to dollars. What better way to telegraph to the world that the dollar was no longer defined as a weight in gold? This switch of the gold fix from pounds to dollars is worth a little extra thought. It was quite remarkable, even if it was hardly noticed.

If you define the dollar as a certain weight and fineness of gold, then how can you even price gold in dollars? That would be like pricing dollars in quarters, in a public market with a daily fix. "Today the dollar is worth four quarters. Thank you, and we'll be back tomorrow with another daily fix." Switching the fix to dollars at the collapse of the gold pool was quite significant!

Of course not every individual net producer chooses to buy gold with all or even part of his or her own surplus earnings. All that matters is that gold is available for those who choose to buy it. The "fiat 33" distinction meant that gold demand did not stress the dollar within its own economy. But again, there's no practical difference between people not being allowed to buy gold and them no longer wanting to buy (or even thinking about buying) real physical gold.

"Fiat 33" laid the groundwork for a global monetary system that would not be stressed by gold demand from net producers. It worked until 1958.

Here's a question to ponder. Did "fiat 33" end in 1974 when E.O. 6102 was repealed? Or did the "fiat 33 distinction" end in 1971 when Nixon officially closed the gold window making all dollars irredeemable in gold? Is everyone in the world using "fiat 33" today, or is nobody using it since gold is now legally tradable everywhere?

There are at least two ways to look at it, aren't there?

"Freegold the monetary system" was a concept born from lessons learned during the Bretton Woods years. But I'd like to point out a couple of simple observations. First, notice that closing the gold window and essentially locking all CB gold in place, ending its flow, did not end the trade imbalance. The US deficit not only continued to this day, it expanded.

Second, since 1971, 85,000 tonnes of new gold has been mined, yet the world's central banks today hold 15% less monetary gold than they did in 1971. In 1971, the seven European former members of the London Gold Pool held a combined 15,660 tonnes. Today they hold a third less, 10,465 tonnes. Even Saudi Arabia's official gold reserves have increased by only 227 tonnes since 1971. So where did 90,000 tonnes of gold go, if not into the monetary system?

Yes, Freegold was a concept born from lessons learned during the Bretton Woods years, but from a monetary system perspective, it has little to do with gold. It's far more about something else. Freegold is about gradual, natural and automatic adjustment mechanisms in the modern world of fiat currencies, and in the international monetary system that means a clean, floating exchange rate regime, the opposite of Bretton Woods.


Agreement 44

I think that Bretton Woods was an honest, timely and noble effort. I think that each participating nation negotiated with honor and the best of intentions, each protecting its own interests while also pushing toward an agreement that took only 22 days to reach but lasted for 27 years. To get a real sense of the atmosphere at the end of the 22-day negotiation between 730 delegates representing 45 nations, please read Henry Morgenthau's closing address:
"I am gratified to announce that the Conference at Bretton Woods has completed successfully the task before it.

It was, as we knew when we began, a difficult task, involving complicated technical problems. We came to work out methods which would do away with the economic evils-the competitive currency devaluation and destructive impediments to trade-which preceded the present war. We have succeeded in that effort.

The actual details of a financial and monetary agreement may seem mysterious to the general public. Yet at the heart of it lie the most elementary bread and butter realities of daily life. What we have done here in Bretton Woods is to devise machinery by which men and women everywhere can exchange freely, on a fair and stable basis, the goods which they produce through fair labor. And we have taken the initial step through which the nations of the world will be able to help one another in economic development to their mutual advantage and for the enrichment of all.

The representatives of the forty-five nations faced differences of opinion frankly, and reached an agreement which is rooted in genuine understanding. None of the nations represented here has had altogether its own way. We have had to yield to one another not in respect to principles or essentials but in respect to methods and procedural details. The fact that we have done it in a spirit of good will and mutual trust, is, I believe, one of the hopeful and heartening portents of our time. Here is a sign blazoned upon the horizon, written large upon the threshold of the future-a sign for men in battle, for men at work in mines, and mills, and in the fields, and a sign for women whose hearts have been burdened and anxious lest the cancer of war assail yet another generation-a sign that the people of the earth are learning how to join hands and work in unity.

There is a curious notion that the protection of national interest and development of international cooperation are conflicting philosophies-that somehow or other men of different nations cannot work together without sacrificing the interests of their particular nation. There has been talk of this sort-and from people who ought to know better-concerning the international cooperative nature of the undertaking just completed at Bretton Woods. I am perfectly certain that no delegation to this Conference has lost sight for a moment of the particular national interest it was sent here to represent. The American delegation which I have the honor of leading has been, at all times, conscious of its primary obligation-the protection of American interests. And the other representatives here have been no less loyal or devoted to the welfare of their own people.

Yet none of us has found any incompatibility between devotion to our own country and joint action. Indeed, we have found on the contrary that the only genuine safeguard for our national interests lies in international cooperation. We have to recognize that the wisest and most effective way to protect our national interests is through international cooperation-that is to say, through united effort for the attainment of common goals. This has been the great lesson taught by the war, and is, I think, the great lesson of contemporary life-that the people of the earth are inseparably linked to one another by a deep, underlying community of purpose. This community of purpose is no less real and vital in peace than in war, and cooperation is no less essential to its fulfillment.

To seek the achievement of our aims separately through the planless, senseless rivalry that divided us in the past, or through the outright economic aggression which turned neighbors into enemies would be to invite ruin again upon us all. Worse, it would be once more to start our steps irretraceably down the steep, disastrous road to war. That sort of extreme nationalism belongs to an era that is dead.

Today the only enlightened form of national self-interest lies in international accord. At Bretton Woods we have taken practical steps toward putting this lesson into practice in monetary and economic fields.

I take it as an axiom that this war is ended; no people-therefore no government of the people-will again tolerate prolonged or wide-spread unemployment. A revival of international trade is indispensable if full employment is to be achieved in a peaceful world and with standards of living which will permit the realization of man's reasonable hopes.

What are the fundamental conditions under which the commerce among nations can once more flourish?

First, there must be a reasonable stable standard of international exchange to which all countries can adhere without sacrificing the freedom of action necessary to meet their internal economic problems.

This is the alternative to the desperate tactics of the past-competitive currency depreciation, excessive tariff barriers, uneconomic barter deals, multiple currency practices, and unnecessary exchange restrictions-by which governments vainly sought to maintain employment and uphold living standards. In the final analysis, these tactics only succeeded in contributing to world-wide depression and even war. The International Monetary Fund agreed upon at Bretton Woods will help remedy this situation.

Second, long-term financial aid must be made available at reasonable rates to those countries whose industry and agriculture have been destroyed by the ruthless torch of an invader or by the heroic scorched earth policy of their defenders.

Long-term funds must be made available also to promote sound industry and increase industrial and agricultural production in nations whose economic potentialities have not yet been developed. It is essential to us all that these nations play their full part in the exchange of goods throughout the world.

They must be enabled to produce and to sell if they are to be able to purchase and consume. The International Bank for Reconstruction and Development is designed to meet this need.

Objections to this Bank have been raised by some bankers and a few economists. The institution proposed by the Bretton Woods Conference would indeed limit the control which certain private bankers have in the past exercised over international finance. It would by no means restrict the investment sphere in which bankers could engage. On the contrary, it would expand greatly this sphere by enlarging the volume of international investment and would act as an enormously effective stabilizer and guarantor of loans which they might make. The chief purpose of the International Bank for Reconstruction and Development is to guarantee private loans made through the usual investment channels. It would make loans only when these could not be floated through the normal channels at reasonable rates. The effect would be to provide capital for those who need it at lower interest rates than in the past, and to drive only the usurious money lenders from the temple of international finance. For my own part, I cannot look upon the outcome with any sense of dismay. Capital, like any other commodity, should be free from monopoly control and available upon reasonable terms to those who would put it to use for the general welfare.

The delegates and technical staff at Bretton Woods have completed their portion of their job. They have sat down together and talked as friends, and have perfected plans to cope with the international monetary and financial problems which all their countries face in common. These proposals now must be submitted to the legislatures and the peoples of the participating nations. They will pass upon what has been accomplished here.

The results will be of vital importance to everyone in every country. In the last analysis, it will help determine whether or not people will have jobs and the amount of money they are to find in their weekly pay envelope. More important still, it concerns the kind of world in which our children are to grow to maturity. It concerns the opportunities which will await millions of young men when at last they can take off their uniforms and can come home to civilian jobs.

This monetary agreement is but one step, of course, in the broad program of international action necessary for the shaping of a free future. But it is an indispensable step in the vital test of our intentions. We are at a crossroad, and we must go one way or the other. The Conference at Bretton Woods has erected a signpost pointing down a highway broad enough for all men to walk in step and side by side. If they will set out together, there is nothing on earth that need stop them."

I also suggest reading and familiarizing yourself with the original Articles of Agreement of the IMF agreed upon in 1944. Here's the original document, and I recommend reading pages 11 – 59 of the pdf, or at least Articles IV (par values of currencies) and XVII (how to make amendments). XIX (explanation of terms like "reserves") and Schedule A (the specific quotas) are also worth a peek. Later, I'll be taking a closer look at one amendment in particular.

The goal of Bretton Woods was twofold. It was to establish an international monetary system that would foster growth and free trade, and to assist in the post-war reconstruction of Europe. The International Bank for Reconstruction and Development (World Bank) was created for the latter, and the IMF for the former.

The pre-war Depression-era years were marked by competitive currency devaluations and defensive trade restrictions like tariffs, both of which reduced international trade, inhibited growth, and even contributed to international tensions going into the war. The IMF Articles of Agreement were a reaction to the protectionist tactics of the 30s.

Fixed exchange rates were the most significant outcome of the Bretton Woods conference, and they were a direct response to the exchange rate manipulations (competitive devaluations) of the 30s. But I want you to take note of the fact that the solution they came up with for the problem of uncoordinated exchange rate manipulation was coordinated exchange rate manipulation.

From "A brief post on competitive devaluation" in The Economist:

"When the Depression struck, this gold standard became a noose around the necks of struggling economies. Economies with overvalued currencies struggled to compete in export markets and ran trade deficits which led to gold outflows."

Uncoordinated (competitive) devaluations overvalue your trading partner's currency which, unless he devalues in response (a currency war), eventually lead him to trade deficits and gold outflows. The Bretton Woods solution had the same effect. First it overvalued the European currencies which led to gold outflows while allowing them to run a trade deficit during reconstruction, and then it overvalued the US dollar beginning around 1958 which led to gold outflows and a trade deficit which continues to this day.

Yes, the dollar has been overvalued because its exchange rate has been supported by Europe and others since at least 1958. This has had a profound effect on America. It has transformed the US economy from what it was in the 50s into what it is today. This is the American experience that comes to maturity today.

FOA:
"Using an overvalued dollar makes one feel as there is no inflation, even though there has been massive dollar currency inflation over the last twenty years (the real cause of price increases is when the exchange rate is allowed to balance a negative trade deficit)." (9/22/98)

"The exchange rates, almost like gold, block their path. However… the dollar of present operates in a world currency system without gold, that allows this currency to be exported without restraint… The result is a dirty float of exchange rates in that most Central Banks artificially keep the dollar flowing out of the US… Using this line of reasoning, we can see how a massive inflation of dollars over many years has built up. When something does come along that blocks that outflow of dollars and even causes it to reverse, the dollar will plunge on exchange rates and bring home all of the past buildup of price inflation." (10/20/98)

"Under such a system, world trade and exchange rates will balance more fairly… Let us see if this great economy can stand on its own feet with the yoke of paying its debts from "real production"? We may indeed get an answer to this dilemma." (8/2/99)

"The US became wealthier by importing things and paying for them with an exchange rate that is "out of whack"." (12/10/99)

"This is how the "dollar reserve process" inflates the money supply world wide as we (USA) run a trade deficit for our benifit. It keeps the dollar exchange rate higher than it would naturally be thus allowing a US citizen to buy goods at a cheaper price…" (2/26/00)

"We, America, promote the value of our dollar in and of itself. Mostly pointing to our goods, services and assets that dollars can buy. Of course, if you have followed this for long, you know the dollar and near dollar supply has shot to the nearest star and will never actually convert into these products in total. At least not at current exchange rates or internal price levels in the US.

So,,, we promote the dollar using a different format, by saying that foreigners can invest here, not buy, and find the best returns. This works as long as foreign CBs support our dollar as a reserve by saving it themselves. Making for a stable exchange rate… Their real reasons [for doing this] have been our topic for years now.

Eventually, as the dollar works its way toward becoming just a regular money, its exchange rate will tumble. Vastly aggravated by our world class trade deficit. A deficit, I might add, that has become structural to the function of our economy..." (2/15/01)


To be continued…

Sincerely,
FOFOA

"A very easy way to view this… would be to simply
say that the American Experience is reaching the end!
Yes, here was born the American Experience
that comes to maturity today."


339 comments:

«Oldest   ‹Older   201 – 339 of 339
tEON said...

"who actually believes usd support will be withdrawn suddenly?"

From the comments of the ZH article BRICS Announce $100 Billion Reserve To Bypass Fed, Developed World Central Banks


Jim Willie's been on this story for well over a year now...probably a year and a half. The 100 Bill is old news and was just the seed money to get it started. It's going to become the BRIICS gold central banking system for international trade settlement. They will re-monetize gold for trade in goods by-passing the dollar or they will establish trade via other currencies. But the goal is to start backing their trades and/or individual currencies with gold.

The caveat is this, however: They still need to continue slowly extricating themselves from as much of their U.S. dollar and bond holdings as possible so that they don't start a fucking avalanche and everyone start running and screaming from the theater all at the same time. That way they can also continue to buy gold for cheap dollars.

But when the day comes and they're all wired together with their own version of SWIFT and everyone is ready to rock, then that's when they will flip the switch on the dollar. They will all have to dump it at the same time so the transition occurs in one move basically over a weekend.


Don't think the Feds aren't aware of this. It's been well documented and it's not like they haven't been instrumental in pushing for this to happen as well. It helps bring down the American economy and our society all at once and that's when the bad guys in charge will make their move to take over the country.

After this happens, Americans are going to wake up on a Monday morning living in an entirely different America. An entirely different world. Where the dollar is actually dead and nobody will want it, not even Americans. Life in this country as we thought we knew it will be long gone to the dustbin of history.

It's still may be a while...I've been guessing sometime just before the end of Obama's term in 2016. That's as good a time as any for these scumbags to make their move.


So, I guess Jim Willie does... to answer the question.

M said...

The posted gold price (paper gold)

Just when it looks like it found a slightly higher range , kaboom. Down $50 in 2 days. While voletility in every other financial market is nonexistent. It's blatant price manipulation. It's rather nieve to think otherwise.

runninggloves said...

managed decline vs disorderly collapse

what is it that stops the authorities from periodically managing the POG when it runs up too fast in dollar terms all the way to freegold endpoint price.

the deal is not enough people are taking physical delivery yet. and custodians havent run their vaults to the last bar yet.

as long as some people deposit their metal with custodians; kaboom cannot occur.
so until all the metal has been taken out of the system for delivery and stored in private residence/warehouse; disorderly rise in the POG cannot take place.

although the authorities will welcome a managed rise in the POG since they get to tax the inflation anyways 20-35% isnt too shabby;

Jeff said...

injured reserve

http://www.economist.com/blogs/freeexchange/2014/07/global-monetary-system

runninggloves said...

how about attempting to measure lost of faith as a percentage of Joe six packs owning metal? I'm guessing less than 5%; have you tried asking people within your circles?

KnallGold said...

The $ will be part of the multipolar world and some oil will be sold in $. No problem imo under a FreeGold umbrella.

From Obama to Putin to China, they all said in the last months that they don't wan't to be a hegemon (or what specific words they choose). I listened closely to the respective important speeches and interviews and interpreted it as clear aknowledgment of the Triffin's dilemma. No euro, ruble or yuan standard. You could think the rest.

The new architecture is slowly built up, step by step. Many things will change but the grass will remain green, the sky blue and humans will be humans (and you won't care anyway about an IMS during your morning shit, and most of the day).

But there's a problem of how the $ will get there, its simply not possible without a deep fracture, all the overhang of its age. And with the new payment systems and now the BRICS bank, methinks the hole below the $ just got bigger.

To answer Indenture's question with a slight provocation, the world now HAS everything to be ready for the collapse of the $!

Apropos "our way of life", I have that musical line from Zoar nagging in my mind (dark classical/exp. rock)

Our Way Of Life - Is ... ...

runninggloves said...

@M
that is because people still trust the custodians.

those who are gonna take delivery dont have the means to buy alot.

those who have the means to buy alot probably dont want to take delivery yet..... they gonna have to operate their own vaults otherwise; and those that have alot will have their stash more like subjected to theft. (rehypothecation or imagine employing someone to guard the stash [stash is subjected to heist]) ; and that is the well to do's problem.

that is the dilemma

MSC said...

M,
People always talk about the gold price being manipulated. And those making the claims state that it is simple to achieve - all you need to do is make huge well-timed big paper sales. Plus maybe you also need to be sure there is still enough metal for people that decide to take advantage of the price drop by taking physical possession (assuming the move down actually ends up attracting more buyers than stressed sellers). But who is bothering to force the price down $50 by selling stacks of paper? The effort and cost would be immense (plus you'd need to acquire the paper in the first place - and (issuing bank aside) wouldn't that raise the price?) and for what, to stop the gold price going up to $1400 or $1500? Why would you need to keep the price controlled ? It could only possibly be the hugest traders, banks, or even banks working in close co-ordination, with a single mysterious common goal. How likely is that? And who is still buying all this worthless paper anyway, why is the price not well under $1000 by now? (CB support for the paper price....possibly... but I happen to view the support issue slightly differently to our host).
In reality, the price is absolutely not 'manipulated'. It is actually just totally controlled. Pre-set, in fact, for every second, of every single day.
Once the power of being able to move or control market prices was understood (many hundreds of years ago), it was quickly recognized that the ideal situation was to be the one actually owning or setting the market price while ensuring you had enough genuine market information to move the price around within an acceptable range and profit which ever direction you sent it. Consider that. It doesn't seem possible at first, it goes against everything you were taught or continue to read on a daily basis.... but where is the spot price really set? And how?
An entity actually no longer needs to have cornered a market to control its price, it just need access to huge amounts of information on trades - pure demand and sell information, and access to the pricing mechanism itself. Who/What has perfect visibility of every single paper position or desired position taken every day (they all get cleared in one place), and who at the same time could easily keep tabs on all big physical flows? Markets are actually far more than an exchange mechanism, they provide the very foundation for the monetary system, and they turn a huge profit too. How prices move can never be left to the whims of traders, especially not for anything as important as gold,. The way markets function is simply not the way you have been told.
I know I make some bold claims without any evidence here, and the objective of my post is absolutely not to try to persuade you (where have I heard that before), so if you disagree, that's fine, but I just thought I'd try opening a window for you, and maybe other enlightened soles on this very high quality blog. I will conclude though by saying that if you end up fully considering this alternative perspective, you will likely up down a very deep rabbit hole indeed...

One Bad Adder said...

@MSC: - good (first??) post Sire - your points make absolute sense from a current systemic ($PoG, et-al) perspective.
...however, Real-Gold advocates look beyond the monetary / fiscal system du-jour ($IMFS - of which $PoG is part of) ...to a point in time when this current system collapses ie: ALL Fiat derived evaluations will be called into question - IMHO.

M said...

@ MCS

" But who is bothering to force the price down $50 by selling stacks of paper? The effort and cost would be immense (plus you'd need to acquire the paper in the first place - and (issuing bank aside) wouldn't that raise the price?) and for what, to stop the gold price going up to $1400 or $1500? "

Umm that is the question YOU have to answer. Not me.

We are talking about a market that went down 2.5% in one day on ZERO news in the least volatile time in recent history.

I know it is just paper and I know it doesn't matter on a long enough timeline. But it is still bullshit. Total fucking bullshit. Even gold bears are starting to say that this is a joke.

Do you really think that this is regular market action ?

M said...

@ OneBadAdder and MSC

I recant the last reply I sent. I realize that you both agree that it is manipulated completely.

MSC said...

Thanks OBA, appreciated coming from you.. I only posted once or twice before and on a lighter note, quite some time ago.
I see relatively recent technology related market developments that have enabled the current $IMFS system to survive much longer than should have ever been possible (and longer than Another could have possibly envisioned). The system has also become incredibly profitable, further increasing the incentive to drag it out as long as possible, but I entirely agree that the day of reckoning must come.
And given my previous comments, it won't surprise you that I am also in the minority that believe the 'unavoidability' of the $collapse and related transition is well understood at the highest levels, and in fact has been part of an overall plan since Greenspan was in charge. From what I can see, it would take no effort at all for the price of gold to suddenly be €10,000 as the $ starts its collapse. Because of the level of control I favor a two or three step waterfall over maybe a couple of weeks as RPG slightly precedes HI. This way the flow can be maintained as there is confusion over the value of things and gold is outpacing everything and weak shrimps will still be tempted by a five figure price, especially if inflation is only just starting to kick in. Most people have never experienced HI and will assume they can always buy the physical back somehow with their new found $ wealth. CBs may also claim they are gold sellers further encouraging weak holders to 'sell before the price falls'. I think there are plenty of ways to keep some stock flowing as the price rockets up - in the $100s per day - towards its final Freegold price...

Eric C said...

This was posted in the comments of ZH at the end of 2010 under a FOFOA post. "Has no one made the connection that the monetary system is the DNA of the society that forms around it?"

I saw it looking for more information about equity.

I read "Gold: The Ultimate Wealth Consolidator" for the first time and loved it. I do have a lot of reading to go, but is there an article that discusses the word equity in depth, here or elsewhere, that anyone would recommend?

Thanks,

Eric

Sam said...

@M

You lurk and comment on this blog and you have your own blog dedicated to freegold. I assume that means you are a "freegolder" for lack of a better word. What is it you want the paper gold price to do that "manipulation" is preventing? A higher price of paper means accumulation of physical is more expensive. The continuation of the paper gold bull market would support the prolonging of the current system. I just don't get what upsets you. I really don't.

Robert said...

Sam, I'll take a crack at answering that question. Some of us have reached our "target" and are no longer accumulating. A saver hoards during the productive years and dis-hoards in retirement, or while unemployed, or in less-productive years. For people who are in the dis-hoarding phase, selling physical gold for currency to pay for basic necessities is painful at these low prices. It is no comfort to them that the real value of gold is much higher than what they will receive when they have no choice but to sell.

Remember the days when FOFOA was starting a new thread every time the $POG crossed another $100 threshold? I do. Those were exciting times. Of course, we were still expecting the paper market to go down in a blaze of glory at the every end, but at least in the steps up to the very end, I expected that the $POG would continue to rise in a managed, stable and gradual way. That gave a double comfort: Comfort that if forced to dis-hoard before the revaluation, at least you would be protecting your purchasing power. Comfort that upon revaluation, your purchasing power would shoot to the moon. Manipulation of the paper market, if that is what is happening, removes one of the key comforts.

I am neither accumulating nor dis-hoarding, but all things being equal I would prefer that the paper price keep climbing and then go down in a blaze of glory at the very end when the entire $IMFS collapses. This long drawn out "slow history" is not as exciting as the period 2008-2011. At least not to me.

By the way, GLD inventory is on the increase again, and foreign holders of treasury securities are also increasing their holdings again. Both of these seem to be going the wrong way, no?

M said...

@ Sam

"What is it you want the paper gold price to do that "manipulation" is preventing?"

First off, I don't so much like the term paper gold being used exclusively so much. In some cases, a better name for it would be the posted price of gold. Because we have no idea what the real price is. So we are stuck with the posted price. If a relative asks you what the price of gold is, what do you say...

To answer your question, I believe these paper smashdowns really come down hard on the average persons psyche regarding gold. It also damages the average persons view on inflation. If even paper gold could get some momentum behind it, it would speed up the process. A paper gold bubble would speed up the process. But these smashdowns destroy all momentum and any hope of a paper bubble.

" A higher price of paper means accumulation of physical is more expensive. "

This is true. But it doesn't really matter. I thought I would be paying $3000 an ounce for gold by now and I wouldn't care if I was.

" The continuation of the paper gold bull market would support the prolonging of the current system."

This is where I disagree. During the LTCM fiasco and Gordon Browns gold sales, a higher price of gold was threatening the system. That is why they crushed it by selling some of the UK, Canada and Australia's gold. I can't see how it is any different now. But we can agree to disagree on some of this stuff. There is valid points for both sides.

But since we see it opposite on that one, just flip the chart upside down. Now imagine the price was wanting to grind lower but anytime some momentum would build to the downside, some mysterious buyer would constantly jump in and smash the price back up. I think you would be pretty pissed.

Jeff said...

Robert,

You've got yours so you're ready to cash in, eh? "Après moi, le déluge"? Being upset that your ship hasn't come in won't change things.

If you're dishoarding gold to meet life's necessities you've missed an important point:

FOFOA: The whole point of the [hyperinflation] debate is about the denouement, the final outcome of this 100-year dollar experiment. It is about the ultimate end, and the debate has been going on ever since the 70s when the dollar was separated from gold and it became clear that there would be an end. The debate is about determining the best stance someone should take who has plenty of net worth. And I do mean PLENTY. People of modest net worth, like me, can of course participate in the debate. But then it can become confusing at times when we think about shortages or supply disruptions of necessities like food. Of course you need to look out for life's necessities first and foremost.

Slow history is very exciting when you don't try to put a price on it, but walk in the footsteps of giants and give up your 'poor trader' mentality.

ANOTHER: "Brokers and traders will show you, "turn your gold into wealth", "put it to productive use, Trade It"! "Sell your gold and buy it again, many times". "Do this and find the value lost from your youth"!

But I say, spend your time in the company of truly wealthy ones, see how they make gold lie very still! Know this now, the world will again, in your time, feel value in gold as never before. And that value will be as the "productive use of holding wealth thru the fire of change". "Yes, you can also walk in the footsteps of giants".

tEON said...

By the way, GLD inventory is on the increase again, and foreign holders of treasury securities are also increasing their holdings again. Both of these seem to be going the wrong way, no?

GLD lost 2.7 tonnes yesterday and YoY is down 131.54 tonnes. Over the past 2 years is down 460.08 tonnes

Foriegn treasury buying is only slight positive YOY, but did turn negative this year. Major holders aren't selling, but they aren't buying either (significant).

Nothing goes straight up or straight down.

Despite anyone's immediate needs - I do hope paper price continues to decline - as it is the most conclusive sign of imminent FG, IMO.

Regards,

runninggloves said...

um..... accumulated enough. how much is enough? under freegold; 1 Oz for a years of salary um..... so 100 Oz is more than enough to retire?

Robert said...

Jeff, here we go again. I was expecting such a response, the only question was whether it would come from you or from tEON.^^

I submit to you that saving is for everyone, yes, everyone, from the greatest giants to the least of the third world nobodies.

Don't you remember when FOFOA talked about dis-hoarding? Or are we all supposed to be so rich to own even one gram of gold that none of us EVER need to be in a position where we dis-hoard before the revaluation?

FOFOA acknowledged in The Debtors and Savers 2012:

"Then there's gold, with limited downside and lots of upside potential. It's a tough sell to savers who have been swimming in a sea of Mungerian paperbuggerdom their whole lives, but not to the true Giants who already hold 170,000 tonnes and aren't letting it go at today's paper gold prices."

Got that? For everyone who holds less than 170,000 tons, it is perfectly natural to be frustrated by what's happening in the paper markets.

And where did I say anything about trading my position? If it wasn't clear from my previous message, I say it again: I am neither accumulating nor dis-hoarding. All I was saying is that for people who need to dis-hoard, whether out of emergency of because of where they are in life, I can sympathize with their situation.

[By the way, blogger really sucks these days. Thankfully I have learned my lesson and save every message before clicking "publish" because it's virtually guaranteed that blogger will somehow lose the text before you submit it properly]

Archer said...

MSC wrote:

I see relatively recent technology related market developments that have enabled the current $IMFS system to survive much longer than should have ever been possible (and longer than Another could have possibly envisioned). The system has also become incredibly profitable, further increasing the incentive to drag it out as long as possible.

This is the second time in as many posts that you have made this claim. By all means elaborate on the relatively recent technology related market developments to which you refer and how "they" -who are they? - are able to totally control the price setting mechanism of the _________?every second of every day.

The system has also become incredibly profitable.

To who?

The objective of my post is absolutely not to try to persuade you.

That's just as well since in the absence of considerably more elaboration and evidence you have not persuaded me, for example, that the unavoidability' of the $collapse and related transition is well understood at the highest levels, and in fact has been part of an overall plan since Greenspan was in charge.

I find this claim less meaningful or provocative than I imagine it was meant to be in light of the fact that The Euro architects wouldn't have bothered to do embark on the program they did, well in advance of the Greenspan led Fed, if they didn't know full well the fate of $IMFS.

Testing said...

A mid-size increase in paper gold price (say U$S 2500 – 3000 /oz) would increase your physical purchasing power 2X but probably your mining shares/paper investments would skyrocket (5? - 10X? – 20 X?). Remember the shares are not taken as savings, but as investment. Cashing out at 10 X would be an excellent trade. You could buy physical with that trade. If physical was not available, you could buy real estate, cars, jewelry, FOREX, take a cruise around the world, I don´t care… but the thing is that you would have attained a 10 X increase in purchasing power. And that is without touching your gold savings. If a $IMFS were to collapse afterwards, you would still have your physical.
If you have physical gold savings and mining shares a tanking paper gold price would accelerate a revaluation, increasing your physical gold (30 X? – 50 X?) and at the same time sinking your paper investments purchasing power.
I think the most frustrating thing regarding the manipulation, control (or whatever you want to call it) of the paper gold price is the sense that whoever is behind it can extend the end game for a much longer time than any of us expected while keeping paper gold price at a level that puts at risk both physical savings and paper investments. If not at risk, at least you cannot make a profit trading or increase your purchasing power by owning physical/dishoarding. Most shrimps are especially exposed to system crashes, unemployment, costly health problems, car/home accidents, etc.. Dragging the end for too long basically exposes you longer…

And Y said...

Latest from Ambrose:

"A study by the International Monetary Fund concluded that the Fed's QE had pushed $470bn into emerging markets that would not otherwise have gone there. IMF officials say nobody knows how much of this hot money will come out again, or how fast."

M said...

@ Robert

Good post. I thought most gold advocates were getting too greedy from 2009 to 11. I was ready and expecting a corection. We got the correction and that's fine. But the banking interests have taken the opportunity to clobber any natural movement in the paper price ever since. That pisses me off.

MSC said...

Hi Archer,
I don't mean to be provocative. My perspective comes only from extensive personal observations over a long time. I have no hard evidence or inside information. I am an observer and an analyzer of information, news, and patterns. A good place to look for clues is to consider statistics of market participants, and the percentage of people that play the market for any length of time and win. The usual response is that although there are more losers than winners, there will always be a winner and a loser, its a zero sum game. This is correct, but the winner isn't another wealthy player, it is ultimately the house. Where are the famous successful traders? Surely many people must succeed if market movements are determined by the actions of the majority? Yet there are almost no people that trade and profit consistently (even Soros only picked his serious trades where he saw the system itself was flawed), even though the factors determing future prices should be easy enough to figure out and capitalise consistently from? Markets constantly appear irrational, but they aren't if you understand what they are doing... Another thing to consider is why TA had so many followers for so long (its popularity now waning). Surely 'technicals' couldn't ever tell someone where a price was going, if it was genuinely determined by millions of interacting agents? Looking closely and for long enough I simply observed that markets did not function as we are told. Then over time, I have seen market complexity increasing significantly. The balancing act that is achieved daily is nothing short of amazing when you think about it or study it; AI is required. Trying to prove this level of technology exists is not my goal, I simply see no alternative scenario. And to answer your question, 'They' is the house, the owners of the systems, which I have concluded can only be be a private banking organisation or organisations.


I won't post further on this topic, as it is too far removed from Freegold, plus I also know it is a bad idea to try to defend a position with annecdotal or no evidence, so I mean no offence, I just wanted to offer an alternative possibility on how the price of some things might actually be determined. I fully expect most people to completely dismiss my unorthadix perspective, but if it helps just one person to consider markets in a different way, and draw some useful personal conclusions, then I would be delighted.

One Bad Adder said...

@MSC: - It has been an eye-opener these last several years (systemic management) - the number of Rabbits the Hat has had in it boggles the mind...and no doubt there are still a few more left to go :(
An algorithm somewhere must identify precisely how much stress the system can take before collapse ...and if (say) the French Revolution (benchmark) is anything to go by - we are a fair way away from Max-pain yet.

One Bad Adder said...

FYI - this Chart - http://stockcharts.com/h-sc/ui?s=$ONE:$USD&p=D&yr=0&mn=6&dy=0&id=p36390858510 - is looking awry lately (since Apr) ...$PoG and it's alt-currency siblings are getting a little out-of-whack here ...which MAY augur poorly for systemic management.

Sam said...

Hi Eric C.

Try the FOFOA articles titled Euro gold www.fofoa.blogspot.com/2011/07/euro-gold.html and RPG update #4 www.fofoa.blogspot.com/2011/10/rpg-update-4.html . You can also take a look at the Euro system’s balance sheet at: http://www.ecb.europa.eu/press/pr/wfs/2014/html/fs140709.en.html. Line 11 on the liability side is where they would track the revaluation of foreign currencies and gold reserves which in the accounting world would be like “equity” on the liability side of the balance sheet.

M said...

@ rimminggloves.

100 ounces at anything north of $15,000 an oz is enough for me even though freegold projects as high as 50,000 in 2009 dollars. Think of the asset price destruction that will occure during the reset too. Capital assets will not be at bubble valuations in real terms. Read about historic hyperinflations. Assets crater in value in real terms during hyperinflation.

Sam said...

@M

A higher price of gold was threatening the system until the Euro was born. Then as FOA said the war with gold was lost and both zones would like to see it rise in price. “One because they wanted it to and one because they needed it to.” If I was Jeff I would find you the exact quote but I’m far less resourceful. My interpretation of that quote was that the Euro "wanted" it to rise so they could show off mark to market to the rest of the world (exposing one of the flaws in the $ and the strengths of the Euro) and the US "needed" it to rise to encourage scrap dishoarding, increased mining operations, ect. To increase the supply side of things so that the physical stuff didn't run out as quickly causing the paper market to crumble. A higher price also slows the accumulation on the demand side as well since the same amount of currency buys less weight of gold.

Today we seem to be in the end game. The Euro has shown that it can handle, and in fact actually benefit from, a higher price of gold thus establishing its superiority to the dollar. The ROW has stopped trying to prolong things any longer including supporting the paper gold market. If the paper gold market was still rising this would indicate support for the paper gold market and hence we would still be in the middle game. Notice I didn’t mention the US at all because in the physical plane they have no say in how things play out. Their monetary shenanigans don’t matter. Exorbitant privilege is given, not taken, and the giving has stopped.

@Robert
All I can say is gold is for saving post reval and post reval only. In the meantime it is an investment and a pretty volatile one at that. There is no legitimate savings vehicle in the world today so the problem you mentioned hypothetically (since I know this isn’t your personal situation) is a problem that the whole world shares in today whether they buy stocks, bonds, metals, currency, real estate, stamps, or pork bellies. I feel for those in the dishoarding phase of their life. All I can say is hold on tight to your physical gold investment because we are getting close.

Bright aurum said...

A lovely discussion recently. Charles Hugh Smith seems to get POG formation basically right in this article . What is different now from say 2008 squeeze is that most smart(and relevant) traders are already in cash and no severe margin calls are expected. The insiders are waiting for the crash therefore when the markets crack POG will remain in line with the rest of the CCI and it will just show how dysfunctional the FX markets are in the wake of the HI.
Cheers

runninggloves said...

@M
like how things got expensive in Wiemar in paper terms and affordable in gold terms;

get the food stash to weather the storm;
then use gold to recapitalize after the chaos settles.
question is how much food? hyper usually last less than 18 months

has anyone figure out how to store food without having it spoil? does food make gold look expensive or what?
see link
http://stockcharts.com/freecharts/perf.php?$wheat,$WTIC,$GOLD,$SILVER,$PLAT,$CORN,$COPPER,$NATGAS,$SUGAR,$SOYB#

speaking of current geopolitical tension; does it look like quite a few parties want out of the $IMFS?

Phil S. said...
This comment has been removed by the author.
M said...

@ runninggloves

"@M
like how things got expensive in Wiemar in paper terms and affordable in gold terms;"

No I meant assets. Like real estate, farm equipment or construction equipment for example. They fall in value even in currency terms because people are unloading it for necessities. These assets don't just retain their value plus inflation.

For example. Some guy with a $40,000 Bobcat loader on payments would probably take $5000 for it before the bank shows up.

runninggloves said...

@M
ok that too , and farmers get rich during those moments, like how they have loads and loads of pianos stacked up, just cause people unloading pianos for food

according to my parents when In vietnam after vietcong took over 1975ish; a detach house with 40metersx15meters land that was 100Oz became 17Oz; and that is without hyperinflation.

were there any accurate accounts of what happened to house in gold terms during hyper?

Michael dV said...

"When Money Dies" is an account of Weimar both in economic terms as well as human.
Food in particular led to fighting between city dwellers and farmers. It was believed the farmers had lots of food which they withheld due to the failing currency. Gangs from the city would loot farms and slaughter dairy cattle for meat.

Jeff said...

RG, there are many posts on hyperinflation, deflation, real estate.

http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

runninggloves said...

@PhilS.
have you considered the expenditures of a household spent on food during the weimar marathon?

So how much do we actually spend on food today? im guessing 30-40% of income ; by that measure we could be like 3 - 5 years early in reference to weimar.

hence, farmers will be buying everything else on firesale prices relative to their crops.

jojo said...

Wake me up when it's over

zabba said...

Phil S.,
Does, ";)", mean you are joking?

If not...
Only hoarding gold as a means to "prepare" for The FG Transition is foolish (sorry Motley). Have you ever heard the saying, expect the worst but hope for the best?

There will be a period of time when we are transitioning from our old paradigm into the new. This is what I prepare for (food, water, weapons,skillsets...). The gold is for after we are fully in FG.

Good Luck,
zabba

Testing said...

Sorry guys…. but rule of law does not apply under those stressful circumstances. Crops and most food will be confiscated (or bought at a very low price) by Government for redistribution, for the “greater good”. Otherwise riots will.
No one will be allowed to profit from such a situation, except maybe those who are in charge of Government Authority, Police, Militia, etc. Farmer shrimps making the deal of their lives under HI, while the rest starves to death because their 100 dollar bills are worthless?!?!? C´mon… absolutely no way that´s gonna happen. EVER.

byiamBYoung said...

@DASK,

That was a riveting read. Thanks. Many metaphors come to mind...

The crew (CBs?) wanting to help, but losing control...

The first to act (freegolders?) survive.

The many who understand what is happening, but do nothing... human nature dooms many!

Thanks for the link. It was quite mind provoking at the same time as it was fascinating reading.

Cheers

DASK said...

Cheers byiam; that one sticks a bit close to home as I have someone in my circle here who lost a loved one on that boat. Terrifying stuff.

Some of the images that stick with me long after reading it are people being robbed even as they thought they were safe, and the stairwell; what was always an easy path to the surface instantly became unclimable overhangs once the boat tilted.

runninggloves said...

@Testing
what about farmers getting rich during weimar episode?

what makes someone so sure that hyperinflation will start at the US, could it start at Japan since they seem that much more worse off? if losing reserve status = hyperinflation ; then why didnt the british pound go into the toilet after bretton woods?

here is another one; what is the tax rate of the japanese citizens?
we can say it is whats stated by official policy, but with so much japanese buying JGB, if JGB go into the toilet, then wouldnt the japanese tax rate be alot closer to a very high rate retroactively for the past couple decades? think about that.

speaking of kicking the can down the road, if the japanese can kick it for 20 years, who knows what other governments can try.

do you know anybody who is below the age of 30 bringing up the issue of price inflation? could they be just too busy partying?
also who actually pays attention to inflation? maybe those that are above the age of 30? so does that mean only those that are born before 1940 vividly remember inflation during the 70s in the US? they say that the next great war starts when the people who remember the last great war have died out. can we say that the next great wave of inflation/debasement starts when the people who remember the last great wave of inflation/debasement died out?
and can we take this further, who actually remembers the ration coupons during WW2? maybe those that are born before 1910? and since gold was called in by FDR during 1933, can we say that the people that still remember gold being valuable in commerce domestically in the united states would be born like before 1903 which we can assume to be dead already?

Michael dV said...

rg
As far as 'houses in gold terms' ….We have had a couple here with actual experience of HI and it seems that transactions are always in currency…so all you would need is the conversion rate of gold: currency.

Dim said...

Something to think about amongst all the hype regarding BRICS...


Question: Regarding the onset of hyperinflation: Do you expect that the initial loss of confidence will come from a foreign government? Or from the private sector?

FOFOA: I think it will come from a panic in the private sector, because even though foreign governments have already lost confidence, they will never take overt action to destroy the system. That’s the kind of thing that starts wars.

Motley Fool said...

Zabba

Fwiw, I think(translates as hope) we all here do the prepper thing, it's simply not the topic of conversation. :P

Motley Fool said...

Ps. You can try this as a reasonable introduction to the topic. I note the website has changed due to creation of a book so used internet archive for earlier version. It is probably worthwhile spending $4 on the book.

http://web.archive.org/web/20120716071907/http://www.longtermstoragefood.com/

Michael dV said...

MF
I have posted somewhere in the past, a 2000 calorie per day, protein adequate, $1.10 food plan.
It is a survival diet, not a 'healthy' diet. It consists of oil (calorie source), rice (calories and variety) milk and TVP or texturized vegetable protein. Other items that can be substituted for about the same cost include sugar and flour. Additional items would include spices, powdered eggs, beans and other grains.
This is a plan for food storage on the cheap. It requires water and the ability to cook.
At $5 per day there are a lot of better options but all of the items on my list keep for eons and you can always add MREs, #10 cans of whatever, and freeze dried. For $4000 on could keep 10 people well fed for a year. I also used CO2 for some preservation but most of these items only go bad very slowly. Rice can keep for years (white rice, the groovy stuff has oils in it and oils can become rancid.
Obviously alcohol would be on the list for the serious prepare.
I have not seen a similar list in which calories per person and cost are considered. The usual prepper is lost in some ideal of 'a healthy diet and 'organic' is considered as a benefit.
My diet plan is for keeping people alive and is so cheap you won't feel bad feeding it to livestock in 15 years if it goes unneeded.
Most other diets do not consider quantitative need for protein either.
Only a cheap ass doctor could come up with my diet plan.
btw there are 4 calories per gram of protein and carbohydrates (dried weight, after all water is removed) and fat has 9 calories per gram. There are 460 grams per pound. 200 proof (100% alcohol is 7 calories per gram. TVP is about 50% protein dried weight. Protein also has the characteristic of 'quality' meaning the kinds of amino acids in the protein source. Milk is considered very high quality. The types of amino acids in beans not so much. So mix up your proteins and the odd caught rodent in the pot only adds to your overall survival experience.
Remember $1.10 per person per day. Don't forget a stove and fuel. You'll be the envy of your starving, well armed neighbors.
Also if you boil your rice and then quickly toss your spices into hot oil you will minimized food odors and not attract the underprepared.
The only question mark in my plan is oil going rancid. So far (3 years) the 35 pound oil containers I get from Sams Club are still good. I plan to use rancid oil as a fuel source if it does go bad.
I have also experimented with ghee. It is rumored to stay good for decades and is pure butter oil. It has a wonderful flavor. It is the most expensive 'extra' in my pantry (except the good booze).

vizeet srivastava said...

Dim,
Interesting.
The governments will not pull the plug makes sense. French government was frustrated because BNP-Paribas had to pay. Something similar is happening with Germany banks. But when Malaysian plane was brought down whole Europe and US were speaking in same language against Russia in-spite it is well known Ukraine does have such weapons.
So probably governments will be with US even when inflation rise.
BRICS bank is probably not very significant step because whole purpose of the bank is to form parallel support system for African and South American countries because World Bank is unable to lend money they want. Bank will work on USD. The step is important because it contributes to the rise of China.

Michael dV said...

MF
I found an error in the first bit of your reference. They say E coli is a virus. It is a bacteria not a virus. I don't claim this invalidates the rest of the piece but right off the bat I know the guy is not fully trained in biology and also did not properly reference his work.
It makes me nervous about whatever else he may say.

Michael dV said...

Ultimately 'trade' is about exchanging goods. In our modern world the currency prices have been a major factor in the way trade flows. Ultimately the currencies involved must ultimately act soley as a medium of exchange. Now they pretend to be a store of value. This hides and confuses the fact the China and Russia and Brazil probably have most of what each other need. All they have to do is get the process exchange right and then they can proceed without the dollar.
The world seems to be thinking 'hey, you can't have international trade without dollars'. For now the world is right but I think the world my be surprised at how quickly a system can be created….even if they (the BRICs) are thinking in dollar terms. Who knows, the 'money concept' use of dollars could survive longer than the actually currency.

One Bad Adder said...

I've mentioned this phenomenon before here: http://s1343.photobucket.com/user/OneBadAdder/media/silvervolitality_zpsaeb27bf4.gif.html?sort=3&o=3 - and it seems to be becoming more pronounced lately.
We may be about to witness a marked drop in the GSR ...and of course this won't detract from Golds ultimate status one little bit - just the "current price" - IMHO.

Motley Fool said...

Michael

You are of course correct. However I think that mistake is made fairly often, and I do not think it invalidates the rest of the stuff there.

I'd like to see your 2000 calorie diet, if you can find the link sometime. :)

TF

Testing said...

RG, thanks for your reply. I´ll try to answer your comments the best I can.
- what about farmers getting rich during weimar episode?
Many things have changed since 1920´s. First, the Weimar episode was confined to a small region, devastated after a war and punished for it, forced to pay an unpayable amount. To sum it up, the Germans were already in deep shit even before HI. They were used to hunger, shortages of all kinds. Some farmers being richer did not change a thing. Besides, there was a much larger rural / urban population, and much more people were living in the country than now.
Second, welfare states did not exist then. Also, welfare fed populations did not exist then. Meaning nobody claimed anything to the Government, nor did they were expected to intervene like today.
Probably many other things changed as well, but I think these might be the most important.

- what makes someone so sure that hyperinflation will start at the US, could it start at Japan since they seem that much more worse off? if losing reserve status = hyperinflation ; then why didnt the british pound go into the toilet after bretton woods?
HI could start anywhere, but only reserve status HI hurts worldwide. HI in Japan, Russia, China, Canada would not “change the system”, it would merely “damage the system”. It would be a great shock, sure, but it would not change the $IMFS rules.
Don´t quite know the answer for the british pound, but probably because gold still was highly considered back then, many countries still held large gold reserves. Also, the British Pound was not so inflated back then, meaning that the monetary mass returning for Great Britain bidding for goods would have been much smaller that the case of the USD today.
- here is another one; what is the tax rate of the japanese citizens?
we can say it is whats stated by official policy, but with so much japanese buying JGB, if JGB go into the toilet, then wouldnt the japanese tax rate be alot closer to a very high rate retroactively for the past couple decades? think about that.

Testing said...

I didn´t really get want you mean, but that would be the same as a real estate crash. JGB are financial assets. If they crash, Japanese would lose a lot of purchasing power. That is not the same as a tax. It would be similar to Sony stock dropping 50 %.
- speaking of kicking the can down the road, if the japanese can kick it for 20 years, who knows what other governments can try.
Japanese were fight deflation, not inflation. It´s a very different thing. Besides, regular Inflation is different from HI. High regular inflation can go on for years, HI is violent and short lived. I don´t think the Japanese example applies to this case.
do you know anybody who is below the age of 30 bringing up the issue of price inflation? could they be just too busy partying?
also who actually pays attention to inflation? maybe those that are above the age of 30? so does that mean only those that are born before 1940 vividly remember inflation during the 70s in the US? they say that the next great war starts when the people who remember the last great war have died out. can we say that the next great wave of inflation/debasement starts when the people who remember the last great wave of inflation/debasement died out?
and can we take this further, who actually remembers the ration coupons during WW2? maybe those that are born before 1910? and since gold was called in by FDR during 1933, can we say that the people that still remember gold being valuable in commerce domestically in the united states would be born like before 1903 which we can assume to be dead already?
Nobody cares about inflation until they can´t pay for food. Nobody cares until they do. Then, it´s too late.That doesn´t change a thing, nor it avoids inflation. Besides, it´s a changing environment and inflation has a curve (soft or very steep, but a curve at last). Sometime down the line people are going to start worrying about it, false statistics or not. Eventually, statistics are buried by the people and they believe what they see and feel, everyday.

Roacheforque said...

MdV,
I too thought,"even if they (the BRICs) are thinking in dollar terms," ... until now ...
http://thebricspost.com/brics-bank-capital-might-not-be-held-in-us-dollars

One Bad Adder said...

@Testing: - the MAIN cause of the Weimar HI was that they abandoned Gold -http://americanmonetaryassociation.org/blog/the-weimar-republic-a-case-study-in-hyperinflation/ - ...and went it alone.
Nowadays of course we're in a full-blown Fiat world which lacks this regulatory mechanism.

Blake said...

Looks like structural support is alive and well...

Per Epsilon Theory, "[t]his past Wednesday the WSJ published an article titled “China Plays a Big Role as US Treasury Yields Fall”, pointing out that the Chinese government bought US Treasuries at the fastest pace in the first five months of 2014 than at any point since this data started being collected more than 30 years ago. China added $107 billion to its Treasury holdings over these five months, almost 10% of its total Treasury holdings of $1.27 trillion, which is itself about 10% of the total $12 trillion US Treasury market."

What to make of this recent development?

Michael dV said...

Motley
That was my diet.
It is foodstuff that is based on the 3 different types (4 if you count alcohol) food. Man needs only protein and some certain fats to live and grow. Everything else is fuel (calories).
You can really decide for yourself if you want 40% of you daily caloric needs supplied by fat or if you'd go with 60% from carbohydrates like rice.
I went with 40 fat//40 carbs// 20 protein.
the 'secret is not to get sucked into all the dietary myths about 'health'.
To survive you don't need to get fancy. If I was rich or only had 2 people to keep alive my plan would be different...more bacon less cooking oil.
My goal was 1) adequate caloric intake 2) adequate protein especially for growing kids 3) storage over time with little hassle 4) cost...finally taste and variety but those were far down the priority list.
It would be possible to do freeze dried and canned and 'organic' but show me how you get into the millions of calories you'll need without busting the budget.
Watch 'The Road' again...at least there are no dried cockroaches on my list.
One way to approach your own personalized version is to figure out how much each group costs per calorie...I think I found fat (oil) was cheapest and protein the most costly at $6.50 per pound for TVP which works out to 3.53 per 1000 calories...but only half is protein. Powdered milk is more per calorie and per gram of protein.
Rice at 40 cent a pound is cheap. Thats 1600 calories for the price.
Again, I'm going full survival. This is not what I eat, prefer to eat or suggest anyone eat on a regular basis.

Michael dV said...

One more at $24.69 for 35 pound of shortening...that is 144900 calories...less than a 20 cents per 1000 calories.
Laugh but in Bolivia they fight over the fat of meat....the natives know what they need and what satisfies.
We live in a world where the secret is to stay thin and fit. That is not survival that is luxury.

Michael dV said...

Blake
was this a net gain in China's holdings or just replacement of maturing bonds?

Blake said...

@ Michael dV

Net gain

Snip:

"The rise in China's Treasury holdings disclosed Wednesday marks the biggest first-five-month increase since record keeping began in 1977 and surpasses the $81 billion of Treasury debt bought by China for all of 2013, according to Ian Lyngen, senior government-bond strategist at CRT Capital Group LLC.

China has increased its U.S. Treasury holdings every year since the 2008 financial crisis except for 2011. China continued to log a trade surplus with the U.S., thanks to its aggressive efforts to boost exports over the past decade. That has led to a huge accumulation of foreign-exchange reserves, and the Treasury market is the most liquid bond market for China to invest reserves, analysts said.

China held $1.2633 trillion in notes and bonds at the end of May, compared with $1.156 trillion at the end of 2013, according to Jeffrey Young, U.S. rates strategist at Nomura Securities International in New York.

The gain reflects in part China's decision to shift its U.S. investments to longer-term securities from short-term debt known as bills. Including bills, which mature in a year or less, China held $1.2709 trillion of Treasury debt at the end of May, compared with $1.2700 trillion at the end of December 2013, according to the latest data from the Treasury Department."

Full article here:

http://online.wsj.com/articles/china-plays-a-big-role-as-u-s-treasury-yields-fall-1405545034

Eric C said...

Hi Blake,

It looks like their total holdings are about the same. I will say I know very little about foreign holdings of debt.

Why does it matter if they are short or long term? There is an active market for both. It doesn't seem like structural support trading one US note for another US note (regardless of time).

Eric

Sam said...

Hi Blake

http://www.treasury.gov/ticdata/Publish/mfh.txt

I found some of the statements in the WSJ article confused and uninformed. The raw data from the treasury department doesn't match the assertions.

Blake said...

Spot on, Eric. This article is misleading on further inspection and borders on disinformation. The increase in Treasuries is a red herring; total USG debt holdings increased by only $900 million.

anand srivastava said...

MdV:

I think the best part of the guide was that he recommends consuming some of the food regularly. This makes sure that it will be edible when you get around to it. Otherwise you are left with something that you cannot eat.

I think it is a mistake to think only about calories and nutrients. There is a lot more to food than just calories. I don't think you can survive on the things that you are storing for more than 1 year. You will start getting nutritional deficiencies much before that, unless the food is based mostly on real food. I don't think TVP is a great idea. But then a lot of people are living for a long time on similar junk.

I am only preparing for 6 months. This should not be too much of a problem. I do think supply chain will get ok within that time, and I will not hesitate to part with some of the precious for food.

Ashley said...

@Testing:
Many things have changed since 1920´s. First, the Weimar episode was confined to a small region, devastated after a war and punished for it, forced to pay an unpayable amount. To sum it up, the Germans were already in deep shit even before HI. They were used to hunger, shortages of all kinds. Some farmers being richer did not change a thing. Besides, there was a much larger rural / urban population, and much more people were living in the country than now.
Second, welfare states did not exist then. Also, welfare fed populations did not exist then. Meaning nobody claimed anything to the Government, nor did they were expected to intervene like today.
Probably many other things changed as well, but I think these might be the most important.


A slight correction is needed here. Germany, under Bismarck, implemented some of the first social welfare laws in the world in the 1880s. They had government insurance for sickness, accidents, old age and disability by 1889. These were certainly less comprehensive than today's programs, but Germany had some semblance of a welfare state for at least 35 years before the Weimar hyperinflation reached its crescendo.

Michael dV said...

as
In most dietary writing there is an emotional and cultural component. My plan would please ANY truly starving population for well over a year.
I do also use a multivitamin daily though as you are correct, my recs have very little in the way of 'other nutrients' such as vitamins.
Dietary studies are almost useless as it is nearly impossible to get a good control group and indeed to control the study group. We do understand biology well enough to know what it takes to keep people alive. Really that breaks down to some minimal protein (ie the essential amino acids) a calories. Add vitamins and trace minerals and you will sustain life indefinitely.
Eric Shipton was a English mountaineer and sailor. He was asked why he only served oatmeal for breakfast on his expeditions. He replied that if men were given too many choices they would complain more.
As for you comment about TVP I did specify that some other protein sources should be used. Protein is amino acids. There are 8 that the body cannot make from other amino acids. These are called the 'essential amino acids.'
If you get TVP, occasional milk (especially for children) beans and the occasional animal you'll be fine.
Again if you are wealthy feel free to do your own selection. Indeed I'll come eat with you. My plan is for the cheap among us. I repeat...if I have to feed this food to livestock in 15 years I'm OK with that. The oil can work as a fuel source if it goes bad.
I challenge anyone to do this cheaper and still provide essential nutritional elements. In fact I would appreciate suggestions for improvement.

Michael dV said...

I'll add a final comment to my diet plan.
The cooking plan I have is to cook rice and use it as a base. Oil will be heated and spices added to flavor. TVP is hydrated (take 5 minutes and no heat) then added to the oil briefly. This TVP is then served over rice. I have tried this and if the flavoring is done well you will get no complaints. Many Indian recipes follow this strategy. The hot oil takes on the flavor of the spices (onions too if you can get them) the TVP takes on the flavor of the oil/ spice combo. Served over rice it can be deeeeelish.
TVP is almost flavorless. It can pretend to be ground chicken, ground beef and other ground protein sources.

Tom R said...

A very Freegold-ish article from Casey Research via 24hr Gold.

http://www.24hgold.com/english/news-gold-silver-gold--western-delusions-vs-chinese-realities.aspx?article=5665279718H11690&redirect=false&contributor=Jeff+Clark

It discusses the Western vs Eastern view of gold's function, and 'price' vs 'value'.

Blake said...

http://www.alhambrapartners.com/2014/07/22/speculating-on-the-gold-supply/

Posits a disruption in the flow of physical gold...Let's discuss...

tEON said...

(1 of 2)
With all due respect to Michael, I would like to propose a significantly different food plan - which may, actually, be cheaper - and certainly healthier, IMO.

Firstly, as a consideration - you may wish to understand how some people survive being in a situation, akin to being forcibly confined in a Concentration Camp, with little-to-no food for lengthy time periods.

Your body (an average) has about 15,000 Kilo Calories of fat stored, but this is hard to access as an energy source if you primary energy is from, less-efficient, carbohydrates. If your body has a choice - it will always choose the 'cheap' energy source as primary... and then store excess as fat. Carbohydrate heavy food - like the rice Michael suggest as a base - tends to spike insulin levels. All carb-heavy food does (bread, potatoes, sugar, pasta etc.). Insulin is a hormone that, among other bad things, makes you gain weight. This increases your risk of heart disease, cancer and Diabetes. Probably the last situation you might want to be in is to become insulin-dependent if the grid is down.

As opposed to the Concentration camp survivor - who is forced to alter his energy source (and many cannot in short time-frames - and, hence, they die) - you can alter it yourself - now. This is not a fad or gimmick (diet has becomes a cheap word - it is actually Latin for 'lifestyle' or 'way of life', I think). This has been around for 1000's of years. In fact, there were even medical authorities who were aware of it over 100 years ago.

The process is called 'ketosis' and was popular with cultures for centuries. The fact that the nutritional change from a hunter-gatherer diet to a carbohydrate-based diet has affected populations negatively has been revealed extensively. More recently, this problem has also been reflected historically by the change in eating habits of Inuit peoples of the North (include Mexican Indians, Pima Indians, South American Indians, Middle-Eastern Nomads, African Pygmies, Australian Aborigines, Maoris, South Sea Islanders etc.) Traditionally, the Inuit diet contained only 3-5% carbohydrates (based on fish, whale blubber, moose and caribou), obesity (co-relates heavily to heart disease - the #1 killer along with Cancer), diabetes (1 in 10 Americans and rising) and Cancer (1 in 4 will contract - moving to 1 in 3) were virtually nonexistent in these cultures. Since the sixties, a growing tendency in type II diabetes (over-production of Insulin) and obesity problems has been observed due to a progressive substitution of the traditional protein and fat-based diet - by a diet with higher carbohydrate content.
NOTE: info taken from various sources on the web...

tEON said...

(2 of 2)
So, I prep with generator-supported freezer-filled fatty meats, fish, bones (to boil and drink broth), grass-fed butter, rich cheeses, freeze-dried eggs, unfiltered salt, Olive Oil etc.. Grains and rice are great if you want to shorten your lifespan, increase your risk or chronic diseases, potentially increase the fat content of your body (ie become obese) and increase your appetite (carbs make you hungry!). But the beauty of all this is that in Ketosis you need to ingest very little 'food' as you can use the existing fat cells on your body as your energy source. This is not 'protein-loading' - it is based on modest protein ingestion and high quantities of fat and salt (carb-eater's kidneys are absorbing salt - where those in ketosis' kidneys are excreting salt).

Once you have achieved the state of ketosis (breaking your body's carbo-holic addiction) - can take 5-6 weeks if you aren't harsh - you have few hunger pangs, can go lengthy periods without eating, and use the fat cells of your own body as your primary energy source. You would be far better equipped to handle whatever extent TSHTF, IMO - of course depending on how long before some form of normalcy order is restored. I also store dry pasta, rice, energy bars - but they would be as my last resort 'food'.

Best of luck,

M said...

@ VS

"BRICS bank is probably not very significant step because whole purpose of the bank is to form parallel support system for African and South American countries because World Bank is unable to lend money they want. Bank will work on USD"

Yeah i don't really get the numbers either. The 100 billion to the BRICS bank would fund the US trade deficit for a whopping 2 months.

Michael dV said...

teon
Again, my suggestions are well studied. I am talking about near concentration camp environment. I'm suggesting emergency foods for real emergencies. Ketosis is, I believe you will admit at least controversial. You will not be worrying about your insulin levels on a 2000 calorie per day diet. You will not be concerned about weight gain.( If you are try McDonalds instead. A professor (from Nebraska I think) ate there for a month and dropped 20 pounds and lowered his cholesterol.)
If you can still stock up your freezer and your freezer is still running you and I might be talking about different kinds of emergencies.

Michael dV said...

...and remember all dietary studies are severely flawed. Unless you describe whether you are studying normal or overweight people it is just silly.
Outside of a prison environment getting good diet data and compliance is impossible. No one remembers what they ate or how they cheated. Gathering data that is rigorous enough to please a scientist would require thousands of prison inmates and millions of dollars. These studies never get done.

vizeet srivastava said...
This comment has been removed by the author.
vizeet srivastava said...
This comment has been removed by the author.
vizeet srivastava said...

M

True, in this bad economic condition no one want to give out a penny.

http://thebricspost.com/brics-bank-capital-might-not-be-held-in-us-dollars/#.U89J2HWSzrd
If this is true then I think the bank will be significant loss for US. Need to wait and see how BRICS bank will function. But this can happen only after crisis.

Michael Martin said...

Michael dV said...
Again, my suggestions are well studied. I am talking about near concentration camp environment.
...
Outside of a prison environment getting good diet data and compliance is impossible. No one remembers what they ate or how they cheated. Gathering data that is rigorous enough to please a scientist would require thousands of prison inmates and millions of dollars. These studies never get done.


I'm confused. On the one hand, you say your suggestions are well studied and your preps are for a concentration camp environment. Then immediately after, you say that studies of prison environment diets aren't done.

There is a lot of literature on ketosis and keto-adaptation. And barring a generator supported freezer, there are other stable enough ways of storing fat. Canned butter and canned cheeses can keep pretty long enough at room temp (70-80 F). Ghee keeps longer than butter. If you have a basement, it would be easy to maintain those temps year round.

You can't pour new wine into a cup if your cup is already full. Or so the saying goes.

M said...

@ VS
"True, in this bad economic condition no one want to give out a penny."

Well the BRICS apparently will give the US whatever it takes to keep the Exprive going. And then they scrape the leftover crumbs together and stick it in their development bank.

Sam said...

What Michael dV is saying is that most nutritional science isn't science at all because you can't control for variables. That doesn't mean the studies aren't useful but take each piece of information you get with a grain of salt. For example just today someone told me that studies show babies that are breast fed have an IQ 10 points higher than kids that aren't. So what does that say about the nutritional benefits of breast milk? To me, almost nothing. It could very well be that breast fed kids also have more nurturing parents overall and thousands of different variables and factors add up to those extra 10 points.

Michael dV said...

I do not want to get into another diet discussion (we have had a few here in the past).
I am just presenting an inexpensive way to put aside food for a prolonged period of shortage...a real food shortage.
I have 10 people to do this for.
I know that at the end of a year they will be alive on this diet. I will have spent less than $4000 to do it.
If you have special dietary needs or preferences then plan accordingly.

Eric C said...

Hi M and VS,

VS said, "BRICS bank is probably not very significant step because whole purpose of the bank is to form parallel support system for African and South American countries because World Bank is unable to lend money they want. Bank will work on USD"

M said, "Yeah i don't really get the numbers either. The 100 billion to the BRICS bank would fund the US trade deficit for a whopping 2 months."

Why is a new bank needed to make loans to these countries in BRICS currencies? If you think it is going to be based on USD, why don't these countries just lend USD rather than this elaborate system to finally settle in USD?

I don't think the quantity of the currency is important at this bank, nor where it is spent, rather which currency is spent. It seems to me that this bank would allow direct trade between these countries using only their currency. As trade imbalances build up (at this new bank) gold would be used (required) to settle the difference, not USD. If a country is low on gold, they will go into the market and buy gold with their currency to settle.

I am not clear if I am understanding this correctly yet, but it seemed to me like a big development.

Eric

Michael dV said...

DCRB has promised a report on the 2 new entities. I'm waiting for that before I waste too much time doing the leg work of actually learning about them from the primary documents.

anand srivastava said...

Will try to keep it brief, but this happens to be one of my major subject of interest :-).

MdV:

There have been some (although very rare) double blinded clinical studies, and they do tell us something about diet. They are expensive, and they only allow you to publish very few papers. While Observational studies are cheap and you can just mine the data to publish many many papers. So obviously predominately observational studies get done.

Case in point is that there have not been any long term clinical studies on the kind of food that you are thinking of using. Indians do use the same method but they do it with real food, like pulses. And they do use vegetables.

I would think that you would start to see effects of nutritional deficiencies just over an year on such a diet.

tEON:

Just like there have never been vegan societies (including Indians), there have never been societies that preferred living in Ketosis (including Inuits). We are doing both kinds of experiments simultaneously :-).

Inuits have never been observed to be in Ketosis. There is a reason why the preferred Seal Meat. Its very high in Glycogen. All Sea Mammals are, to allow them to stay underwater for very long times. They prefer the organs and the skin, as that is where much of the glycogen resides. They are not high fat moderate protein low carb. They eat a huge amount of muscle meat, owing to the low digestibility of raw muscle meat. And they do prefer raw over cooked, because of Vitamin C and similar nutrients. The high meat consumption is required for getting the required protein to prepare the required glucose.

Eating a high fat low carb diet is a work around for lack of adequate gut flora. This avoids using them. Unfortunately we do need the gut flora, anyway. Lack of gut flora makes us susceptible to toxins in food. I believe that Autoimmune diseases are caused by lack of the right kind of Gut Flora, which is why it is so much on the rise these days. The high fat low carb diet avoids the autoimmune issue too because the meat and fat does not have toxins. But you do become susceptible to anything eaten out of the way. Also the susceptibilities increase over time, so that you need to take out more and more fruits/vegetables from your diet.

MdV your diet is also very deficient in food for the gut flora, ie Fiber and Resistant Starches.

anand srivastava said...

Sam:

The problem with much of the nutritional research is that it is observational. These are good for generating hypothesis, but not useful as evidence. Unfortunately, because of the lack of an incentive, there is a paucity of controlled clinical studies, the observational get used as evidence. Much of the clinical trials are done by companies that want a specific result. And they obfuscate data, so that they can claim that the results came out a certain way.

What we can do is have some basic principles, to determine what could or could not be good for us. Its easier to work that way, in absence of good research. I use the paleolithic principle. It basically means that our base adaptation is to the paleolithic period. Any adaptations after that may not apply to everybody. We can guess their food habits based on the hunter/gatherer societies of the world. They tend to be based on starchy vegetables, nuts or fruits for the most part, except for societies in extreme cold areas. Meat consumption varies a lot depending on availability from occasional to regular. Grains and Legumes are not normally a large part of the diet. That is what I base my diet on.

Slowly the results are coming around, but it is slow. Like they say Science doesn't progress when people change their views, but it progresses, when people with the older view die out. It is going to be a very slow process.

Saturated Fat has been exonerated over the last 5 years. I am sure cholesterol will similarly will be exonerated. Carbs are also being demonized by a different set of people, and that too will be found not to be a problem. Because we could not have evolved if these things were bad for us. Evolution is a very important guide for biological sciences, which our nutritional scientists have forgotten. They do science like creationists.

vizeet srivastava said...

Eric C
I corrected myself in the previous comment. I see it as significant step if they don't use USD. BRICS nations have too many differences. India would not want China to dominate. Russia and China have trade surplus, other countries I think are in deficit. Deficit countries need money, they don't want to lend money. The bank is for giving loan to Asian, African and South American countries. If India gives money to BRICS bank to lend money to some South American country there is going to be resistance at home.
Other problem is what will an Asian country do with the African currency. This all looks very filmsy. I think for an International bank to be viable it needs to deal in a global currency. Not sure if China have such a plan.

vizeet srivastava said...
This comment has been removed by the author.
vizeet srivastava said...

I think foods we can store are:
1. Grains
2. Pulses
3. Pickles
4. Onions
5. Dark Chocolates
6. Honey, sugar, dry fruit syrups,
7. Nuts
8. Dried vegetables and fruits
9. Vegetables in brine solution or vinegar
10. Jams
11. Refined, packed foods

I think we all need some meat/eggs/milk to avoid deficiencies. Any packed food that claim to survive long can be good. Not sure what I can do for my wife because she is a vegetarian and only eat milk products. May be long fermented cheese like blue cheese could be an option.
If we can produce electricity using solar panel and keep the fridge on then cheese and some vegetables like peas can be stored for very long time.

Motley Fool said...

teon

Since it seems to be the topic now, haha, I was curious...

"With all due respect to Michael, I would like to propose a significantly different food plan - which may, actually, be cheaper "

Regardless of how much energy you have and what you eat, in order to sustain body weight you must take in at least as many calories as you burn. How in the world can the price per calorie of protein be cheaper of carbs? Your claim makes no sense to me, your qualifier 'may' notwithstanding.

TF

Michael dV said...

as
I agree with your comments about dietary studies. I'm not sure if there are ill intentions but the fact is that these are very very difficult to organize and perform. To get statistical satisfaction would cost billions of dollars.
I am not using any particular dietary theory, just the sciences of biochemistry and biology. We need energy and building blocks. The energy (calories) come from all foods. The building blocks are the amino acids which make up proteins. There are 7 or 8 that MUST come in the diet. One could go to a chem supply house and buy these (very expensive) and supplement with that but the simplest way is to use a couple of protein sources TVP and milk works.
After that you are on your own. If you can afford it go high class. Get a generator and a years supply of diesel, eat frozen food until the zombies are dealt with.
For me, I plan to put enough sugar and milk into the kids until their teeth rot. The occasional vitamin pill and they can scout the desert for bugs if they want more.
I am confident that after one year the toothless little monsters will still be alive, at least not perished of starvation.
I just bought 70 pounds of oil and 50 pounds of sugar last night. That was a million calories for $60. If I do not use it I will make candy with the sugar and burn the oil in my truck...or sell it to a pig farmer.
My plan meets minimal standards and is cost efficient. It is NOT what I eat regularly.
I will review any other plan that purports to provide the same minimum and comes in at a lower price. No special storage should be required. Mine does fine at room temp (the cooler the better.)
I do not think it can be done.

M said...

Ok guys... Palladium

Part of the family of obscure half breed not so monetary metals that has a stock to flow ratio along the same lines as soybeans. It has been tracking the inflation that almost all other asset classes have been soaking up rather well.

Is this because it is has been free of the molestation of the banking interests ? Unlike paper gold or silver ?

I think so. If you take the chart of palladium and use it as a proxy for gold rather then the molested gold chart, it would look at lot more realistic.

Michael dV said...

M
I think palladium may have some source issues ie S Africa and Russia ...kinda like platinum.
you are right though in that it has seen a nice and persistent rise and it is indeed a very marginal ;precious; metal. I am pretty sure most of the demand is industrial (catalytic convertors) and not so much wedding rings and rounds. Silver will be a lot closer to palladium in the future than to gold. It only has history on it's side as far as it's claim to monetary status. The Chinese were the last to try to use it that way but gave up in 1935. If I recall correctly the French gave up when they realized they would have to corner the silver market to use it as a monetary base.
I'll stick with the yellow stuff and let the other guys lay claim to all the 'other, other white' metals.

Robert said...

Time to go fishing.

FOFOA has practically disappeared, which is natural after the "slow history" post and that he has said almost all that can be said about the freegold view. I suppose he is right that sometimes all you can do is sit back and wait and watch. Oh I suppose that he will from time to time put up more posts that surprise me once again, but I expect only a trickle until the next crisis hits and it looks like things are moving again. I suppose I should printout the PDFs and reread the whole thing again, but I feel no urgency to do so.

Central banks have blown the "all clear" signal. There is no sign of the dollar's imminent demise. The whole system is stable, too stable, lulling the world into a sense of complacency.

Did anyone read the link at Jesse's yesterday speculating about the worldwide above-ground stock? The consensus figure is 180,000 tons, but the figure may be 10x higher than that -- or even greater. Nobody really knows, and much depends on how much gold was picked up in antiquity. I have a feeling there was a lot more gold out there in 1500 than a mere 10,000 tons. Not that it really matters, as the key thing is the flow. But of course if the stock is 10x higher than we have been assuming, then it may be easier to coax out more flow if the $POG moves slowly rather than violently. I wonder how much unreported hidden gold lies quietly out there.

As for the topic of the day, food preparedness, I have enough rice to last a year, and rice keeps well. My new project next month will be to buy a wheat grinder so that I can make nutritious daily bread without needing to rely on nutrient-poor supermarket flour, which has a short shelf life anyway unless you like the protein from the weevils. I love the taste of fresh baked bread, much more than all that rice. Of course I need to be able to cook both, but I am less worried about that at the moment compared to having a sufficient supply of rice and wheat on hand.

I guess I can give these issues more thought while fishing.

toolmaker said...

@Robert
The stock of gold out there may be running dry. A local cash4gold in a fairly high-end mall shut down a couple of months ago. Has anyone else seen evidence of scrap gold drying up?

http://usawatchdog.com/germany-secretly-planning-on-joining-brics-jim-willie/
AT 40.58 Greg Hunter asks (paraphrased) "why has the price not gone up yet?" to which Jim Willie replies "how do you know it hasn't?"

I know that Dr. Jim Willie is a little "out there", but I like to hear differing viewpoints - if only for entertainment value.
The statement in the interview is the first time outside of this blog that I have heard this idea stated. Is Jim Willie familiar with the freegold concept?

Michael dV said...

toolmaker
One of our commentators has said( a year ago) that the C4G business was indeed dead.
Willie is good fun but not a reliable source of info. I think he just states as fact, things some of wonder about.

Michael dV said...

Robert
FOA had a good deal to say about gold in antiquity. He felt and had data to suggest that there wasn't that much…there did not need to be…high turnover. See the Gold Trail.

Lisa said...

Robert

Here's a 2011 FOFOA post about "black" gold, which includes the FOA remarks that Michael dV references

http://fofoa.blogspot.com/2011/02/wendys-open-forum-part-2.html

Jeff said...

What are the signs of the dollars' imminent demise? Who foresaw the collapse of, for example MFGlobal? Are you waiting to see the avalanche before you start to run?

FOFOA: Compare these big money folks to the average guy who rides the bus. You miss a bus, so what? It's inconvenient but another bus will come. It takes a long time to sink in that another bus isn't coming. It's not until there is such a big crowd waiting at the bus stop for the next bus that people start thinking "even if a bus comes there are too many people to fit on one bus." In that mindset the surest way to cause a riot is to send one bus i.e., not enough buses. You have to fight to get to the front of the queue. This is a bank run mentality.

And this is a key difference between the average guy and the big money. Big money isn't used to being kept waiting. Big money owns the "bus company". They know the buses aren't going to run before the little guy. They panic early. There was an electronic bank run around the time of the Lehman collapse. That was one of the reasons why governments around the world stepped in with fresh deposit guarantees. But there were no lines outside the banks to alert the average guy to what the Giants were up to.

There's only one way to beat the Giants to the gold, and that is to run in front of them.

ANOTHER (THOUGHTS!) : Sir, the plan is good, the question is, "how good is your broker"? Noone can know how this world change will come about, in specifics. The gold market may lock at $400? Or $4,000! When the public perception does come to understand, many entities I know of will not be buying "at the market" as your broker will. These ones, they will be "above the market", "well above the market"! Will you bid $1,000 when your broker screen shows $475? I myself, as a country will be "there"! You sir, will stand well behind most in line.

M said...

@ MichealDV

"I think palladium may have some source issues ie S Africa and Russia ...kinda like platinum.
you are right though in that it has seen a nice and persistent rise and it is indeed a very marginal ;precious; metal."

Yeah. Its just quite annoying that some unsophisticated , uncommitted Joe, buys into some HM socialists palladium sales job and he makes out good over the medium term.

But the people like us, who are committed to the study, get stuck in this rut over the medium term. A year or more of this, and it won't be medium term anymore.

Things tend to even out in the end and freegold projects that. But still... Its a bitch.

I have this 2001 dirtbike that rarely gets used. But for the cash I can get for it, I'd rather just keep it. Even if I only use it twice a year. Yet I could get more then one ounce of gold for it. I could get more then an ounce of gold for a 13 year old beat up Japanese dirtbike. Something just doesn't... I just....

Eric C said...

Hi Jeff,

I have been reading the http://fofoa.blogspot.com/2012/07/jeff-blondies-open-forum.html post. I'm not very far along but I have been enjoying it. I appreciate your thoughts.

M,

This blog is about storing wealth, not making paper profits. I think you are still seeing this topic through the USD lens?

Eric

Motley Fool said...

Hmm

@Michael dv

Not so sure about the sugar, unless you an pull teeth too. ^^

Still, very much enjoyed that line of commentary. Hilarious stuff.

For myself I also consider it from a basic biological and biochemistry pov, and I must say a lot of the food guru stuff sounds like utter bullshit to me...which friends and family seem to be lapping up to the point they are starting to annoy me with it and I have started asked pointed common-sense questions which they are obviously unable to answer. Phew, what a sentence. :D

@Robert


“I suppose I should printout the PDFs and reread the whole thing again, but I feel no urgency to do so.”

“The consensus figure is 180,000 tons, but the figure may be 10x higher than that -- or even greater. Nobody really knows, and much depends on how much gold was picked up in antiquity.”

...

Re Paladium, we and Russia are only sources, stock to flows says it is industrial.

TF
Perhaps you should consider rereading, or perhaps a first read in your case. This is covered.

Canadarob said...

http://www.cbc.ca/m/news/#!/content/1.2718365

Its ok guys, its just due to the drought......

paladin said...

younare wrong.....LOL

Michael dV said...

M
the expression I have come to hate the most is: Just because something is inevitable does not mean it is imminent....damn...

Dim said...

I just realised the ECB made a press release in May giving the details of the 4th Washington Agreement on gold. Apologies if you've already seen this.


http://www.ecb.europa.eu/press/pr/date/2014/html/pr140519.en.html


Gold remains an important element of global monetary reserves;

The signatories will continue to coordinate their gold transactions so as to avoid market disturbances;

The signatories note that, currently, they do not have any plans to sell significant amounts of gold;

This agreement, which applies as of 27 September 2014, following the expiry of the current agreement, will be reviewed after five years.

M said...

This propaganda winning streak that the keynso-socialist are on just keeps on rolling. Keynesians don't think it's propaganda because they believe what they think. But when you know it's wrong, it burns like propaganda.

The Big Mac index numbers are in and yep, you guessed it.....The Big Mac is the cheapest in the Ukraine at the moment says CNBC. Because you know , all the Keynesian reasons why........

Sigh

Robert said...

Lisa, thank you for the link. I remember that now, but I remember it primary for the idea that there is no vast conspiracy to secretly conceal "massive secret storerooms" -- as FOFOA put it. I agree that there is no conspiracy, and the reasoning against the "conspiracy" part is sound. But what about the giants? The giants are out there, they have large hoards, and they do not go around advertising their holdings. We don't know how many giants are out there, or where they are dispersed. Giants don't go around advertising these things. Conspiracies aside, gold naturally lies very still.

FOFOA quotes Randy Strauss, who suggested that "historical evidence" indicates that in the 1300s there were less than 150 tonnes in total gold, and that over the next 350 years leading up to the gold rushes "reasonable records and estimates" show that gold in known use in the civilized world increased by only 3,000 tonnes.

However, I wonder what "historical evidence" and "reasonable records and estimates" he refers to. Here is one paper on prices and wages in Byzantium from the 7th to 15th centuries: http://www.doaks.org/resources/publications/doaks-online-publications/economic-history-of-byzantium/ehb39-prices-and-wages

At first glance it seems like there was a lot of gold out there even back then -- more than I was expecting based on the prices listed in the paper. But that's just a first impression. On top of that, one historical anecdote: Justinian in the 6th century paid a tribute of 5000 pounds of gold (30,000 solidi) to sign a peace treaty with the Persians. Then they paid 500 pounds of gold every year after that. That was just one expense, and just considers gold from the public treasury. If they paid that much, just imagine how much gold had to remain within the empire in private hands. And this is centuries after all the gold in Rome disappeared into the Indian black hole.

Randy talks about the "easy pickens" of the gold rush years in the 19th century. But what about the real easy pickens of what our ancestors pick up off the ground over the 6000 years before that?

At the end of the day, I guess I have less confidence than FOFOA, FOA and Randy about the quantity of gold out there from time immemorial. There seems to be a lot of guesswork involved for the quantity of gold in antiquity.

Perhaps a higher than generally recognized above ground stock of gold is one of the contributing factors for why freegold hasn't happened yet? If not, is there a better explanation for why freegold has not happened yet?

Not taking a definite position here -- just wondering out loud.

anand srivastava said...

Robert:

FOFOA quotes Randy Strauss, who suggested that "historical evidence" indicates that in the 1300s there were less than 150 tonnes in total gold, and that over the next 350 years leading up to the gold rushes "reasonable records and estimates" show that gold in known use in the civilized world increased by only 3,000 tonnes.

That 150tonnes is probably too low an estimate. 10 - 20 times that would be more reasonable IMO. But that doesn't change the final estimate much. Even the impossibly high 100 times would not make much of a difference.

KnallGold said...

Robert, maybe there are unknown/hidden giants out there? Interesting thought. There would be no need for a conspiracy for the reason to hide. For some reason though they didn't step up to fill the 2008 (and 1999) shortages. Or hadn't the thing in sufficient quantities. We know the occasional pop up of the "black Gold" stories at convenient times...

@all: it looks like the rain has started!? "So let it rain, let it rain..."

"I need to know all the truths behind the lies
I need to show the guilt that is inside me

Try to grow, a little sun and rain to die
Try to grow, apart from this escaping

Actions for the words
Linear touche
Actions killed the first
Border on insane

So let it rain
Let it rain
Let it rain
Let it rain now

Little child with war in her eyes
Little false summation
Little war taken for a slide
Time for lost salvation

I've had to go and leave the doubtful tears behind
Because the glow, well I could see it fading

Actions for the words
Linear touche
Actions killed the first
Border on insane

So let it rain
Let it rain
Let it rain
Let it rain now

Little child with war in her eyes
Little false summation
Little war taken for a slide
Time for lost salvation

Oh clouds are overhead
Oh sentimental shade
Oh why am I scared

So let it rain
Let it rain
Let it rain
Let it rain now "

The Awakening - Rain
https://www.youtube.com/watch?v=YX3BO6plqVw

tEON said...

@Motley Fool

Regardless of how much energy you have and what you eat, in order to sustain body weight you must take in at least as many calories as you burn.

Hi MF. You've made an assumption "to sustain body weight". If 1 in 3 Americans are obese - I suggest many definitely don't need to sustain their weight. If they could live off their fat cells (and they can), using them as energy instead of carbs, they could go extensive periods without ingesting food. And when they do eat - eat far less. While those leaning to carbs will have a propensity to require sustenance every few hours.

As for the idea of calories - well, everyone burns them at different rates. The idea that they can standardize even in your own intake is actually counter to the theory of thermodynamics. My suggestion would be to read Gary Taubes book "Good Calories, Bad Calories: Fats, Carbs, and the Controversial Science of Diet and Health " written in 2008 that dispels this calories-in calories-out theory of diet. He describes this far better than I could (so don't ask me!!). Essentially different food groups of the same caloric value - react totally differently in different bodies. He also has videos on YouTube.

My dietary suggestion results in requiring far less food and being healthier (less risk of diabetes, heart disease and Cancer) which might be vital to longer term survival if there are both supply chain shortages and lack of medical services. I fully realize this is not mainstream but I can state, from my own personal experience - that being in Ketosis for over a year my grocery bill has significantly decreased (estimate about 1/3rd) and my risk of chronic disease is likewise decreased (if I can marginally go-on based on blood tests). Forget about the weight-loss! You can gamble now on, example, becoming diabetic, but it isn't something you would want to risk if tshtf, IMO. BTW, I don't mean you specifically MF - I have seen your debriefing and look like a fit man!

Lastly, you are correct in terms of dollars, you can buy (store) more calories from carbs than protein (or fat). But I was offering an alternate viewpoint. It's like putting a dollar value on having healthier blood - at a time where you'd most want to have it. Simple survival is one thing. By changing your energy source to a more efficient one and partially, living off your body (which is protein and fat) you may not even need honey, sugar, candy etc.. I too have large bags of rice, energy bars - but would only access them after my five generator-supported freezers of fat, and what remains on my body, run out. I hope they don't!

Cheers,

Michael dV said...

Whether the stock of gold is bigger than current accepted estimates suggest we still see the need to use paper gold to satisfy the market. We saw a big loss from GLD in 2013. We still see the big drops in gold occur after paper sales.
I think the biggest argument for the lower (than 'black gold") estimate is technical. For many years there was a WAY lower estimate going back to the days when gold was money. There would have been no good reason to keep a huge surplus secret.
Then comes the new mining techniques. From there we see the big jump.
If there really was a bunch of hidden supply why did all the effort (and diesel) go into mining? The folks interested in gold could have simply released inventory and saved the cost.
I know there have been better responses to the stock issue but we know what effort is need to bring 3000 tons up from the ground every year. To have more stock it would mean that at some point there were places in the world where gold was very easily found even more and easier than the Spanish found in the New World. That episode was never recorded. The Romans went after much less in France and Romania. Why would they fight expensive wars if they already had far more than is recorded from their efforts in those places?

anand srivastava said...

I hope people will be ok with the current thread on diets :-).

tEON:

Good Calories Bad Calories is an excellent book.

Unfortunately, Gary Taubes makes the same mistakes as done by those doctors, in believing that just because you can have good health on a low carb diet, it would be better to be on a very low carb diet.

It is true that the body can create glucose, but not everybody is efficient at making glucose. Also there are some starches that don't convert to glucose, and feed bacteria, ie resistant starches. The LC crowd is too much phobic to the word starch. The primary problem with the people who feel good on VLC is that their gut flora is nearly dead.

You didn't respond about the nutritional ketosis in nature problem. The fact that it is not found anywhere. No animal does it, no natives have done it. And yes that includes carnivores and Inuits. I tend to think that nature to be infinitely more wise than us. If it was better for animals, it would have developed somewhere.

Robert said...

There is a growing recognition that a reboot is coming in one form or another. Consider the following blurb from a source that is far from the freegold camp:


The question being hotly debated in the blogosphere is, “What then?” Will economies collapse globally? Will life as we know it be a thing of the past?

Not likely, argues John Michael Greer in a March 2014 article called “American Delusionalism, or Why History Matters.” If history is any indication, governments will simply, once again, change the rules.

In fact, the rules of money and banking have changed every 20 or 30 years for the past three centuries, in an ongoing trial-and-error experiment in evolving a financial system, and an ongoing battle over whose interests it will serve. To present that timeline in full will take another article, but in a nutshell we have gone from precious metal coins, to government-issued paper scrip, to privately-issued banknotes, to checkbook money, to gold-backed Federal Reserve Notes, to unbacked Federal Reserve Notes, to the “near money” created by the shadow banking system. Money has evolved from being “stored” in the form of a physical commodity, to paper representations of value, to computer bits storing information about credits and debits.

The rules have been changed before and can be changed again. Depressions, credit crises and financial collapse are not acts of God but are induced by mechanical flaws or corruption in the financial system. Credit may stop flowing, but the workers, materials and markets are still there. The system just needs a reboot.

Hopefully the next program that gets run will last more than 20 or 30 years. Ideally, we might mimic the ancient Mesopotamians, the oldest and most long-lasting civilization in history, and devise an economic system that lasts for millennia. How they did it, along with some other promising models, will be the subject of another article.

http://ellenbrown.com/2014/07/25/you-cant-taper-a-ponzi-scheme-time-to-reboot/

Roacheforque said...

"Freegold is all about gradual, natural and automatic adjustment mechanisms in the modern world of fiat currencies."

Yes, and with CONfidence being the true underlying "asset" which is rehypothecated to extend and pretend against reversion to the mean, how long can the imbalances be maintained (without the interjection of war)?

Ironically, while FOFOA states that imbalances will naturally find their center of gravity over time, is reversion to the mean not also a sort of "technical" analysis in the end?

Something along those lines to consider here:
http://www.321gold.com/editorials/wood_t/wood_t_072814.html

Motley Fool said...

teon

Ok, so if the idea is correct, fat people can live off their stored energy while taking in less energy. Fine. What about the rest of us? I'm sure I can survive a while on body fat, but not as long as I'd like, and starving sucks, I know from experience.

Freezers full of meat assumes electricity. That is also one hell of an assumption during economic meltdown, never mind the attention that would draw in an urban environment.

I'm even worried about the cooking process, and how to minimize risk of smells in that scenario.

"As for the idea of calories - well, everyone burns them at different rates. The idea that they can standardize even in your own intake is actually counter to the theory of thermodynamics."

This is irrelevant. Sure there are variances, but each individual falls within a range based on activity levels. It is possible to approximate energy intake required, even if it varies over time an average is doable. Falling far our of your own individual norm to either side has consequences.

I don't care to debate this. I am far from an expert, and have no interest in being. If it works for you, great. It's good to know this alternative exists.

For myself, I simply relied on basic biology and biochemistry knowledge, combined with the fact that I have limited resources. Personally I attempted most durable bang for buck ito energy, whilst not being completely unhealthy eg. not milk and sugar. :D

@anand

Liked your commentary. :)

TF

Michael Martin said...

Fat people should be careful post-dollar collapse. teon will be on the prowl to sustain his state of ketosis. Hehe!

Some interesting trivia on how caloric counts of food are determined:
http://www.scientificamerican.com/article/how-do-food-manufacturers/

[i]The original method used to determine the number of kcals in a given food directly measured the energy it produced.The food was placed in a sealed container surrounded by water--an apparatus known as a bomb calorimeter. The food was completely burned and the resulting rise in water temperature was measured.[/i]

Not a very accurate process unless you are a robot and have a furnace in your belly.
The "improved" Atwater system isn't very encouraging either.

On another note, whatever happened to the bloke who got an empty package when he ordered from APMEX? Any update on that?

tEON said...

Apologies about continuing the diet thread.

@anand srivastava

Gary Taubes makes the same mistakes as done by those doctors, in believing that just because you can have good health on a low carb diet, it would be better to be on a very low carb diet.

Hi Anand - thanks for your response.

I guess it depends on what you mean by 'very'.

I don't think that is what Taubes is saying. I do think the induction-phase of the Atkins diet - where you shock your body into Ketosis by eating 5 grams or less carbs a day - would be more in-line with that philosophy. But that is simply a way to lose weight quickly - which they use as a sales gimmick.

Most Ketogenic diets that I have seem (see Dr. Steven Phinney HERE, Dr Jay Wortman HERE, Dr. Jason Fung HERE) recommend less than 50 grams a day of carbs. Is that 'very' low carbs?

It is really only the amount required to put your body into Ketosis - which would probably vary depending on the person and the timeframe. Generally about 5.5 weeks of less than 50 grams will put you into Ketosis (measured by a blood meter - not those inaccurate pee-sticks)

Anyway, my direction to his book (I agree 'excellent') was not to promote low carbs but to counter the 'caloric intake/energy' principal. Just another area the medical establishment is incorrect about.

you must take in at least as many calories as you burn

Watching Taubes and re-reading sections of one of his books...

In modern tests reducing Calories directly almost always relates to reducing carbohydrates - resulting in (no surprise) weight loss.
But other tests show that:
Increasing Caloric intake but in a low carb diet - still decreases weight. (same activity levels)
This was done in tests with Rhesus Monkeys and humans as far back as 1917.

This whole calories-in calories-out hypothesis (people measuring their calories) is more modern medicine BS, IMO - as Good Calories Bad Calories identifies. Yeah - if you want to buy the highest caloric food (bang-for-the-buck) buy honey, grains etc.

Some conclude, as with Fluoride, tobacco, alcohol (dare I say) that carbs are... poison.

You didn't respond about the nutritional ketosis in nature problem. The fact that it is not found anywhere. No animal does it, no natives have done it.

Sorry, I don't understand what you are requesting - 'in nature'? Inuits went centuries 'in Ketosis' surviving without the chronic diseases that will, probably, kill you (statiscally speaking). Well, I feed my dog only protien dog food - as do many pet owners - because that is better for them. If I get what you state - then if your body has a choice - it will always choose carbs as the primary energy source. Carbs are addictive - they also increase your appetite. The old joke about Chinese food - 2 hours later - is a trusim.

I am focusing less on the $-value. If the system breaks down for more 6 months - then I suspect it is not bouncing back quickly. I'll then be eating the same carb-groups as you - spiking my insulin, storing fat instead of burning it, and raising my risk of chronic disease. Of course, without the food available, many may be forced into Ketosis (as the Concentration Camp survivor). Would that be an example of how Nature deals with lack of food?

tEON said...

@Motley Fool

Ok, so if the idea is correct, fat people can live off their stored energy while taking in less energy. Fine. What about the rest of us?

I was speaking of averages. Not 'fat people' - all people. Repeating: Most have 15,000 Kilo Calories of fat cells on their body. You body is fat and protein. It would be prudent to feed it that and, to me, seems efficient to use it as your energy source.

Freezers full of meat assumes electricity.

Why I stated mine are generator supported - actually through Natgas - which I will assume (hope?) will be the last thing that is shut off.

I'm even worried about the cooking process

I agree - this may be a legitimate concern. No matter who you are.

I simply relied on basic biology and biochemistry knowledge

Perhaps - like the general understanding of Calories - it is misinformed.

I have limited resources.

As do we all. As the planet does. I understand - best of luck to you.

Lastly,
I'm sure I can survive a while on body fat, but not as long as I'd like, and starving sucks, I know from experience.

This is the most interesting point. You may not believe me but you heavily lose hunger pangs when Ketogenic. That is part of the idea of my recommendation. Carbs make you hungry - if you don't want hunger pangs - don't eat them! In Ketosis, just like the Inuit, you can go significantly long periods without eating. Your energy source remains constant, but taking in salt, I find, is important. To each his own.

P.S. I know there are other FG'ers who are practicing the same prepping storage philosophy as me - I just can't recall who or when I read it (more than 1.5 years ago).

Regards,

tEON said...

@Michael Martin

Fat people should be careful post-dollar collapse. teon will be on the prowl to sustain his state of ketosis. Hehe!

:) You reminded me of the film The Road, which I have now watched too many times. Let's hope (nay pray) it doesn't get to that stage.
Can one ever have enough ammo?

Best,

Michael dV said...

tEON
Watch Tremors 2&3 …Bert Gummer ran out of ammo once…if it can happen to Bert it could happen to anyone!

Sam said...

Mark me down as someone that sees prepping because of a monetary system meltdown as prepping for a very unlikely scenario. Other than buying gold which I simply view as front running the next system. The whole idea of this entire project was to cleanly and smoothly move away from the dollar while avoiding global monetary disaster. Will there be some pain...yes. Will you have to live off rice for a year in a cave with your machine guns...99% chance of no. It would be a monumental failure for the entire globe if a major trading block (namely the US) was reduced to a mad max scenario. It would be better for everyone to just maintain what we have instead. If the whole globe suffered the mad max, prepper dream scenario, mark it down as an even bigger failure. Avoiding such a scenario has been the Primary reason things have been delayed as long as they have been.

anand srivastava said...

Its slow these days on the blog, so I hope this long post is ok :-).

Part 1 of 2.

tEON:

My definition of VLC is < 50gms of Glucose/day.

Basically whatever will cause you into ketosis.

Ketosis for a short term, to kill bad gut flora is fine, but not good long term.

Sorry, I don't understand what you are requesting - 'in nature'? Inuits went centuries 'in Ketosis' surviving without the chronic diseases that will, probably, kill you (statiscally speaking). Well, I feed my dog only protien dog food - as do many pet owners - because that is better for them. If I get what you state - then if your body has a choice - it will always choose carbs as the primary energy source. Carbs are addictive - they also increase your appetite. The old joke about Chinese food - 2 hours later - is a trusim.

Do you have any proof of Inuits Ketosis, that is not originally from Vilhjálmur Stefansson. You might want to read this article (if you haven't found any link that does not end up back to him), and others from Richard (freetheanimal).
http://freetheanimal.com/2014/04/explorer-vilhjalmur-stefansson.html

Your dog will eat meat, and that is ok. Protein converts into glucose and doesn't let you go into ketosis. For ketosis it has to be a high fat, low carb, and moderate protein. It cannot be done with high protein, low carb, moderate fat. Inuits also are known to eat huge quantities of meat. They also love the blubber, which is very high in glycogen. BTW have you noticed how hot the dogs are. That is because of the heat produced during conversion of protein to glucose, almost 70% of the energy is lost to heat. Humans I believe cannot run that hot. It is a good solution for the arctic though. I did make an assertion in my first message to you that Inuits prefer seal and other sea mammals because they are rich in glycogen. And this is to get the required glucose, and avoid ketosis. This is why they prefer blood, organs, and skin, all very high (comparatively) in glucose and glycogen.

The body does not use exclusively carbs or fat. It is always a mix. When there is more availability of glucose, it uses more of glucose, and when there is less availability it will use fat more. It never burns all the glycogen, even before death due to exhaution. Most of it will degrade over time though.

Carbs may or may not be addictive, it depends. Try eating boiled potatoes, let me know how many you can eat. Don't put any fat on it. Actually there are some combinations of carbs, fat, salt, sugar, that are very addictive, and it does depend on person to person. It is never just carbs. Try eating just sugar :-). Some people are able to eat a whole lot of fat. One of my senior had eaten nearly a kg of ghee in one go, without anything to go with, no salt, nothing.

About the Chinese thing, Boiled Rice is actually very low calorie density food, compared to almost anything else. 100gms of boiled rice has just 130calories. You would have to eat much more than a kilo to survive.

anand srivastava said...

Part 2 of 2

In modern tests reducing Calories directly almost always relates to reducing carbohydrates - resulting in (no surprise) weight loss.
But other tests show that:
Increasing Caloric intake but in a low carb diet - still decreases weight. (same activity levels)
This was done in tests with Rhesus Monkeys and humans as far back as 1917.


The problem is that these tests were short term, and done on people on a high carb diet. I have myself observed that when I moved from a high carb to a low carb diet, I lost weight despite eating lots of fat (calories). But after a couple of years the advantage is gone, at least it did for me, and I have read several people having similar results. I think it has something to do with fat adaptation. In the beginning, the body is not very well adapted to storing fat, without a higher insulin spike. In this case the calorie is simply lost to the environment by excretion. But slowly the body gets a grip on that, and then the advantage is lost.

The Calorie in calorie out is not wrong, it just has no predictive power. We don't know how many calories we are absorbing (out of the intake), how many calories we are losing by excretion, how many calories we are losing by radiating to the environment, because you are feeling hot or cold. These numbers can make a very big difference.

The real big problem with extrapolating your results to everybody else, is that everybody is different. Some people do very well on VLC, some people do very well on Low carb, others need moderately high carbs. I do think that 50-150gms should work for most people. Some people will be inevitably outside this range.

I also made an assertion that most Low carb proponents do not have proper gut flora, and are using low carb as a way to avoid the problem of having to digest food that require gut flora. And most will be allergic to common foods. What do you say about that? How many foods can you eat without an allergic reaction? I am asserting that the problem is not carbs, it is the gut problems that is driving you to low carb.

I do understand that fixing gut problems is not easy for a person living in cities. I myself am having problems with that, and am using low carb for avoiding those problems. I do have an Indian ancestry (which has been high in carbs for a very long time) and need more carb than an average European (who have had somewhat low carb for a very long time).

anand srivastava said...

Sam:

Agreed. I am just keeping a running stock of normal food for 6 months, nothing more. People in the past any way kept food at least for a year. This is nothing new. It is cheaper to buy in season. The real problem is that in the present age of living in highly congested cities and year round food availability, we have stopped doing so.

It think it is better to have a store even in the normal case.

I also don't expect the crisis to last more than a couple of months at least for us with a small cache of very very small pieces of the metal.

Franco said...

I lived through the hyperinflation of 1989 in Argentina. From that experience, along with the financial collapse of 2001, I will confidently say that a monetary catastrophe will not usher a "Mad Max" type of scenario where you wonder how many rounds of ammo you will need. Only a physical catastrophe can cause that, such as nuclear war, plague, asteroid impact, etc.

Being a doomsday prepper is fine. I don't have a problem with that. I just don't think that topic fits in with this blog's theme. Not that they are incompatible. They just don't have anything to do with each other. Just my opinion.

M said...

The Netherlands have the lowest interest rates in 500 years. Goes to show that what is coming isn't your grandpas credit cycle. Or even your great grandpas credit cycle.

Remember Grumps labastard kept implying this ...

Archer said...

Franco,

Are you from Argentina? If one can put aside such things as HI and financial collapse, did you enjoy living there?

Indenture said...

M: Could you expand on your last statement?

Michael dV said...

as
I assume that you are weighing the rice after it has been cooked. 100 gms of rice weighed before the water introduced by cooking is added gives 400 calories.

Franco said...

Archer:

Yes, I am from Argentina. Yes, I did enjoy living there, although the Argentina of my childhood was pretty different than that of today. If one day I decided to go back to live there, I would only live in a small town or in the country, and far from the Buenos Aires metropolis, which is a cesspool.

oldinvestor said...

In the diet thing, I think the best thing to store is what you love to eat. I am a blood type O, so I love to eat meat. ( Get the book "Eat right for Your Type", it shows that our blood type is the key to what an individual's best diet is)

So I have stored a lot of meat in the form that I like it, which is canned. It is great. Cosco has a great line of canned beef. Keystone has a great canned pork. But the best is Yoders canned bacon. OMG, it is absolutely addictive. All fully cooked, I regularly fork it right out of the can, so no cooking or refrigeration needed.

I really think that what you can not keep your hands off of is what you should be storing. Reminds me, I need to order another case of the canned bacon soon.

Archer said...

Thanks for responding, Franco.

anand srivastava said...

oldinvestor:

The blood type diet looks great, but unfortunately it doesn't work that way. Me, my wife, and son are all B, but have very different food interests. I love protein, meat etc. She hates them. Both of us like fat. She loves fruits, I am not that interested. We both loves vegetables though. Son takes after my wife. He does eat meat sometimes, hates milk. Both of us don't drink much milk.

Basically the blood group is defined by two antibodies. These are important because they make life difficult when you have to get blood from a person. There is also the Rh factor, which also makes the same problems. It has nothing to do with digestion. Digestion depends on the ability of your body to produce enzymes, and the makeup of your gut flora, and the preference of your body for the gut flora. It has nothing to do with blood type.

The blood type is the easiest thing to test :-), and that is why it is so easy to determine what you should eat based on it. Even though the recommendation would not match everybody. It will work for around 25% of the people, and that is good enough to get a good following :-).

You must love meat, but that would not have anything to do with blood type. I also love meat, but am group B. According to the diet I should do very well on milk, but milk doesn't go very well with all of us. Actually not all Indians do very well on milk. My digestion is not great either. We don't really fit the B diet prescription very well.

There are some scientific papers showing the various inconsistencies of the diet with the real world.

anand srivastava said...

MdV:

Yes I meant cooked. I was showing why you get hungry soon on a rice diet. If you are a predominately wheat and meat eater, you would eat a smaller volume of food, as the food is high density. Rice is very low density, so you require a lot more volume of food. This means that you will get hungry with it much faster. Chinese food also tends to be lower in fat, consisting mostly of spiced steamed vegetables, further adding to the low density. The average Chinese is not used to eating as much calories as the average American. Americans also tend to be much bulkier than Chinese :-). So this perception will be there among the Americans. Chinese do well on their food.

M said...

@ Indenture

All I was saying is that these kinds of numbers indicate that we are not in for another Paul Volker credit style credit cycle. Guys like grumps just think that the minute the Fed raises interest rates into real positive territory, that gold will plummet and we will be in for another 30 year US debt bull market.

But I think interest rates in a place like the Netherlands at 500 year lows points to something else.

M said...

Andrew Huszar was just on King World News. He managed for the Federal Reserve Bank of New York the $1.25 Trillion Agency MBS Purchase Program (the centerpiece of "QE1")

In his interview he says this:

"The Fed will eventually start generating losses from interest on excess reserves that it is paying to the banks. From an implicit funding cost perspective, ultimately the Fed has to deploy so much cash to try and deal with the unintended consequences of QE, that its starts generating losses and whether those losses, for the 1st time in its history, cause it to have to actually borrow money from congress. In which case, we could see some real fireworks.

So what does he really mean ? Why would the Fed have to "borrow" money from congress ?

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