Sunday, July 5, 2009

How The Dollar Made It This Far

Duality of value is a funny thing.

If you have a gun pointed at me and I have an identical gun pointed at you, they (the guns) are worth the same. Yet, if I am wearing a bullet-proof vest, my gun has more worth. Not much, just a little more. Strategic location! In 1933 dollars outside the US were worth their weight in gold. Yet, inside the US they were not. The same dollar had a dual value dependent on location.

Oil, gold, minerals and one's bank account can all have dual values based on their strategic location. Another form of duality exists for most things. Gold has a jewelry value and a monetary value. Its price is reflected in the degree of total demand generated from each value. In fact everything we own has our personal sentimental worth and a "monetary" value. After 1980, oil also reflected this different duality.

In the late 60's and early 70's some US strategic leaders were beginning to understand the "monetary value" of oil. It was becoming clear that local oil reserves, not gold was the real backing behind the robust US economic engine. Like gold today, oil back then was worth a whole lot more than the amount we were paying for it.

It was recognized that even though the old (gold) money system of the 60's had priced oil favorably for the US, its (US) oil reserves were running out at that price. We needed a higher price for oil in order to build local reserves. At the very least, we needed higher prices to discover higher cost reserves located in the "Strategic Americas" (both north and south).

The potential (indeed, it was reality at that time) for the Middle East to continue producing reasonably priced oil for gold (dollars) stood in the way these needed higher prices. In order to resolve this, we moved off the gold standard (1971) and onto the oil standard. Again, in hindsight it was a masterful play. You see, in duality, oil in the Middle east was worth more than other oil if it could back the dollar in world settlement.

The US had already placed it's currency on an oil standard years before (in practice anyway). They were expanding the money supply directly in relation with the increased production of goods that modern oil use was providing. Of course they ran away with the process as is always the case. Gunning the debt money supply and justifying it by extrapolating growth at ever increasing rates. Dollar creation overran the ability of the gold exchange standard to balance it. Still, in all fairness, the old system was built on a much slower creation of production efficiencies and couldn't accommodate this modern surge of wealth (and debt). Let's face it, the world has no precedent for the last 30 years of growth.

After 1971, the value of the gold backing lost, was found in oil. In reality, the value of oil to the world economy was increasing much faster than value of gold lost from dollar default. Even at the higher prices per barrel the need and demand for oil proved to be a far superior "monetary backing" for the dollar than gold. As long as the majority of oil producers agreed to receive dollars for oil, the stage was set for a renewed surge in growth the world over.

During the '70's, dollar price inflation was bad, but by no means did we see the "runaway price inflation" that should have come from a reserve currency without gold backing.

In practical theory, oil now backed the dollar as world oil payments were settled in dollars. In return, gold now backed oil from a US guarantee of an open market for the metal. Over time, a portion of oil dollars could be replaced with real gold through actual physical purchases or in participation with evolving world gold banking (paper gold). Even though the dollar gold price had surged, the higher oil prices were allowing a percentage of those dollars to be converted back into gold at the old gold/oil rate. [Note: After the gold window closed, dollars surrendered for gold REMAINED in circulation!]

Slowly, the old dollar holdings (prior to 71) were effectively being used to reclaim gold. The expansion of the world dollar money supply was seen as reflecting the more modern importance (value) of oil in the economy. As long as growth in the production of economic goods outstripped dollar price inflation, the dollar could be expanded to match the unrealized value held in oil.

Again, "strategic location" of the world's major oil reserves was the backbone behind this "duality" in oil's value. Gold in Fort Knox could not back the dollar anymore, because the US had shown that they could just withdraw it from backing. In fact, the entire validity of backing ANY currency with a fixed gold amount was in question with this new age of "super nation blocks". For it to work again, gold and the reserve currency backed by it would have to reside in different "power blocks" to guarantee delivery. That wasn't going to happen. Indeed, with supply of the world's major oil reserves being controlled outside the US, the dollar was now backed more effectively by a commodity that could be used to devalue it (through the oil price) should the money supply run wild.

[See The Judgement of Value. This is key. If I print dollars, the judgement of value of those dollars belongs to whomever I offer them to. Under the gold standard, the value of the dollar was set by the printer himself. An unstable and unsustainable system!]

This system [of EXTERNAL backing] came into balance, as the value received from oil by the goods producing world outran the loss from price inflation initially created from rising oil prices.

Today, the situation is changing in a much more dramatic way.

Throughout the 80's and 90's, an increasing dollar reserve base impacted the economies of foreign nations as the US dollar trade deficit and the debt that represented it expanded without relief. After over three decades of non-stop foreign dollar inflation, the dollar float has become so large that any transition from dollar settlement into "Other" settlement will permanently remove it from reserve status. These events we will witness and document will be the "Facts" of a dollar fall from grace.

The strong US economic success [is best expressed] in our SOL (Standard Of Living). Dollar exchange rates, interest on dollars, stock market values, home values all represent what an American "can buy" if they decide to spend their wealth. Not what they presently have as owned wealth, paid up 100% [or liquidated 100%]. This leveraging of dollars created an "illusion of savings" that in effect allowed a high SOL.

In other words, we lived high on the hog because our equity values and savings don't really exist. Time has transformed the entire dollar system into a giant "futures contract" that only represents the wealth we could obtain in partial "future purchases". Just like the gold market, we mostly trade paper wealth and call it real. Yet, if a large percentage demand for delivery ever happened, the contracts would fail. Yes, our wealth and economy status is really based on us cashing in and buying just a little at a time. If we didn't, the illusion would be exposed.

Our present dollar economy is "super leveraged" not just into the future of US goods production, but it also completely depends on future foreign fulfillment to produce those real goods. Truly, most of our present sizeable financial wealth is little more than a function of the "acceptance of dollars overseas" by others.

In reality, if this foreign reserves chart was ever forced into reverse, no amount of real US goods production could be bought using present dollar price rates.

Foreigners could never spend their dollars at a rate that matches our SOL values. Indeed, some of the biggest players now know it! It's all an illusion that has spanned 35+ years from the loss of the gold standard and it's about to be tested.

Indeed, even now the paper gold market expressed a major "duality" in real value depending on the strategic location of it's contracts. Some leveraged gold banking backed with Euroland guarantees is today far superior after the Euro success. [See Deutsche Bank and the ECB] (I think this concept is hard on most people. Still, it will look much different after the train wreck that is coming.)

Going further into the duality of values, Oil prices today are on the rise and doing so in total conflict to perceived marketplace function. It's no mistake as to why this dollar price rise is happening now. Just as a high gold price would expose the dollar by presenting it's true past inflation (world dollar money supply growth), a rising oil price exposes the US economy to the super leverage it contains. Especially if one can grasp how that economy was built on oil backing through dollar settlement. Once the threat of a dollar crash is made possible by high oil, expect big oil to run elsewhere for settlement for international trade. Perhaps run is not a good word? Let's just say a transition will begin that shows the world the trail ahead.

But the market has yet to fully grasp the impact of these events and still bids contract gold at par.

Our [FOA and ANOTHER] stance is and always has been that the world will be using paper digital currencies for the rest of our lifetime. I for one, have never heard any official voice his stance that we will move back into a gold standard. Their direction has always been to keep a reserve currency system and strengthen it with a free physical gold market trading in the background. In none of our meetings have we heard where a fear was expressed that the governments will lose control of digital currencies and give it (control) back to gold. That is simply not going to happen, no matter how severe a down turn the loss of the American dollar system creates. Believe it.

The dollar system is failing as we move into another stronger (relative to fiat currencies) money system. The future will see us all using digital currencies, for better or worse. Therefore, by logical extension if I must use a reserve currency of account, I move into one that has the best strategic ability to survive and denominate my assets. In addition, the Euro's creators are restructuring the gold market to the physical bullion holders advantage. This is the only reason I "Walk In The Footsteps Of Giants". They created this bullion path and the world will follow in due time. Therefore, my position of Euro assets and physical gold. Mostly (because I am American), I lean to gold for this transition.

One can take the radical position that the world financial system is going to end without the dollar. You can also say that the Euro will fail as this process evolves. One can buy gold for these reasons only and still prosper, whether your grasp of politics leads you to this conclusion or not. Our sole reason for writing is a private commission to share official directions and perceptions with the average citizen of the world. Nothing else.

Still, stand alone logic and history promote that the world will lose the present system to paper inflation and move into another as it has done before. With this, gold will bankrupt the outgoing system as hyperinflation runs through it. In a broader view, all total dollar dependent economies (Canada, Mexico, Japan, etc.) will share this fate.

This view gives you no facts only our perceptions from the builders of the future. We offer only the events as they occur for our proof. Indeed, strong events are ahead on this gold trail we all walk.

- FOA paraphrased by FOFOA


Anonymous said...

The real gold advocates (infinitesimal/homeopathic small group) need to evidence that the system is "crashing" ! A very unthankfull occupation.

Even a possible dangerous occupation. When the crash finally materializes,...the gold advocates might even be blamed for it (the cross of gold).

The states, who co-govern the $-IMFS, are running away from their real responsibilities because they don't want to "sanction" the irresponsibles. The states (have to) collude and will therefore lose public confidence.

That is the real significanse of the 9/11 (breaking point) drama.

Can the crashing system remain alive/functioning with another massive devaluation ? This time it will definitely be different simply because of the globalizing world.

"Evidence" of this will manifest itself, step by step by step...

Anonymous said...

Simply " amazing " !

Questions grow over oil spike brokerage
By Izabella Kaminska and Javier Blas in London

Published: July 3 2009 23:34 | Last updated: July 3 2009 23:34

The boss of Steve Perkins, the broker at the heart of a rogue trading scandal that rocked oil markets this week, issued a bullish report suggesting prices could go higher only hours after Mr Perkins made the unauthorised trades that caused prices to spike.

Anonymous said...

Next week's summit (Italy) :

The gravity of the Globalized Crisis and the impossible high expectations on the exit stratego make that everybody whishes $-stability. No $-statements to be expected.

The electronic printing presses cannot stop and there is no poltical will for a global exit strategy (back to balanced budgets). The Systemic $-Debt Crisis shall proliferate faster and deeper. The $-regime again is trying to buy some more time.

Trichet (France) warns that the globalized/further globalizing world economy MUST be "stabilzed !
He knows very well this goal will NOT be reached without a catastrophe.

Let's see in fall what the oilprice and Mexican flu will cause !?

Anonymous said...

J.Sinclair : Nice insight !

A Lesson In Super Sovereign Currencies: An End To The MOPE and SPIN
Posted: Jul 05 2009 By: Jim Sinclair Post Edited: July 5, 2009 at 2:18 pm

>>> Is this a possible intermediare in the transition process,...or already the finale !?

Is the $-regime ever going to accept to give in (compromise) on its global monetary leadership ? I don't think so. It will fight this transition with tooth and nail...and let everybody pay dearly for it.

Thoughts anyone ?

Anonymous said...

Hi Fofoa!

The last post from J.S. (A Lesson on...) suggests the incoming SDR would include the dollar. Of course that's not new. Would the "basket" take the $ in even in its sick state it is now,or should it first be devalued? And what about the national debts in relation to freegold and SDR?

FOFOA said...

Hi Fauvi,

Can you see how fast the meme of alternate reserves is spinning and changing and evolving this year alone? We have never seen something like this before. It is new. Since 2009 began we have seen talk of bilateralism, barter deals, regional currencies, gold, SDRs and pseudo-SDRs. What do you think this all means? Do you think this means that the powers that be are finally getting their act together?

Now that everyone seems to be supporting the current financial $ystem, at least with words, we can see what they have realized. They have realized that transition comes with a great price. Now they want a slow, smooth transition.

Anon is right. The $ regime will resist ANY transition. The cost to them is the highest.

This "diversification" that JS talks about exists in a world without an intact solution. Only gold.

First we will see Freegold. Then we will see a new SSCI or whatever.

The dollar will probably be a part of it. But it will be the new devalued dollar, and the world will be more in balance before anything concrete is created. This is the only outcome that can work.

Someone MUST eat the losses! Someone with actual EQUITY to lose, MUST eat the losses. A new monetary system CANNOT be built while the losses exist in hidden corners of the accounting offices.

The politicians REFUSE to allow the responsible parties to eat their OWN losses. Instead, they are papering over the problem in hopes that the free market will rush back in with its actual EQUITY. This will not happen.

Someone MUST eat the losses. It will be EVERYONE. Then a new system can be built.

The REAL contributions of the BRICs still cannot compete with the paper bubbles of the $IFMS. Until there is balance, no basket will work! The $-bubble must pop and then there can be balance between paper/oil/gold.

One "surprise" we may see after the bubble pops and gold is set free, is the emergence of an EXISTING regional currency, that ALREADY holds gold in high regard as a reserve, onto the global settlement scene.

All this "basket-talk" is because gold is not yet viewed in its proper function! Once it is, there may not be a need for creating an SSCI or whatever. One may be found to ALREADY EXIST. This would be bad news for the newly devalued dollar!

America is a land of plentiful resources. This is why the dollar will always be part of CB reserves. But at what price?

Don't forget what Another said...

"There are nations that will try to "resource a new currency" as the old financial system implodes. Oil or gold or both may be used. If it is done at the correct time, much will be gained by all! Fail this Attempt, and gold will never trade on an open exchange again, in our lifetime! We will see this end in our time."

How does gold trade on an open exchange? Through a paper proxy.


Anonymous said...

Yes, Sir
you HAVE to be right! Our stupid politicians would NEVER find a solution - and if they were looking for one - it would only be a bad one.

Anonymous said...

An owner of real oil-money-wealth says :

July 5 (Bloomberg) -- Kuwait, the sixth-biggest OPEC producer, wants to see oil prices stay above $60 a barrel and will watch the market closely before deciding on its output at OPEC’s meeting in September, the country’s oil minister said.

>>> Don't devalue my oil-wealth by artificially upvalueing your worthless $--fiat-unit !
(my free translation)

The oil-owners now decide increasingly on the dollar's international PP.
What to think about Obama's (peace) policies towards Middle East in the background of the oilprice evolution (Cairo speech) ?

How much goodwill can Obama generate from the oil wealth owners without "risk" ?

When will Obama visit Bejing ?

Will there be an oil-worth parameter in the (new) SDR basket ?
Will the SDR track the international PP fluctuations (with freegold) ?
(SDR-reserves tracking the oilprice)

A lot to be sorted out before the september G-20.

Anonymous said...

The management of $ 6,5 Trillion reserves, questionned !

July 6 (Bloomberg) -- Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.

“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.

Anonymous said...

I've found an older Atimes article from Liu. IMO it's not only interesting but even actual.

"The second thing that may happen is that the price of gold will skyrocket in currency terms, causing a great deflation in gold terms. The US national debt as of June 1 (2005 n.b.) was $7.787 trillion. US government gold holding is about 261 million ounces. The price of gold required to pay back the national debt with US-held gold is $29,835 per ounce. At that price, an ounce of gold would buy a car. Meanwhile, the market price of gold as of June 4 was $423.50 per ounce. Gold peaked at $850 per ounce in 1980 and bottomed at $252 in 1999 when oil was below $10 a barrel. At $30,000 per ounce, governments would have to make gold trading illegal, as US president Franklin Roosevelt did in 1930, and we would be back to Square 1. It is much easier for a government to outlaw the trading of gold within its borders than it is for it to outlaw the trading of its currency in world markets. It does not take much to conclude that anyone who advises any strategy of long-term holding of gold will not get to the top of the class." ??????!

"According to Greenspan's figures, the Fed can print $8 trillion more fiat dollars without causing inflation. The problem is not the money-printing. The problem is where that $8 trillion is injected. If it is injected into the banking system, then the Fed will have to print $3 trillion every subsequent year just to keep running in place. If the $8 trillion is injected into the real economy in the form of full employment and higher wages, the US will have a very good economy, and much less need for paranoia against Asia or the EU." ????

"Anyone can issue money, but only sovereign government can issue legal tender for all debts, public and private, universally accepted with the force of law within the sovereign domain. The issuer of private money must back that money with some substance of value, such as gold, or the commitment for future service, etc. Others who accept that money have provided something of value for that money, and have received that money instead of something of similar value in return. So the issuer of that money has given an instrument of credit to the holder in the form of that money, redeemable with something of value on a later date."

Dollar hegemony
against sovereign credit
By Henry C K Liu


FOFOA said...


The good Mr. Liu Think Tank has some excellent ideas where China is concerned. But he also has some crazy ideas from time to time, mostly about monetary theory, gold and the US.

I remember being disappointed to read this piece by Liu in which he said,

"Only reform toward full employment with rising wages will save this severely impaired economy.

How can that be done? Simple. Make the cost of wage increases deductible from corporate income tax and make the savings from layoffs taxable as corporate income."

He demonstrates certain tendencies in this statement. Tendencies toward big government, controlling government, socialism and even Keynes.

Statements like this, "It does not take much to conclude that anyone who advises any strategy of long-term holding of gold will not get to the top of the class.", say more about his personal feelings toward gold than offering an objective analysis.

"...not get to the top of the class." This is like saying "not the sharpest knife in the drawer." Or "not the brightest bulb on the tree." Or "not playing with a full deck" etc...

These are things you say when you DON'T LIKE someone. Not when you have made an objective analysis.

So what exactly WOULD "the top of the class" advise us to hold long-term? Treasuries? Yuan? Please tell me what is better than gold, Mr. Liu, if you are going to make a statement like this.

And why would $30,000 an ounce force all governments to make gold trading illegal? This is VERY dollar-centric Western thinking by Liu. He doesn't explain why. He only tosses out the usual "Roosevelt in the 30's" line.

"If the $8 trillion is injected into the real economy in the form of full employment and higher wages, the US will have a very good economy, and much less need for paranoia against Asia or the EU."

There's that "full employment and higher wages" again. I bet Mr. Liu would like The Cook Plan.

"only sovereign government can issue legal tender for all debts, public and private, universally accepted with the force of law within the sovereign domain."

This is true, but they cannot determine the VALUE of it under a fiat system. "...within the sovereign domain..." But not outside of it. Remember, the Zim Dollar was legal tender in Zimbabwe, for all debts, public and private!

What gives something like gold its value? It is all the people in the world that are willing to trade real stuff in return for some gold. This is what gives gold value. If all the world is suddenly willing to trade a new car in return for an ounce of gold, what good will it do the US to forbid its citizens from making this trade or from saving in Freegold? What good would it do ANY country to put currency controls on the new world reserve?

I'll tell you. It will destroy the US or any country that tries it. Capital will flow out of the US like water through a sieve.

The US can no longer control the value the rest of the world places on its dollar. And it also cannot control the value the world decides to place on an ounce of gold.

Mr. Liu's "objective analysis" is clearly masking an ideology and a bias. This is intellectual dishonesty. In my humble opinion.


Anonymous said...

Liu always stayed far away from gold matters, his publications. Speculating on the reasons for this (pro forma-?) gold aversion is a waste of our time.

Read Fekete's latest :

>>> The $-regime and its followers remain convinced still having the entire world in their $-hands.

One needs to be very strong/smart to contradict this with solid arguments. Gold advocates are "strong/smart".

Tekin said...

How to solve economical problems?

Scores killed in China protests

Violence in China's restive western region of Xinjiang has left at least 140 people dead and more than 800 injured, state media say.

Tibet --> Domino theory --> Unrest in Tibet spreads to Uygurs (Zinjiang)

Does Zinjiang region have 150 billion barrels of oil reserves? Is it true?

Chineese LAND access to Persian Gulf Energy requires a pipeline through Zinjiang and Pakistan to Iran. All these regions are in fire. Coincidence!

Us plans for Pakistan. Give the northern region of Pakistan to Afghanistan to eliminate a common border between China (Zinjiang region) and Pakistan.

Chinese are planning to build a port at Gwadar (Pakistan) which is located just at the exit of Hormuz. Create a Balochistan out of South Pakistan and evict the Chinese out of Gwadar.

Success of these steps would ensure that the Chinese are forced to rely on Sea Lanes of transportation... and there is Iran, the biggest oil supplier of China... that has the potential to come under Chinese influence...

Suppose that US victoriously cuts the land access of Chinese to the Gulf and Iran is jointly controlled by Russia and China. In that case, what kind of international monetary system would the Chinese accept?

Tekin said...

Biden: Israel has right to attack Iran

Biden said Israel could decide to attack Iran whether the United States agrees or not.

Martijn said...

The US has no problems with Iran being under attack I believe. They will however have problems with being involved directly in such an attack: both public opinion and financial wealth do not allow them to.

Should Israel go at it, the US (believes it) has litte to loose.

Martijn said...

Two interesting observations: here Max Keiser says that the US so far has been using military power against countries that tried to undermine the dollar-hegemony. here a German article states that 140 persons were killed in protests in China, and that the riots are thought to have been created by outside forces.
Resistance to the dollar loosing it's power is tougher that many believe, as I have stated before. Unprecedented action have become the general precedent these days: we shall many more of them.

Martijn said...

More on gold manipulation.

Martijn said...

More Taleb.

Martijn said...

China story in English

Martijn said...

more on monetary inflation.

Anonymous said...

Collapse indicators:

Isn't it a touch of
communism/socialism about Liu?

Anonymous said...

More about "program trading" :

The "black box" $-FI...governing the $-IMFS.

The entire manipulative manipulation goes much deeper (further) than only raw instant mega profits ! It is about keeping the $-system functioning.

That's why the BRIC talk about $-reserve placement is being labelled as purely academic (by the $-regime).

What a fenomenol "game".

Anonymous said...

The conflict - stated above - should be conducted "from abroad"!!!
That won't make the Chinese friendlier towards US!


Anonymous said...

$-Debt Explosion...and interest rates !?

>>> The catch-22 explaned (more or less).

Error in previous post > manipulative intervention (not manipulation)

Anonymous said...

That zero hedge article about Aleynikov is it not a sabotage à la 134bn of those Japanese? Isn't it a national damage? Interesting is also whom did he work for?! If NYSE is in for espionage, is it not of national interest?


FOFOA said...

@Anon: >>> The catch-22 explaned (more or less).

A long time ago on this blog in a discussion about feedback loops, I made the analogy of "speed wobbles" on a skateboard. An analogy to which I have personal experience from long ago.

Imagine a child on a skate board being pulled faster and faster behind a small motor cycle. And then down a small hill. The skateboard's sensitive turning mechanism and small wheels cannot handle the speed, and even the smallest tilt in one direction causes an overcorrection in the other, and an even bigger correction back again. This happens 3 or 4 times almost instantaneously and totally unexpectedly and results in what we used to call a "face plant".

FOFOA said...

@Anon: What a fenomenol "game".

I smell a black swan lurking.

Do I have this correct, the liquidity (program) trading which only STARTED last November in response to the stock market crisis actually PEAKED last week(?) even - in - the - absence - of - Goldman - Sachs ? GS was, by far, the driving force of this "operation". "The primary SLP, 60% of the total"

Talk about taking up the slack!

Who could possibly coordinate such an emergency operation?

And WHY? Would the market have crashed?

Please let me know if I've got something wrong here.

I also noticed that "Tyler" stated twice for the record that he is currently in Europe. This could be nothing. Or he could be sending the message that he is "out of reach" right now. He also directed readers to an alternative site to follow this story.

Black Swan: large-impact, hard-to-predict, and rare event beyond the realm of normal expectations.

FOFOA said...

"One of the few things we are confident about is, some very improbable things will happen. Surprises will occur so often they will become routine... I am sure this was only the beginning of a parade of shockers."
-Richard Maybury (EWR June, 2009)

Anonymous said...

@ FOFOA : It is exactly since 1994 that this fenomenol Big Game is in play. Rubin/Summers + Greenspan !

The markets, the entire financial system should already have crashed 15 years ago !

But exactly in 1994 everything came under the exclusive (complete) control (leadership) of the $-brotherhood and collaborators.

It took the contra-powers 5 years to get their counterpunch organized. The next 10 years (1999 > 2009), both added their respective weight on both sides of the balance. This game/struggle is still being "played".

When you read (study) interviews with Kissinger/Brezinsky, learns to "think" like them (their stratego).
And that stratego is NOT a black and white story. And the majority wants black/white stories.

Look at the $-goldprice manipulative behavior : This is NOT yet a clear black/white story ! It is one Big Confusion cloud for the absolute majority.

Markets should have crashed already,...and they did NOT crash ! Nobody sees this as a stratego (fenomenol game). I do, just like the manipulative (interventionist) high priests do.

That's why A/FOA insisted on going absolutely "physical". A once in a lifetime event.

The bulk of speculators/gamblers since 1994 lost their shirt in the FI. Simply because they keep on thinking in black/white and the manipulative high priest don't.

FOFOA said...

"The next 10 years (1999 > 2009), both added their respective weight on both sides of the balance. This game/struggle is still being "played"." ;)

Martijn said...

But exactly in 1994 everything came under the exclusive (complete) control (leadership) of the $-brotherhood and collaborators.

What happend in 1994?

Martijn said...


Martijn said...

Or Kuweit?

Anonymous said...

@ Martijn - 1994 : Rubin/Summers/Greenspan, accellerated the gigantic $-ponzi.
The main katalyzator for this was that the euro (EMU) was going to be succesfull at its launch 1999.

It is quite a job to retrace everything to that 1994-period and list the arguments.

Take a close look at the $-goldprice chart around 1994 and take the Gibson paradox with it.

The drastic changes (accelerating in 1994) not only happened in de FI but also on the geopolitical fronts.

We are already living through a 15 yrs transition period without knowing/realizing it. Transition-processes go crescendo.

FOFOA said...


"Strong Dollar Policy"

Look at Eric deCarbonnel's last conclusion here:

"Rubin figures out how the US could have its cake and eat it too

1) It was not until Robert Rubin became Special Assistant for Economic Policy to the President Clinton (1993-95) that the US would figure out its strategy of dollar hegemony through the promotion of unregulated globalization of financial markets

2) The US economy grew at an unprecedented rate with the wholesale and permanent export of US manufacturing jobs from the rust belt"

What do you think the "strong dollar policy" really means?

Martijn said...

Need to read a bit more.
Strong dollar at least involves low gold, and also worldwide oil trade in dollars.

The timeline provided in that previous article was quite interesting. The math also.

Perhaps we should extend that timeline untill today. Would be an interesting overview.

Iraq might fit in nicely. And they did want to start trading oil in Euro's. Iran had already made the first steps on the same course. Than the crises started, and now their regime is destabilized.

These thinks will fit better than many see.

Martijn said...

And yes, it is plausible indeed that the US kept the dollar "Strong" by trading it for gold and manufacturing capacity.

Also interesting regarding oil: price controls

Martijn said...

As the chart shows, Gibson's paradox continued to operate for another decade after the period covered by Barsky and Summers. But sometime around 1995, real long-term interest rates and inverted gold prices began a period of sharp and increasing divergence that has continued to the present time. During this period, as real rates have declined from the 4% level to near 2%, gold prices have fallen from $400/oz. to around $270 rather than rising toward the $500 level as Gibson's paradox and the model of it constructed by Barsky and Summers indicates they should have.

The historical evidence adduced by Barsky and Summers leaves but one explanation for this breakdown in the operation of Gibson's paradox: what they call "government pegging operations" working on the price of gold. What is more, this same evidence also demonstrates that absent this governmental interference in the free market for gold, falling real rates would have led to rising gold prices which, in today's world of unlimited fiat money, would have been taken as a warning of future inflation and likely triggered an early reversal of the decline in real long-term rates.

Other analysts have noted the inverse relationship between real rates and gold prices. An interesting and informative recent article along these lines is Adam Hamilton's Real Rates and Gold, which makes reference to a 1993 Federal Reserve study containing the following statement: "The Fed's attempts to stimulate the economy during the 1970s through what amounted to a policy of extremely low real interest rates led to steadily rising inflation that was finally checked at great cost during the 1980s."

The low real long-term interest rates of the past few years may have been engineered with far more sophistication than those of a generation ago, including the coordinated and heavy use of both gold and interest rate derivatives. By demonstrating that falling real long-term rates will lead to rising gold prices absent government interference in the gold market, Barsky and Summers underscore the futility of trying to control the former without also controlling the latter. But they do not provide a model for successful long-term suppression of gold prices in the face of continued low real rates.

Martijn said...

Strong dollar policy, gold and oil are related.

Carbon taxes also. I do not believe that just as we enter into a massive crisis relating to fiat currency use and gold suppression a measure directed at artificially raising oil prices is imposed randomly.

Martijn said...

Interesting how this Summers guy is now one of a capo dei capi in the camp of the Messiah.

Martijn said...
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Martijn said...
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Martijn said...

One other thought:

The USD/oil/gold scheme is about manipulating the paper price of both oil and gold downward (paper "value" upward) for the public in order to secretely trade oil for gold.

The Chinese understood that game too. That's why they pegged to the manipulated dollar. Not to exchange oil for gold, but to exchange products for production capapcity!!!!!!!!!!!

Martijn said...

Check And this vid!.

Martijn said...

Really, really great Liu for those that did not read it already.

While a strong-dollar policy has officially continued from the administration of president Bill Clinton to the current administration of George W Bush, US Treasury Secretary John Snow, at a Group of Seven (G7) finance ministers' meeting in France in mid-July, defined the strong-dollar policy in what the market considered weak terms. "What you want to be strong is that you want people to have confidence in your currency, you want them to see a currency as a good medium of exchange," he explained. This describes a sound-dollar policy rather than a strong-dollar policy. What Snow was really saying is that you want certain foreigners, such as the Japanese and the Chinese, to continue to buy US bonds.
(Quite clear indeed.)

In February 2001, O'Neill said publicly: "We are not pursuing, as often said, a policy of a strong dollar. In my opinion, a strong dollar is the result of a strong economy." Financial markets reacted with massive dollar selling, forcing the Treasury Department to issue this clarification a day later: "The secretary supports a strong dollar. There is no change in policy."
(Haha.. )

While since the start of 2002 the dollar has fallen as much as 30 percent from its peak against the euro, it does not add up to an end of the strong-dollar policy. The United States has been sanguine about the rapid decline of the dollar only against select currencies. Since its low for the year in mid-June, the dollar has rebounded by 6 percent against the euro.

A strong dollar is key to this capital account surplus/current account deficit strategy, which has come to be known as dollar hegemony.

A new economic sector called financial services came into existence. This was the true meaning of the slogan "a strong dollar is in the national interest". Dollar hegemony allowed the United States to levy a tax on the rest of the world for using the dollar, a fiat currency, as the reserve currency for world trade.
(That's why the financial sector got so big in the US - and UK)

What the Wall Street Journal calls mass capitalism would not have been half-bad if it were not for the fact that the hard-earned capital was squandered through fraud and Ponzi schemes. These new ventures financed by fund inflows did strengthened the US economy at first. But as the real economy in the United States did not grow as fast as the inflow of funds, because fewer and few things were being produced in the US, the excess funds soon channeled toward manipulation and fraud on a massive scale, resulting in financial scandals such as LTCM, Enron, WorldCom, Global Crossing, and thousands of less-known bankruptcies.

Much of the disaster came from the smoke and mirrors of so-called financial services, based on minute technical quantitative advantages that seem benign by themselves, but can accumulate into huge profit or loss in hundreds of billions of dollars on the turn of a penny. Hundreds of billions of dollars of investment and credit went up in smoke from fraudulent schemes perpetrated not only by management under the coaching of ever-enterprising investment banks, but also with the active, knowing participation of the banks, robbing workers and retirees the world over of their pensions and life savings.
(Program trading is robbing)

There are only two difficulties with this grand strategy: 1) to build the ideal empire, US workers will have to be retrained for the service sector and large numbers of both blue- and white-collar workers will fall through the cracks - and that creates problems in a democracy; and 2) the rest of the world is not stupid and may not take it lying down. So freedom and democracy at home will have to be modified in the name of homeland security and foreign resistance will have to be crushed in the name of freedom and democracy. The "war on terrorism" is tailor-made for this grand strategy.

Martijn said...

I repeat:

The USD/oil/gold scheme is about manipulating the paper price of both oil and gold downward (paper "value" upward) for the public in order to secretely trade oil for gold.

The Chinese understood that game too. That's why they pegged to the manipulated dollar. Not to exchange oil for gold, but to exchange products for production capapcity

Martijn said...

Sorry for spamming the forum.

So far, even with the US dollar at four-year lows against the euro and six-year lows against the Canadian dollar, overseas investors have chosen simply to hedge their currency risks instead of abandoning US assets.

Those derrivatives were fulfilling two important tasks:
1) Adding an extra layer to the value pyramid in order to absorb money and prevent it from flowing into gold.
2) Providing psychological reassurance for people holding USD denominated assets by making them feel "insured". (In reality those insurances will prove to be worthless as the dollar collapses)

Martijn said...

3) Providing a means for the US financial system to rob everyone holding USD denominated assets

Shanti said...

On paper it looks nice !

Who could benefit most of a revaluation......? (on paper)

FOFOA said...


All this in-your-face market rigging we see so blatantly today is the climax of the Strong Dollar Policy that started in 1994. I think you are definitely on the right track!

The plan was that if they could exercise a relatively small amount of control it would enable them to massively expand the monetary base over the whole world and to reap the power and wealth that comes from a global "inflation tax" that would remain largely hidden.

From the very beginning the Strong Dollar Policy was never about a fundamentally strong dollar. The Strong Dollar Policy has always been about controlling the commodity markets at the margins to enable a global expansion of the US dollar and the US REACH!

It was always about creating the illusion that "strong dollars" will buy you whatever you need well into the future.

The Strong Dollar Policy is not about the USDX nor is it about fighting inflation as Lenon Honor would call its "face value". Instead, it is only about controlling dollar activity on the MARGINS of the system. The cutting edge of the dollar system where speculators dwell.

It is about maintaining the illusion that the dollar is functioning perfectly in both spot markets as well as future markets. As long as product flows to those who take delivery, and as long as prices don't run away, the strong dollar appears to be functioning perfectly in its settlement capacity.

Remember, speculators don't take delivery.

Whenever commodity prices start running away, the speculators are threatening the strong dollar. The "policy" is to punish those speculators with as much pain as possible.

During normal times, the "policy" uses the speculators to create highly leveraged futures markets that can control spot prices by controlling paper supply. But if the speculators ever start to run away from dollars, they are punished to the extreme. This is the Strong Dollar Policy. It is all about market manipulation.

Another came along to let us know that, in time, the world would not grant ANYONE – any political entity – the right to abuse others in the same way. Never again would there be a strong currency policy held over the entire globe. Another was around to see the ‘checkmate’ that gold provided. We are around to see the transition and the end of this phenomenal game.

As Anon said, "That's why A/FOA insisted on going absolutely "physical". A once in a lifetime event." All the hidden "inflation" of the last 30 years coming all at once. And not necessarily in everything. But mainly in those things that were controlled most of all.


Ender said...

@FOFOA's 11:30 post.
Exactly. Well said.
Dig as deeply as you would like into all the other points of view on the topic, but there is not a single one that stands up to the test of time. FOFOA, you have outlined it well.
I absolutely agree that gold plays the checkmate roll, but no political entity will call checkmate! No, the only way a checkmate will play out is through the hands of millions that turn to physical gold as a means to preserve wealth. It will take the a conscious change of mindset of enough people for gold to make the transition. A unstable world reserve currency will speed the mindset change.

FOFOA said...


This manipulation scheme began with a seed, a tiny acorn, and grew into a mighty Oak.

It probably began with Larry Summers' paper, "Gibson's Paradox and the Gold Standard" written in 1988.

Gibson's Paradox was a term first used by Keynes in 1930 to describe his theory that interest rates correlate with the rate of change in the general level of prices.

Summers' 1988 paper spelled out a scheme by which a government could use Gibson's Paradox to its advantage and keep interest rates down and government bond priced up by rigging the gold market. At the time, Larry Summers was a professor at Harvard and his paper was published in the Journal of Policy Economics.

It is also interesting to note that the PPT was birthed around the same time.

Then, in 1994, Larry Summers followed his buddy Robert Rubin into the Clinton White House. In 1995 Summers became Rubin's deputy Treasury Secretary and later his successor.

Follow these two and their network of friends around Washington and Wall Street and you can see the giant footprints of this scheme as it grew from an acorn to an Oak!

This evolution gradually encapsulated Fed monetary policy, the ESF and now the PPT and the NYSE.

This is POLICY. Which is why it is CRITICAL to keep men like Summers close to the ACTION.

Gold, in its limited supply and its wealth reserve function, is David to Goliath. And public perception, as Ender says, is the Achilles' heel of this behemoth in the room.

This is why the MANAGEMENT OF PUBLIC PERCEPTION is so important to them right now. As JS calls it, MOPE! JS says "122 days to go". I wonder why...


Chris Powell on Larry Summers and Gibson's Paradox

Anonymous said...

" strong dollar " : Is indeed the
1/controlled 2/global expansion of the $-unit !

Let us not forget that this (controlled global $-expansion) was ONLY possible because of 2 FUNDAMENTALS :

1/ US-citizens' gold confiscation.
2/ Closing the gold window ($-gold redeemability)

The most evident logic dictates that a third fundamental must be on its way : FREEGOLD !

A recent BIS study on the mercantile China concludes that surplusses will certainly be generated till 2025 (global creditor).
This "force" will certainly meet the strong dollar policy current !

Freegold (3th logic fundamental) means : Don't keep telling us (the wealth generators/owners) what our wealth should be (worthless $$$) !

The $-system/regime has run out of bunker bursting ammo (fundamental 1 & 2). At present the US citizens' gold is not being confiscated physically, but pricewise (POG freeze)!

The surplus generators are absolutely confident that they will keep on generating surplusses because of the (strong dollar) controlled global expansion that is systemic !
They (we) can patiently/confidently wait up until this $-system collapses under its own weight.

Simple logic, no !?

Anonymous said...

JS 122 days ???

More "stimulus" and positive spin is on its way ! Is there another G-20 meeting in US in sept/oct. ?

Will there be a general acceptance to collectively devalue fiat and let the controlled $-expansion (hyper-stimulus) go its way of least resistance in exchange for "free-er" goldprice (JS goldprice projection)?

We can only speculate on the timing as the (stimulative) events unfold.

FOFOA said...

GATA urges SEC, CFTC to probe Goldman trading program

"Dear Friend of GATA and Gold:

GATA today urged the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission to investigate the Goldman Sachs Group Inc. computer trading program that, according to a federal prosecutor, the bank acknowledges can be used to manipulate markets..."

FOFOA said...

By my calculations, 122 days brings us to Friday, November 6th.

G20 is on September 24-25 in Pittsburgh, PA. Why there? I dunno.

G20 finance ministers will meet in Sweden on Sept. 2 (?)

European leaders will meet a few days prior to the Pittsburgh meeting "to prepare a common E.U. position".

Here is Jim's original "130 day warning", where he started the countdown:

130 Day Warning

Yes, that is right. You have a little more than 130 DAYS before MOPE (management of perspective economics) falls into the abyss of loss of confidence in the US dollar.

The event will be the birth of hyperinflation in the US and elsewhere to the horror of the spin media. Crude has been trying to explain this to the public, but so far they have not gotten a clue. Crude strength is being called a hedge against the dollar as fundamental energy analysts are hard pressed to explain a rise from $30 into the $70s with NO pick up in US economic activity and NO massive draw down on supplies. The oil price is an example of the arcane and exoteric mechanism of hyperinflation soon to take gold to $1224, $1650 and then on to Alf and Armstrong’s numbers. This phenomenon is something that the murderous Children of the Corn that run the hedge funds will not accept until it happens.

Happen it will.

130 days is no time at all. Are you prepared?

Jim may be focusing on Martin Armstrong for this prediction. I don't know. In April I posted this on Martin:

"Martin seems to be projecting gold to go to $2,500 around October or November, 2009. But this would be a "normal market development" he says. "Not the end of the world". If we have a more severe turn of confidence, he sees gold hitting $5,000 in that rough time frame. And depending on what happens at the end of April, he says he could see this spike in gold happening as early as September."

Anyone know why Jim is counting down days?

FOFOA said...


"1/ US-citizens' gold confiscation.
2/ Closing the gold window ($-gold redeemability)

The most evident logic dictates that a third fundamental must be on its way : FREEGOLD !"

[QFT = Quoted for truth (aka) Quite f___ing true]

"Freegold (3th logic fundamental) means : Don't keep telling us (the wealth generators/owners) what our wealth should be (worthless $$$) !"

AA - 12 step program to recovery...

1. Admit you have a problem - Check!
2. Something greater is there to help (gold) - Check!
3. Make a decision to accumulate the greater - Check!
4. Take inventory - Check!
5. Admit the transition in process - Check!
6. Give in to the new reality...........

Anonymous said...

Could be the Armstrong crystal ball ? One thing Jim assured is another 130 days intens attention from his readers/visitors/followers. Nothing wrong with this.

GS (comp.trad.prog.): Was it a Russian "mole" (mole and Russian) ?

What is much more important than the GS-program is the "people" and their "strategy" (final goals) behind those programs ! What exactly do they want to achieve ?

And how does it come that the GS program trading is so totally succesfull ? Many others use program trading with much less succes.

It is much more about the hyper-concentration of ruling/controling power ($-FI) ! No hacker/thief is going to break *this* all embracing cartel-power.

But the entire IMFS only functions when "manipulative interventions" are daily practice. We never lived/worked in "free" markets !

So, what is all the fuss about program trading,...without putting it into a much broader context of who is dominating who ?

Martijn said...

I have been to a Dutch program trader. During last year they had only 3 loss days. So it can work. They were however not so much manipulating markets, they were doing only arbitrage and market making.

FOFOA said...


"Could be the Armstrong crystal ball ? One thing Jim assured is another 130 days intens attention from his readers/visitors/followers. Nothing wrong with this."

But is he receiving financial reward for 130 more days?

"But the entire IMFS only functions when "manipulative interventions" are daily practice. We never lived/worked in "free" markets !"

At least not until November 9th, 2009! (The Monday after the collapse! :)))

Anonymous said...

FOFOA's " Give in to the new reality " !!!

This is exactly the hardest nut to crack for every winner/loser !

And who still dares to deny, today, that during the past 15 years, quite a lot of RAW/UGLY NEW REALITIES are seeing the daylight (surfacing) !?

Everybody stays conveniently in the state of absolute denial (green shoot hysteria).

The reason why nobody (except FOFOA) dares to paraphrase A/FOA is that the new reality of paper versus goldmetal has increasingly become visible and that this is a
* VERY UGLY * new reality for the winning dominators ($-system/regime).
That's why the losers who suffer under the $-system are also very reluctant to * expose * this developping new goldmetal reality.

The ECB never mentions/propagates its MTM gold-wealth-reserve concept. We all keep absolutely quiet about it, if it is totally IN-significant.

Anonymous said...

@FOFOA : I stopped the debates about timing/prices when Jim didn't want to answer where he got his first figure ($ 1,650/Oz), from.

@Martijn : So, let's get us a good program for trading,...and...* win for life * !? Smile, mate.
Oh sorry,...forgot to employ two Noble price winners (LTCM).

The promotion-industry of " finance capitalism (-ism !) " will soon be out of business. The ugly new reality.

Martijn said...

This is precisely what the Formula anticipated in 2006.

This is exactly what you were told would happen nearly four years ago, the order in which it would happen, and exactly what it means to markets. Now I am telling you there is 122 days to go.

Martijn said...

Isn't that also the strong dollar policy: making sure enough dollars are recycled and tap off from those streams?

That's why the US had such a large banking sector. To steal from all the paper wealth being pumped around.

Those practices will indeed have to be altered thouroughly once we go to a new, more fair system.

FOFOA said...

"That's why the US had such a large banking sector."

Yup! Lure in ALL the cows then milk them to death! Only now the cows are gone. They are milking each other. And it's not udders they are tugging on!

FOFOA said...

Speaking of.....

I caught the "Beat It" video on TV tonight. Honor has polluted my mind!

Martijn said...

It is hard to get rid of that guy. I too cannot enjoy beat it anymore.

However, he also made me aware that there can be a deeper meaning to many things - albeit not necissarily the beat it video - which I have chosen to consider an enrichment of my mind after all.

Martijn said...

Big Banks don't want California's IOUs

Jimmpy said...

India looks to cut out middlemen on gold :

Snip :

“What we’re trying to do is to create a market so that Indians can sell gold by way of converting into gold bars or gold coins and sell it on,” said National Spot Exchange’s managing director and chief executive Anjani Sinha.

But while a market exists for imported bullion, there is no mechanism for the resale of gold jewelry and its conversion back into bars once it enters the domestic market.

FOFOA said...

California is still in a showdown (Mexican standoff, duel...) with Obama (Summers). It (Cali) will be the next Lehman Bros. We may not have to wait 121 days!

Anonymous said...

Gordon Brown to warn G8 leaders of threat of second recession.

Gordon Brown will today warn international leaders that

---sharp and unpredictable rises in oil prices---

risk "choking off" the global economy and pushing the world into a second recession.

>>> Then WHY isn't G.Brown taking the opportunity for pointing a Big finger to ALL the manipulative speculators ...previous manipulative speculations mis-management with intentional evil purposes (sub prime etc) ...etc...etc...!?

What a gigantic hypocrisy show (ad nauseum)!

Let us repeat FOFOA's conclusion : THEY ARE LOSING CONTROL !


Anonymous said...

About global $-exposure :

When the different economic blocks want to follow the examples of EMU and China to reduce their exposure from the dominant dollar,...they "must" expand their own fiat currencies to push the expanding dollar, away.

That is the systemic fiat devaluation competition race.

The one and only difference between both competitors ($ and rest of the world) is their attitude towards gold/goldpricing.

This specific "difference" in attitude towards gold is crescendo growing in "waves". Cfr. South Korea's recent gold statement (future action).

Anonymous said...

Bloomberg :

July 8 (Bloomberg) -- Huang Xinyuan, who sells mining equipment and pesticides to customers across China’s border with Vietnam, says he no longer wants payment in U.S. dollars and prefers the yuan.

Sales using the greenback at Guangxi Jinbei Group, where Huang is vice president, dropped to 30 percent of contracts in 2008 from 87 percent in 2007. The yuan, which has gained 21 percent since it was allowed to strengthen against the dollar starting in 2005, offers greater stability, he said.

“In recent years, the dollar has gone in only one direction and that is down,” said Huang, 45, in his second- floor office in Pingxiang, a town set amongst karst limestone hills and sugar-cane fields in China’s southwest Guangxi Zhuang Autonomous Region, three kilometers (1.9 miles) from Vietnam. “Settling our orders in yuan removes a major risk.”

Anonymous said...

Deutsche Bank (???) says : IMF is going to sign up on the CBGA-III (september 2009) ???

Who is the ($)IMF going to bribe with 400 tonnes of gold ?
Answer : Those who want to lower their $-exposure ?

Martijn said...

Yep, they've got some more tricks like that.

Anonymous said...

Ghana to get a gold refinery !

Direct barter of the refined Ashanti precious for goods/services !

3% Goes to Ghana rerserves !

>>> China and Rio Tinto have a problem (espionnage/steelprices-?)

Anonymous said...

The emergence of China as a global power in effect relativises everything. The west is habituated to the idea that the world is its world, the international community its community, the int­ernational institutions its institutions, the world currency – namely the dollar – its currency, and the world’s language – namely English – its language. The assumption has been that the adjective “western” naturally and implicitly belongs in front of each important noun. That will no longer be the case. The west will progressively discover, to its acute discomfort, that the world is no longer western. Furthermore, it will increasingly find itself in the same position as the rest of the world was during the west’s long era of supremacy, namely being obliged to learn from and live on the terms of the west. For the first time, a declining west will be required to engage with other cultures and countries and learn from their strengths. The United States is entering a protracted period of economic, political and military trauma. It finds itself on the eve of a psychological, emotional and existential crisis. Its medium-term reaction is unlikely to be pretty: the world must hope it is not too ugly.

Extracted from “When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World” by Martin Jacques, published on 25 June by Allen Lane (£30) © Martin Jacques 2009

The Mad Scientist said...

Martijn, FOFOA,
In light of your discussions on the workings of evil and Good girl gone Bad, consider what ScotiaBank has done with its short position on Gold and Silver over the years.

Tekin said...

Pedal to Metal

G-8 Leaders Spar Over Stimulus, Leave ‘Exit Strategies’ Open

July 8 (Bloomberg) -- Group of Eight leaders failed to bridge differences over combating the steepest recession since World War II, letting each country decide when to stop infusing money into the economy.

President Barack Obama pressed for the door to remain open to more stimulus measures as a renewed stock-market drop stirred concern that $2 trillion spent worldwide so far hasn’t jolted consumers and businesses back to life.

“Exit strategies will vary from country to country depending on domestic economic conditions and public finances,” leaders of the eight economies -- U.S., Japan, Germany, Britain, France, Italy, Canada and Russia -- said in a draft statement today at their annual summit in L’Aquila, Italy.

Divergences over what to do next underscored the G-8’s limited room for maneuver after the biggest borrowing spree in 60 years failed to halt rising unemployment and left investors doubting the strength of the recovery. The MSCI World Index of stocks slid for a fifth day. The 23-nation index has dropped 7.3 percent since a three-month rally ended on June 2.

“It’s a warning not to take the foot off the accelerator just yet as economies still need as much stimulus as possible,” said David Page, an economist at Investec Securities in London. “It’s important not to react too soon to early signs of a pickup or take false comfort from them.”

Anonymous said...

@ Anon - 6:55

As an enthousiastic Eurolander, I'm afraid/pessimistic that we go down the same (Western) path.
The old continent is most probably going to miss the (great) opportunity for revival. Maybe we might suffer less than the US ? Small confort.

Euroland cannot yet make up its mind and choose. W're getting more divided by the day. And that was not the purpose of the EU.

Anonymous said...

GB was used as a Trojan Horse into the EU by the US. Therefore as their obedient slave the EU is going to suffer for a long time as it was never able to emancipaton.

Martijn said...

Well, the've also started selling packed securities again.

Guess they've finally figure out how to revive the economy for real...

Ishkabibble said...

I think it's great that the securities are back on the market again. All they needed was a little shrink wrap to keep the waste from leaking out, a spritz of spray paint, and a fancy new bow.

I think banks will need to be a little more creative than this. However, I don't put it past them to find a way to dupe citizens again. We could well see a couple more crafted upturns... short term of course.

FOFOA said...

Found this piece on JS. It's more than a week old, but even ignoring the questionable "Hal Turner" connection, there are a few interesting thoughts in it.

I personally agree with JS in his summation, "There is a very simple way to know. Whatever is officially said guarantees you the opposite."

Everything suggests that the American bonds seized at Chiasso are real

"From confidential, usually well-informed sources, AsiaNews has learned that this type of paper money was issued less than ten years ago (in 1998), although it is difficult to know whether those seized in Chiasso are authentic. But the fact that the release of this particular State Treasury was not completely in the public domain tends to exclude the possibility of counterfeiting. It highly unreasonable to suppose that a forger would reproduce a State Treasury not commonly in circulation and of which there is no public knowledge."

Of course, in the case of these bonds, we'll probably never know the truth if it is as we suspect. The system will likely fall apart first. But if my suspicions are even partly correct, this is a big fissure in the structure of a system that is purportedly sound. Nothing new of course. But one of many that suggest they have lost all control and it could collapse at any moment in time. 121 days may simply be a sufficiently sized window.

FOFOA said...

@ ANON: July 7, 2009 1:53 PM - "A recent BIS study on the mercantile China concludes that surplusses will certainly be generated till 2025 (global creditor).
This "force" will certainly meet the strong dollar policy current !"

I think you are on to something here... "Deficits without tears"

I assume you have already read this short article. If not, it is good. MK linked it.

The problem with economic "flexibility" has ALWAYS been the fractional reserves of gold. The INSUFFICIENT fractional reserves.

This is why the gold window closed. Since then the imbalance has grown much greater! The fractional reserves (to dollars outstanding) are MUCH MORE FRACTIONAL now.

Even oil reserves are too small at this point to mop up the excess dollar reserves. A debt monster was required.

Now that the debt monster has shown its weakness (DEFAULT), only gold can bring the world back into balance. Only gold can solve the ever-growing DEFICIT/SURPLUS imbalance.

And there is only ONE way it can do this... FREEGOLD

There is NO OTHER WAY!


Anonymous said...

" The confidence break down " !?

CNBC reporting on G-8 show in Italy : CNBC wanted only ONE message to get through >>> THE DOLLAR IS TO REMAIN THE RESERVE CURRENCY !
No other currency (or basket) can possibly replace the dollar reserve.

This is an as great contra-indicator as one can possibly imagine ! Meaning that $-confidence is already melting away.

The Chiasso State Treasury case : Another blatant fact of $-confidence loss, regardless of any details.

Those who already lost confidence in the $-system/regime's future only "question" the dollar and only subtly suggest an alternative through a dollar-international institute (IMF) . This is the soft $-erosion approach. Much more cruel than simply dumping the $-papers in one go. It is the exhaustion stratego of the $-fortress.

Getting the oilprice back down should be percepted as strong dollar indication. But this is in conflict with the green shoot theory.
Evidence that the controllers increasingly are also losing control over their spin-logic (if any).
It will all end with everything making no sense at all, anymore...TOTAL LOSS OF CONFIDENCE !

And then everything will detoriate VERY fast (phase transition-Armstrong).

FOFOA said...

California should probably make the top of this list, since it is larger than all of the others (?). But it won't. It will remain encapsulated in the "green zone".

California is already taking the Gideon Gono approach to internal struggles, printing funny money.

It will likely pay off its funny money in October with more funny money... and so on. There is no solution in sight at this point. The downward spiral continues.

Question: If Larry Summers agrees to let Obama bail out California this summer, will it signal a weakness in Summer's own "Strong Dollar Policy"?

I think it will show a recognition of being caught in the old Catch-22.

It will be interesting to watch. I give a bailout about a 50/50 shot.

Either way it goes is ABSOLUTELY TERRIBLE for the dollar. Summers is probably running computer iterations right now to determine which is the least bad for him. This is the Catch-22. And it is one more reason 121 days may be a sufficient window to bank your reputation on.

Anonymous said...

@ FOFOA : YES Sir !
Deficit-Surplus Global Imbalance of SYSTEMIC nature !

The $-regime begged (still begs) the surplus generators to be "responsible" and contribute to global stability and growth. Why on earth should the responsible surplus producers help the deficit spenders out !?

As you concluded before : The deficit spenders will have the limits of their system and recognise the "balancing" (now re-balancing) role/function of gold-wealth-reserve "exchanges" (cfr. IMF gold)!

Indeed Sir FOFOA : Nobody ever suggested (during the past 15 years) a serious solution to get out of this Systemic Debt Crisis ! Only A/FOA saw this freegold rebalancing solution coming as a natural inevitability.

The fact that Rubin/Summers accelerated exact the opposite of freegold in 1994 (Gibson paradox)means that they wanted to avoid the rebalancing and consolidate the $-dominance and the systemic global imbalance that goes with it ! They were buying precious $-time. The $-time is running out.

Universally exchangeable Freegold will have to represent a big portion of the REAL (tangible) global wealth. The $-debt-universum is representing nothing anymore.

Anonymous said...

Next step in the global rebalancing process is suggesting to price oil in a currency-basket-unit (SDR-like) !

That will be a much less subtle suggestion and result in a big (fatal) blow to $-confidence.

The $-system must be increasingly cautious in the way it treats the $-oilprice !

FOFOA said...

In my estimation, California is a good test-case for how the pension crisis will be handled. They have many similarities.

Most likely, though, pensions will all be wiped out before the crisis is even considered.

Those who are sitting on beefy pensions without a care in the world are like the diners at a sidewalk cafe as a suicide bomber takes his seat wearing an oversized coat.

As I said long ago, if I had a pension I would take the cash value now while they are still lying. Once the lying (MOPE) stops, it will no longer be an option. But then again, I am not a financial advisor and I do not have a pension, so please do your own due diligence and speak with your Registered Financial Advisor. I am not making any recommendations here! Just sayin' what I would do.

In California, Even the I.O.U’s Are Owed

LOS ANGELES — The only thing worse than being issued an i.o.u. rather than a check from the State of California may be not getting the i.o.u. at all — at least in time to meet the deadline of your bank.

But across California on Tuesday, many vendors who had been told they would receive the i.o.u.’s instead of actual money said they had not yet received them. And if they do not arrive soon, they may be hard to turn into cash.

Last week, the state began issuing the warrants for the second time since the Great Depression. It ran out of cash to pay its bills as the Legislature and the governor failed to resolve the state’s $26 billion budget deficit.

Millions of dollars in i.o.u.’s, known as registered warrants, began rolling off the controller’s presses in lieu of checks to pay taxpayers, vendors and local governments. The warrants offer a 3.75 percent interest rate when they mature in October.

In most cases, banks around the state have agreed to honor the warrants only until Friday, in hopes that the deadline will prompt lawmakers to reach an agreement. As of Tuesday, 71,810 warrants to the tune of $108 million had been printed, but many had not yet been received.

“We are out of cash now,” said Carlos Flores, the executive director of the San Diego Regional Center, which provides services to Californians with developmental disabilities. The center is awaiting a $12 million warrant. “I can pay my staff next paycheck, and that’s it,” Mr. Flores said...

FOFOA said...

@ ANON: 2:06

This is the tightening noose of the Catch-22! The Strong Dollar Policy is becoming self-defeating!!

"Heads you win, tails I lose"

They cannot win anymore! Even with fancy algorithms!

Anonymous said...

The $-system will keep painting all the coming bail outs, "green" !

WHO (what majority) is going to "oppose" this green-painting ?

What are the inevitable disastrous consequences of even trying to get back to the orthodoxy ?

The "flight forward" in hyperinflations is the temporary least painfull option left,...but with the same disastrous ($-catastrophic) outcome.

Day after day, the spinners try to show the light at the end of the systemic $-debt tunnel. I hear them talking,...but don't see any light.

FOFOA said...


"The "flight forward" in hyperinflations is the temporary least painfull option left,...but with a WORSE disastrous ($-catastrophic) outcome."

(FYP = Fixed your post)

Anonymous said...

Good correction FOFOA !
Good night and thanks.

FOFOA said...

NP - Thank you.

Good night.

Here's a *flash* I haven't even finished reading yet...

Has GS been frontrunning the entire market?

Still reading to determine if this is a valid claim...

Shanti said...

Now, France is joining the club !

Who's next........ Germany ?

FOFOA said...

**FLASH** Goldman Code Theft BOMBSHELL?

Was Goldman Sachs front running the entire market? Inquiring minds want to know!

The significance is not so much the question being asked as it is the fact that it IS being asked.

"Folks, I have no way to know what the code in question does, but if there's anything to this - anything at all - there is a major, as in biggest scam of the century - scandal here - something much, much bigger than Madoff or Stanford...

The last few days the the market has traded "organically." I and many other market participants have noted that prior to the week before July 4th the market had been acting "very odd" - normal correlations between interest rate, foreign exchange the the stock markets had been on "tilt" for the previous couple of months, with the amount of "tiltage" increasing dramatically in the last three or four weeks. In fact, many of my usual indicators that I use for daytrading had become completely useless. Suddenly, just before the July 4the weekend, everything started correlating normally again. I have no explanation for this "light-switch" change but it aligned almost exactly with the day the NYSE had "computer problems" and extended trading by 15 minutes. Was there a configuration change made to their networking infrastructure, one asks?...

If this happened it is a case of literal robbery of every market participant for the entire duration of the time that the code in question was executing on the network, with losses to market participants potentially running into the hundreds of billions of dollars."

"Apparently, Goldman Sachs has been booted out from doing computerized quant trades at the New York Stock Exchange...

Goldman Sachs may just possibly have used security access codes and built a system to acquire trading information PRIOR to transaction_commit time points at NYSE.

The profitability of this split-second information advantage would have been and could have been extraordinary. Observed yielding profits at $100,000,000 a day...

GS has special access inside the system from its status assisting the Working Group on Financial Markets (colloquially the Plunge Protection Team) created by Presidential Order two decades ago. GC also acts as Special Liquidity Provider for NYSE..."

"Lastly, and somewhat most peculiarly, Jean-Pierre Aguillard (together with his co-pilot), died in a freak glider accident over the weekend... his firm Capital Fund Management, with $2.7 billion in assets, is one of the largest French hedge funds and at the forefront of electronic and program trading...

//In addition, CFM also uses NYSE Technologies’ Data Access and Reporting Tools (DART) Entitlements to control user and application access to the market data feeds and report on unused or underused market data services... real-time tick capture adapter that consumes data from any industry standard or ODBC database for post-processing of internal data. “CFM is a pioneer in the adoption of pure electronic trading systems generating value for their investors. Being trusted with their business in New York and Paris is something we’re extremely proud of and validates our strategy in serving the buy-side,” said Stanley Young, CEO of NYSE Technologies and Co-Global CIO of NYSE Euronext.//

Zero Hedge extends its condolences to Aguilard's family. We, of course, hope that the fund's recent close entanglement with the NYSE for program trading facilitation and the loss of the fund's CEO are purely coincidental, especially in these difficult times for the integrity of program trading courtesy of Goldman Sachs' recently disclosed scandals."

FOFOA said...

It is also noteworthy that this story seems to have caught the attention of not only the FBI, but also:

US Army
NY City Police Dept.
and Department of Homeland Security!

Cryptogon set an IP trap on Google:

"It’s a mystery to me why more organizations don’t hide what their people are doing online (ask any 12 year old computer enthusiast how this is done if you don’t know), but for whatever reason, many of them don’t."


He's even gotten a number of hits from inside Goldman Sachs!

FOFOA said...

If you think YOU are having a bad day, these should cheer you up...

Burning pain

Burning desire

Down the hatch

FOFOA said...

Only WE get to control the markets!

"WASHINGTON — Reacting to the violent swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering new restrictions on “speculative” traders in markets for oil, natural gas and other energy products...

The Commodity Futures Trading Commission said it would consider imposing volume limits on trading of energy futures by purely financial investors and that it already has adopted tougher information requirements aimed at identifying the role of hedge funds and traders who swap contracts outside of regulated exchanges like the New York Mercantile Exchange.

“My firm belief is that we must aggressively use all existing authorities to ensure market integrity,” said Gary Gensler, chairman of the commission, in a statement. He said regulators would also examine whether to impose federal “speculative limits” on futures contracts for energy products...

The government’s second goal is to shed more light on who the players really are.

The commission also announced that it will pull back part of the veil on the oil and gas markets, publishing much more detailed information about the aggregate activity of hedge funds and tapping into new information about traders who swap energy contracts outside of traditional exchanges..."

FOFOA said...

Randy's back, and he has a post up about the California situation with a couple short videos.

Martijn said...

I've finally figured out wat those green shoots are: more greenbacks growing out of everything - limitless printing.

Anonymous said...

That Gary Gensler has also worked with GS!


Jimmpy said...

One of the most succesfull tactics : Divide and conquer

Disinfo claims Saudis OK Israeli raid on Iran :

I think the US urgently needs a sideshow turning the spotlight away from their economic troubles.

Martijn said...

So far John Nadler was not so wrong after all

Anonymous said...

ECB (ESCBs) gold : Have close look at the figures !

Thomson Reuters
ECB-Gold reserves down 8.5 bln euros after revaluation
07.08.09, 10:29 AM EDT

FRANKFURT, July 8 (Reuters) - Gold and gold receivables held by euro zone central banks fell by 8.5 billion euros to 232.128 billion euros in the week ending July 3 after a quarterly revaluation, the European Central Bank said on Wednesday.

Net foreign exchange reserves in the Eurosystem of central banks fell by 10.5 billion euros to 206.2 billion euros, the ECB said in its weekly consolidated financial statement.

Gold holdings fell mainly due to the quarterly revaluation. One euro zone central bank also sold gold for 5 million euros, consistent with the 2004 Central Bank Gold Agreement, the ECB said.

The ECB's balance sheet stood at 1.911 trillion euros.

For details of the report, please see the website:

>>> Note : " Quarterly Revaluation " ! Why not saying MTM of gold reserves ?

" Re-valuation " = To value again.
Leaving out that the revaluation is being done at market prices.

What if $-holders start to dump some dollars and buy gold, to rise the market-price (value) of their gold reserves !?

Anonymous said...

" What if the US (others) had to pay its debt in gold " ?

Governments are fighting this one... just as they did the last one... but with much more money. The cost is in the trillions – most of it in the form of public debt. How will these debts be paid? We all expect that they will ultimately be eased by inflation – in full or in part. But suppose the feds had to pay up in real money?

Colleague Simone Wapler compared government debt to government gold. The US has gold worth about $241 billion, she reports. Its official national debt is $11.5 trillion. That gives it a debt/gold ratio of 48 – meaning, the feds have 48 times as much debt as gold.

Britain is even worse. Prime Minister, then Chancellor, Gordon Brown sold much of England’s gold at the worse possible moment – about 10 years ago. This leaves the island with only $9 billion worth of gold compared to $1,274 billion of government debt – a ratio of 1 to 139. But Japan is the worst of all. It has $23 billion worth of gold and $7.3 trillion of government debt, for a ratio of 1 to 323. (Of course, Japan has vast holdings of dollars too!)

What nation has the best gold/debt ratio? Switzerland. It has only twice as much in government debt as it has in gold.

Martijn said...

The US gold holdings are not marked to market, in reality they have quite some value in gold - if they still have that gold.

As for the eurozon: did gold prices really drop that much this quarter, or could they have sold of some?

Martijn said...

As for the oil prices: yes they are being capped. Pretty strange indeed...

However, should oil rise too much now it could trigger inflation, and perhaps even increased demand for gold...

Anonymous said...

Gladiators in the FOREX-arena !?

Swissie and yen rise too much too fast : They have to sell their currency and buy € and $ !


Anonymous said...

@ Martijn : Check €-goldprices here (inclusive charts)

€-gold : From 25.300 €/Kg >>> 21.300 €/Kg !

Anonymous said...

TA/TI from Trader Dan at JS :

Most probably, JS derived his 120 days (confidence break down) from TA/TI. Another 120 days of goldprice (flat RSI range) consolidation before a major move (up-?) has to be produced.

Goldprices also fall under coded program trading as to produce artificial price waves on top of the primary uptrend on the fundamental basis.

I am a "buyer" now !

Martijn said...


Gold has indeed lost some. I know of many willing to buy, but not entering the market as it continues to trade below EUR 680/Oz.

The Euro-price is by far the best indicator.

As for the currencies: the dollar will be struggling it's power. As long as the dollar proves powerful enough, other currencies will devalue along with it, as are the Yen and Franc at this moment. Continuing to dol so will irreversibly lead to more money printing.

Martijn said...

Here is a bit of discussion about the oil market. It is a power play; Putin does not like it, and the program traders are said to have screwed the market.

Martijn said...

Some more on how inflation might find it's way into the economy.

Martijn said...

Interesting developments alltogether. As the US is printing like madmen, both Switzerland and Japan intervene to keep their currencies "pegged" to the dollar. On the long term this will force them to print.
At the same time the US tries to directly control the price of oil. This hits both program traders as oil-exporting countries. Indirect price controls by means of Crap and Trade are also underway.

What we are trying to find is the fundamental logic in the market. At the same time we are flashed with surprises.

Markets really can stay irrelevant for a long time...

Anonymous said...


Martijn said...

I am finally beginning to really understand why markets have turned into casinos. One of the little things that have earned the US any mony over the past decade was snooping of financial streams - hence the large banking industry. Now that those streams drying up somewhat, the ideal way to bring in more money is by organizing a massive casino. Casinos can be quite profitable as we all know...

Martijn said...

Did you guys already see this Marc Faber clip from June 19th?

Some interesting historic information.

Martijn said...


America has become a socialist country indeed. But it is so simple it must have been somewhat deliberate.

What happend was that individuals bought homes they could not afford by loaning money from the bank.
As these individuals could not afford the homes, they will be repaying their loans. So firstly banks forced people that had money to buy homes for people that did not.
Now the state is buying those loans from the banks. The banks and the people that had saved some money are allowed to keep some of it, whille now all people owe to the state and will pay either through taxation of inflation.

This system is somewhat similar to Europe, the difference is that Europe first decided to adopt such a system, informed everyone and than did it, while the US first did it, and is now informing people.

Anonymous said...

For Martijn : €-goldprice P&F chart from the Privateer :

650 €/Oz : A nice buying price (imvho)

Martijn said...

I bought in the fall of last year at the lows. I bought some more a couple of months back.

650 could be ok. Perhaps it will go even lower. I think the best thing to is wait for prices structurally above 680.

But I have enough gold for the moment, and some silver too (both physicall). The next move up I'll buy some (leveraged) paper. Buying physical is too much trouble, and I have enough for protection. If the situation really does worsen a lot more I'll be sure to buy more physical, but not now.

Martijn said...

What happend to that story of the UAE (if I recall correctly) demanding delivery of their physical from London?

Did they get it yet? Was it there?

Tekin said...

Urban survival techniques. Avoiding trouble.

"...How to survive the most dangerous part of the city without ever being seen, or even thought about...First besides gold and guns, your crisis plan should include stocking up on food...If the riots happen, the rioters will attack the supermarkets and food places first. You don't want to be in line fighting for your share. Better to buy ahead...The next thing to survive in the jungles the cities will become is the advice I gave earlier in my last essay on how to blend in. Hide yourself in plain sight. I cannot give you specific advice since I don't know your situation. All I can say is sit down while you are calm and relaxed and think of what may work for you. Now is a good time...The last thing to stay invisible is to give the rioters, the government, and the opportunists another target. You are laying low. I promise there will be plenty of fools who will be showing off."

Martijn said...

Doomsday is way too much. We basically have the technology etc. to maintain a rather high standard of living. Some people however believe that as soon as dollars become toilet paper, all productive assets become turds. That will not happen, many assets will remain functioning.

However, some minor trouble could arise, e.g. food shortages for perhaps a couple of days. So stacking up some food will not hurt you. I guess most of those survival tips won't hurt you. However, don't scare yourself too much, it's bad for your health.

Martijn said...

NYSE asks particpants to stop reporting on program trading They're covering someone.

"Incredibly Shrinking Liquidity" as Goldman Flushed Quant Trading this is about decrypting tapped information.

Don't forget to occasionally check out the Goldman 666 site
If you ask the Financial Times, one "rogue banker" is to blame for the recent spike in oil prices. Ask others and all fingers point to Goldman Sachs (as reported here April 10, 2009, the story of Semgroup is an interesting one, perhaps FT would do itself well to acquaint itself with that particular tale?)

Further down: Proving oil-trading manipulation is difficult. But numerous people familiar with the events insist that Citibank, Merrill Lynch and especially Goldman Sachs had knowledge about Semgroup's trading positions from their vetting of an ill-fated $1.5 billion private placement deal last spring. "Nothing's been proven, but if somebody has your book and knows every trade, it would not be difficult to bet against that book and put the company into a tremendous liquidity squeeze," says John Tucker, who is representing Kivisto.

FOFOA said...

G-8 leaders to receive books on Canova, gold coins
10:29 AM EDT, July 8, 2009

World leaders attending the Group of Eight summit opening Wednesday in Italy will each be presented with a gift from the past and one for the future.

Handmade books portraying works by Neoclassical sculptor Antonio Canova, as well as gold coins representing an imaginary future world currency will be given to the participants at the opening of the three-day summit...

The coins, made by Belgian Luc Luycx, who designed one side of the Euro coins, are called "eurodollars," in a symbolic call for a common currency to unite Europe and the United States.

They have a value of euro2,800 ($3,900) and were produced by the United Future World Currency, a group pushing the idea of a global currency...


Anonymous said...

BIS : Crisis story,1518,635051-6,00.html

The reason why this BIS-story was worth reading for me is my conviction that the Crisis is (deliberately) "organized".

The systemic nature of the debt-crisis was sooner or later going to result in loss of control for the $-system/regime, anyway.
How convenient to execute a controlled demolition in order to regain (absolute) control when everything is ruined.

Read the story and judge fr yourself if this thought has any merit.

Anonymous said...


As Head of Special Projects for the Italian State Mint and Printing Bureau, in 1997-98 Dr. Sassoli came up with the idea of a new project for 2000, entitled “Gold for the Third Millennium – The world united by the wings of peace”. The project involved the joint efforts of the Italian State Mint, the Royal Canadian Mint, the Cape Mint of South Africa, the Casa de Moneda (Mexico), and the Perth Mint Australia. This would later be considered as a prelude to the UFWC (United Future World Currency) project.

>>> Note that the countries mentionned are having gold/silver-mines !

The prices for the coin-designers coins !

Do you remember A/FOA talking about gold coin distribution. (vending machines-?)

We continue to watch it all together...:)))

FOFOA said...

@ ANON :

I had a feeling there was more of an underlying current to this gold coin story. Do you know anything about this "Belgian Luc Luycx"?

Anonymous said...

Anon 12:37

Next step is asking yourself "WHY?"
If even "DER Spiegel" comes with such an article! M. Taibi has covered it even better.

Anonymous said...

About the eurodollar idea :

We have some academics who still ponder about a world-currency representing a balanced basket of commodities.
But all these ideas remain purely "academic". After reading the text (link) you will realize that the ideas are rather symbolic.

The (old-strong) trans-atlantic lobby in the EU is dying out.

There is ONLY ONE real money that can fly over East AND West : FREEGOLD !

All gold-substitutes (SDR-!) will fail (be not functional).

Anonymous said...

it's just a matter of symbols quite plain. A. Canova worked with marble, their "sculpture" is in financial material. That is very Italian mentality and very transparent.Why didn't Berlusconi buy some DVDs like Obama for Brown? Why not some Italian painter?
And Pope calls for "world political authority"
And someone pays for les grands seigneurs.

Anonymous said...

were did you dig that from???
One way of understanding the future debate over the Eurodollar will be to look at which interest groups will come out in favor of a currency union and which will oppose the currency union. In the case of a Eurodollar currency union, direct losers would be few. Although there might be ideological opposition, economic opposition would come mainly from firms that would fear that the currency union would favor large multinationals at their expense.

Unfortunately, Fofoa, this seems to be just what conspiracy theorist say. I don't think it would be very convenient for the people un EU and US. Now the elitev just "arrange" the last details in order to fill their pockets. This new "currency" is going to be the new combined hegemony of USA with their vassal
EU! Dreadful!

Anonymous said...

" Collapse of the System "

Speaking about the agenda of next week's Munich session of the German-Russian Petersburg Dialogue forum, De Maiziere said that the difference between eastern and western Germans is that the easterners view the present global economic-financial crisis as a crisis of the system, whereas the westerners still view it as only a crisis like many before, within the system. De Maiziere explained that, having gone through the collapse of the bankrupt socialist system in 1989, eastern Germans feel that what they are watching happen today, is something they know from 20 years ago.

Martijn said...

That Spiegel story is interesting indeed. I bought it on paper in German yesterday having to wait somewhere.

Some notes:

Greenspan was long a member of the BIS board of directors and was effectively White's superior. As a fervent champion of the free market, he advocated the model of minimal intervention.
Is keeping interest artificially low really the same as minimal intervention?

But most of them were behind Greenspan, because his system was what they had studied at their elite universities.
Universities really can pollute minds. Enough economists are wasted these days with Kenyan nonsense.

But Greenspan, the champion of free markets, remained impassive.
Againg: was Greenspan such a freemarket guy? Some said so, but was he?
He did off course had to cut some regulations in order for the US banking system to be able to snoop of international dollar streams (strong dollar policy), but still.

These comments show that the central bankers knew exactly what was going on, a full two-and-a-half years before the big bang. All the ingredients of the looming disaster had been neatly laid out on the table in front of them: defective rating agencies, loans repackaged to the point of being unrecognizable, dubious practices of American mortgage lenders, the risks of low-interest policies. But no action was taken. Meanwhile, the Fed continued to raise interest rates in nothing more than tiny increments...
...In the March 2006 BIS quarterly report, the Basel analysts described, once again, the grave risks of the subprime market. "Foreign investment in these securities has soared," they wrote. They also cautioned that there were "signs that the US housing market is cooling" and warned that investors "may be exposed to losses in excess of what they had anticipated."
This is true, and it still puzzles many it could happen.

Ben Bernanke, who succeeded Greenspan as Fed chief in early 2006, was especially deaf to White's warnings. When he presented his biannual report on the state of the economy to the US Congress on July 19, 2006, he made no mention whatsoever of the subprime risk.
Again mind boggling.

"Take the Enron example," he says. "We analyzed the disaster and found that 12 different levels of the government malfunctioned. This is part of human nature."
This is true for large, complex systems with distributed responsibility. It does explain some of the deficiencies.

This is the sort of thing that worries him. "That's when you have to ask yourself: Who exactly is controlling the whole thing anymore?"
Aren't we all asking that?
Also interesting is this one: Why The Fed is Depreciating the Currency by Howard Katz

FOFOA said...

In an unbalanced world you cannot simply introduce a new currency by fiat and proclaim "PROBLEM SOLVED"! Nothing is solved until the existing imbalance is corrected.

A one-world currency is possible, but ONLY AFTER the balance between the East and West is dealt with.

Please tell me one way OTHER than freegold that this imbalance can REALISTICALLY be corrected to the satisfaction of the wealth producers.

YES - The elite are lining their pockets with GOLD! Believe it! And the US will likely reveal it still has TONNES of gold.

Martijn said...


Do you have a link (may be in German) on this DeMaiziere quote?

Martijn said...

And the US will likely reveal it still has TONNES of gold.

Quite possibly so, but that would somewhat contradict many GATA and other claims, wouldn't it?

Martijn said...

I doubt a world-currency to be that efficient, at least not when that currency is the only one used.

The theory on optimum currency area's argues against it.

FOFOA said...

Not if you understand the meaning when I say "possession will be 9/10ths of the law". Paper claims will be settled in paper.

Some gold has likely left physically. Most has left on paper only. Most of the physical movement came from OTHER CB's.

FOFOA said...

I don't think there will ever be a "one-world currency". I only said it was POSSIBLE once things are in balance. I see MANY world currencies in competition, without one master.

Anonymous said...

Well, it should not be just a matter of currency, if gold or fiat. Many people around the world are suffering now for this "reform".If Ameropa is to fight for supremacy having gold as currency it would not make a better world for the future. Even having gold in your pockets we will not feel happier under the pending circumstances.And the hardship to achieve this goal will be long and painful.

Martijn said...

And gold is the most user friendly commodity there is.

That might be very true indeed

Anonymous said...

@ Fauvi : What I want to illustrate are all the thoughts and forces that compete in this complex transition process.

As an (independant-outside-neutral) observer, I wish to put everything on the balance as to decide in what nest to put which eggs.

A crisis is not a SYSTEMIC CRISIS and vice versa !

All this boils down to how much goldmetal do I accumulate !? 5% - 50% - 95% ? What about other tangibles and/or paper ?

I am not trying to reinvent sliced bread and therfore want to know what all the others have been/still are, thinking and doing.

Guessing the future is a fascinating occupation. I use all the info available as my crystal ball.

Martijn said...


And, what does your portfolio look like?

Martijn said...

Would it be helpful to anyone that this Goldman stuff is happening at the beginning of the holiday season?

FOFOA said...

Here is the game right now... It is no longer sustainable, therefore it is no longer about dollar hegemony. It is now about INDIVIDUAL SELF PRESERVATION. The scorched earth retreat of the elite!

What matters is not how it SHOULD be, that is a socialist dream. What matters is how it IS.

The paper casino market sets the price for gold, because only a few are using that market for physical accumulation.

But on the sidelines much gold is changing hands at whatever price the casino sets.

Here is the flow -

Gold in: Cash4Gold

Gold out: Back Door off-market sources (These flows DO NOT affect price discovery! Same bars as COMEX, no effect on price!)

Meanwhile the refineries and dealers are making a killing off the margins! And the sheeple are getting SHEARED!!

FOFOA said...


Look at last year! July 15 - Aug. 15 was the BLITZKRIEG of dollar/commodity manipulation. Then one month later they lost control!!!

Anonymous said...

@ Martijn : Since 1999/2001, my savings are 90% goldmetal.
Have no goldmine or any other paper anymore.
Am still accumulating goldmetal on price weakness with the new savings.

Know nobody else who is that crazy :))).

I have NO problem selling the goldmetal stash within one second if and when I realize being wrong.


( Only buy as much gold as you think understanding it - A/FOA )
Otherwise leave it alone...
Only my personal opinion for amusement. No investment advise or whatsoever.

Anonymous said...

"Know nobody else who is that crazy :)))."

You do now!!

Anonymous said...

this crisis has to become very, very ugly. Especially for US sheeple. It is for them designed, as they are not used to changing currencies so that they have to BEG for the next CHANGE.We,in EU, will not be that bad affected except jobless people and that in a way which is not as bad as in US. When the American people will be absolutely down, after the next bailout, when it will be proven that there is no help, then they will get in with some proposal. Meanwhile there might be some more flu to put the blame on it, maybe some oil price problems and the solution for that stupid "amero" pegged to gold will come. The direction is given: stronger gov's, more influence and that's it. The Europeans will be said that nothing has changed for them, that the poor Americans want to adopt the Euro, that the new currency will be stronger. Of course, it remains interesting which role is to be settled for gold. The currency change will take place at the same time when establishing its role, a all in one measure against the "crisis"!!!
I think therefore that the euro is still powerful, will remain powerful and only the dollar has to be destroyed. And our CB will be the BIS.

Anonymous said...

" Buffett said unemployment had "a ways to go" and he would not be surprised to see it hit 11 percent before it recovers.

"I'm not predicting it but no that would not surprise me," he said of the 11 percent figure."

--And now the BEST of it:

"We're going to come out of this better than ever, the best days of America lie ahead but not next week or next month," he said."

Funny how he seems to know more
than other say...of course, just a coincidence,Buffett speaking like that.

Ishkabibble said...

"We're going to come out of this better than ever, the best days of America lie ahead but not next year or near decades," he said."

There, fixed it for you.

Martijn said...

Look at last year! July 15 - Aug. 15 was the BLITZKRIEG of dollar/commodity manipulation. Then one month later they lost control!!!

Indeed so. During the summer volumes are low, and the markets are easy to control.

September/October it might happen...

Martijn said...

Btw Buffet also said a new stimulus was needed: we only took half a viagra the first time, and it was not enough.

Wendy said...
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