September 3, 2012

Can printing money alone save us?

Posted in Sunday Business Post · 169 comments ·
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This week, the world’s most powerful central bankers, led by Ben Bernanke, will hook up in Jackson Hole in Wyoming for their annual chinwag. This year, Mario Draghi will not be going, as he has some urgent business to attend to in Europe. However, like no other year, the chitchat of these individuals will determine the path of a global economy which is increasingly dependent on infusions of cheap credit from central bankers.

A few months ago in this column I wrote that this would be the “year of the central bank”, and it has pretty much turned out this way.

This week we are going to take two different angles – one American and one Spanish – to try to answer the main question perplexing financial markets these days, which is: can central banks save the day, or is each round of monetary easing simply pushing the day of reckoning out further?

We will try to answer this before the expected announcement this week from the ECB about what it intends to do about buying government bonds in the months ahead and – probably more crucially – before the German constitutional court ruling on September 12, on the legality of using German money to bolster the eurozone’s stability funds.

But first let’s examine what is going on the US and what Ben Bernanke is expected to announce, or at least hint at, in his Jackson Hole speech.
The economic news in the US is at best patchy. Second quarter GDP growth was upwards, but it is nowhere near as robust as it has been in previous recoveries. Unemployment is still far too high, and America is deleveraging at a ferocious rate, paying back debt which was built up in the Noughties boom.
While the private sector is deleveraging, the public sector is taking on more and more debt. This is quite normal because, after all, if we are all saving, who is going to do the spending? However, the figures for US debt build-up are quite startling and are worth having a look at.

Last week, US federal debt rose to over $16 trillion. Last year the figure was $15 trillion. It took 200 years to accumulate federal debt of $15 trillion, it took less than nine months to add another $1 trillion.

As Bill Bonner of the Daily Reckoning blog points out: “The average interest rate paid on this debt is only 2.13 per cent. At that low rate, the cost is only about $340 billion in interest payments. Were the interest rate to double to a more normal 4.26 per cent, the total interest cost alone would be closing in on the Pentagon budget.

“Without putting too fine a point on it, debt – much of it in foreign hands – is growing at about an 8 per cent annual rate. GDP is growing at a 1.7 per cent annual rate. For every dollar of extra output, debt increases more than $4. Official debt is growing more than four times faster than the economy that is meant to sustain it”.”

This is the problem for the US because, the more the economy struggles, the more quantitative easing (QE) is likely to be brought forward and, on present trends, it is taking more and more debt to generate less and less output. If this continues, the US will continue to get indebted faster.

It looks scary, but does it actually matter? The US current account deficit is narrowing. Therefore the US private sector is financing this budget deficit and many argue that, as long as this is the case, the government is simply recycling savings and there is no problem. In fact, much of mainstream economic thought would suggest that this is the right thing to do in a balance-sheet recession where people and companies are deleveraging.

But Paul Ryan, the Republican vice-presidential candidate, doesn’t believe this. He sees the build-up of debt as the beginning of the end for the American economy, and if his running-mate, Mitt Romney, wins the election, we are likely to see a massive reduction in the US budget deficit and a massive reduction in central bank monetary easing. From where I am sitting, this looks guaranteed to tip the US into recession in 2013.

Therefore, the central bankers at Jackson Hole this weekend are bound to have one eye on monetary developments, the other on politics and a third on Europe.
Europe’s problems are mounting by the week. The best indicator of this is data from Spain. In terms of deposits fleeing, Spain is turning into a big Greece. €74 billion of deposits left Spanish banks in July. This is twice the previous monthly record. Spanish banks have now lost 11 per cent of their total deposit base this year. This is what happened in Ireland, but the pattern is more like Greece.

Banks that lose deposits have to replenish these with a direct infusion of capital. This can only come from someone buying equity in the bank, someone lending fresh capital via bond purchases or selling some of their assets to raise money.

How likely is it that someone would take an equity stake in a Spanish bank now? Not very likely. How likely is it that someone would like to buy the assets on the books of the Spanish banks, the most liquid of which are Spanish government bonds? Not likely either. And how likely is it that someone in the private sector would buy Spanish bank bonds now with the economy cratering and bad debt rising? Again, not likely.

The Spanish problems explain why Draghi is not at Jackson Hole this weekend. He knows he is the last line of defence for the Spanish banking system, which is the precursor for similar developments in Italy. The ECB will simply either have to buy up Spanish government bonds directly or orchestrate another massive LTRO (long-term refinancing operation – ie, cheap loans for banks) initiative to keep the Spanish banks from going under.

As a result we should expect more aggressive monetary financing from the ECB this week. Otherwise the Spanish banking system sinks. In the US, we should also expect Bernanke to announce more QE if necessary. This will up the ante for both the Republican Party and the German constitutional court in the weeks ahead. As to whether printing money can save the world, the evidence thus far suggests, not on its own.


  1. michaelcoughlan

    No it can’t but you haven’t said what else is needed.

    • bonbon

      Well then try it yourself. Watch out for the Robespierre’s! If DMcW puts that on the table, he knows very well what will happen.

      But it must be put on the table.

      That’s where we come in.

      Still, look for exactly what will drive the oligarchy insane, now that they are doomed. Our future without them! And it is big! We are many and they are few!

  2. michaelcoughlan

    ‘It looks scary, but does it actually matter? ‘

    That depends on which side of the working end of a us made machine gun you find yourself on! If your country has the raw materials to help the US balance it’s books and you are looking at the working end of the machine gun you be fucked!

  3. Adam Byrne

    Life begins at 40.

  4. Has hyper-inflation ever worked David?

  5. Tony Brogan

    David, you are finally addressing the root of the problem, although somewhat reluctantly.

    you know well that the root cause of our problems world wide is the central banking system and their ability to print unlimited cash.

    Adding money to the economy never did anything other than create inflation and the illusion of wealth.
    If it were added at no interest by treasury it is still inflationary. When it is added as a debt to the government it impoverishes us all even faster and allows the bankers and their controllers to steal all the real wealth from the people.

    QE is more of the same which is insanity. The economy will seize up and there will be a world wide bank holiday where the economy halts.

    We must return to a banking and monetary system where this can not happen, but the change will only happen when the crisis occurs. It will not be done voluntarily as no politician will go there.

    Much of the world prepares with the accumulation of gold. Gold must be the foundation of a non inflationary money.

    As an individual one should be doing the same thing. Also silver as that is what the coinage will be.

    It will not happen unless the central banking system is disolved and that will be a fight to the death.
    One world governance versus the people of the world.

    • ShaneH

      Tony,
      Respectfully I think you are delusional on both points. David’s articles (books, films, seminars etc) are not about addressing the systemic issues of how we organise our money, let alone our economy. This constant drip feeding commentary is about David making an income, which like all of us he is entitled to do.

      David is a creative writer, in much the same vein as a J. K. Rowling. Most of this type of stuff entertains at best. Modern economics has at its core many fallacies, No matter what solution one puts forward, when its foundation is not of sound footing, it is doomed to failure at some point in the future.

      In the 21st century with all the technology we have at our disposal, to suggest organising our money system around a certain type of metal(s) is like foregoing the motor vehicle and returning to horse drawn carts.

      These types of forums are at best a way for people to vent some of their frustration.

      Shane

      • bonbon

        So bring out the fallacies, as I have done, and watch sparks fly!

        No time for frustration then, but creative thinking.

        The fallacies run right across the spectrum, it is fun to point out the blindspot! And wonder how ever one held such absurd opinions before!

      • Tony Brogan

        Hi Shane

        Paragraph one.Point taken and largely agree.

        Paragraph two. correct.

        Paragraph three. I beg to differ.
        Its much like the benefits of organic food properly grown as being much healthier than some of the “modern” processed junk food. for health it is back to basics.
        I take this attitude to money. I used to not have this opinion for a long time in my life but after reading and study came to the conclusion that as far as money is concerned a precious metals base is in fact back to the future.Some things like basic health and the sound money system do not require new technology to be efficient and good.

        In the case of both there are technolgical achievements that can assist.

        New execise machines for one and a digital banking advancement for the other.

        you are correct that I would be delusional if I thought DMW was doing other than selling copy trying to feed himself and family. He is a very talented individual.

        However suggesting that he is going to profer a solution, to an economic problem leaves him with some responsibility to be as accurate as he can as people act on his opinion.

        As far as personal or state adoption of sound money principles is concerned we will see shortly what the results will be. (shortly may be 6 months or 5 years?)

        I assume that a billion people in both China and India who acquire silver and gold directly to sustain their financial well being , are also delusional. Infact pretty near the whole world other than the “westerners”

        Regards
        tony

        • ShaneH

          Hi Tony,
          I respect your view point even thou i do not agree with it. It is refreshing to hear of someone actually doing some of their own research and forming their own opinions.

          As you point out in a post below, paper money was a receipt, which allowed the bearer to redeem a certain amount of gold or silver. Gold as form of money was never practical, paper money evolved out of the need to fill the chasm that gold could not. Returning to a gold standard today would just be as impracticable. People would still have to resort to using promises of gold in the form of paper currency or electronically. The costs in terms of extracting gold from the planet on the planet make no sense at all. To drive an economy designed for exponential growth, on a planet of finite resources, is absolute madness. To waste even more of these precious resources to acquire a metal to then act as a form of money or to give it value is utter NON-SENSE.

          Using sliver as form of money is just as crazy. Silver is extremely important in manufacturing, especially in the world of electronics. To have it as a form of money only increases its cost to the manufactories, this in turn increases the cost of the goods they produce. I totally disagree that a billion people in China or India are acquiring silver and gold. And this is the point of gold or silver; neither is easily attainable to the majority of the world’s population. The vast majority of Gold is held and owned by various banks and governments around the world.

          Shane

          • Tony Brogan

            Out of 180,000 tonnes of gold in existance the majority is in private hands. 32,000 tonnes is alledged to be held by central banks and 10,000 tonnes or moer may be AWOL.
            china is set to become the biggest importer of gold in the world as well as being that biggest producer.
            In the last 5 years chinese citizens are authorised to save gold and more recently silver and they do so.
            India imports 800 tonnes of gold a year and most goes to private hands. so much so that the import of gold creates a problem for the country’y trade balance and the government placed an import duty on gold. created quite the uproar.
            Vietnamese people buy gold on the black market at $10-30 dollars per ounce premium. The Viet government is upset that the currency spent on gold is creating a run on the value of the dong their currency.

            Evedrywhere one cares to look people are buying gold and silver at a pace that there is little physical left to deliver. The paper PM market is active but it is just that a paper promise to pay and does not add to the gold or silver demand.

            The exchange traded funds GLD and SLV invest in only percentage in actual metal with the rest in paper instrument. Thus again demand for PM is held off the market. when people realize that the 1200 tonnes of gold BLD alleges to hold is just 20% of that there will be a burst bubble in the fund and a run to physical. The same with the silver fund SLv
            When you read that the custodian of GLD is HSBC, the largest paper short of gold and the custodian of SLV is JP Morgan the largest bare naked short in the silver market you will see that the demand has not been met and that the price should be double what it is today.
            The only bubble in the PM market is the size of the fraud and corruption. Wait till it busts when dilivery of metal can not be made at rhe Comex or other exchange. Silve rcould go up 30% a day for 10 days. Then talk of a bubble.

            Gold and silver coin are easily attainable. I can make a phone call fix the price, deliver the money and receive the coins with in a week.
            There are no super premiums yet indicating a shortage.

            You are correct that there is no silver availavle on the earth in stockpile being used in industry. However price is not a concern because so little is used in applications that the price could triple to no ill effect on consupmtion. It is not the high price of silver as money that reduced the stockpile but the artificially low price pushed down by central banks, bullion bank and government activities that allowed the stockpile to be consumed as the price was way too cheap. Price is going up because as you point out there is none left.

        • bonbon

          You are certainly living in a fantasy world, actually exactly the same one that Nokia occupied before going bankrupt. Nokia projected a market there for 1 billion mobile telephones! Wow, what a market! They forgot that in China and India each 700 million live below the UN poverty grade! Now to bluster that these very same poor will “acquire gold and silver” is incredibly incompetent. Of course there are still Tiger’s who would love to believe this, of that I am sure.

          From dot.communism to gold for all, from housing to bubbles for all. It is exactly the same fantasy coming from exactly the same source.

          • Tony Brogan

            You bon bon are an ignoramus on this topic.
            Far from being terribly incompetent in making the above assertions you will find they are correct if you pulled you head out of LaRouche and took an unbiased look around.
            You are rude , overbearing and a bully.
            You continually resort to ridicule when you have no knowledge or a proper argument.

            China has the highest savings rate in the world and has had for a time.
            Chinese affinity for gold is well known. this year they will overtake India as the largest gold importers as well as being the largest gold producer. Non of the gold mined in China leaves the country.
            India has inported approx 800 tonnes of gold per annum and are the worlds largest buyer. Mostly private purchases for the wealth of Indian brides.
            now China overtakes them this year.
            The major amount in chinsa is by goverment sponsored agencies but individuals are authorized to buy and alloed to do so and they do.

            On quite heavy volume equivalent to 9,659 NY lots Shanghai gold closed at a premium of $2.63 to world gold of $1,592.88 (Thursday $4.33/$1,604.48/6,503 NY). The yuan was backed off to a 7.11% post $US “depegging” appreciation (Thursday 7.2%). “Delivery Volume” jumped to 11.078 tonnes, the first time in double digits in over a week. It appears the Chinese public like sub $1,600 gold.

            11 tonnes in one day–John brimilow report.

            On a brighter note, after last week bringing news of fresh Korean CB purchases and heavy Turkish gold imports, the present week has opened with news of huge Hong Kong net gold exports to China: according to Reuters data to be 40.75 tonnes (Exports 67.747 tonnes, Imports 26.997 tonnes). While down some 10% from May this is still an immense amount compared to little more than a year ago, and is in fact not easy to fit into conventional interpretations of gold flows.

            40-45 tonnes a month reported exported to China just through Hong kong.

            do you get the picture bon bon or do you think that all chinese and Indians are peasants running around in sandles and loin clothes pulling rickshaws.

            There is a lot more where this came from . I’ll post new info to keep you in the loop

            76 tonnes in May.100 tonnes last Nov. 25% of world demand.

            China set to lift ban on interbank gold trading further boosting demand

            Frik Els | July 19, 2012

            China is preparing to launch direct interbank gold trading — a banned activity at present — at the end of August as part of a broader set of banking reforms.

            China represents about a quarter of global demand for the precious metal and allowing the country’s banks to trade gold should boost investment demand further.

            FT.com (sub required) reports “the new trading channel for banks is likely to increase trading volumes, but it is too soon to tell how big its impact will be on overall bullion demand”.

            Hong Kong customs data showed gold imports into China from Hong Kong were 76 tonnes for the month of May, a whopping six-fold increase on last year. In November imports were running at over 100 tonnes…

            http://www.mining.com/2012/07/19/chi
            na-set-lift-ban-on-interbank-gold-trading-further-boosting-dema
            nd-92259/?utm_source=digest-en-mining-120719&
            ;utm_medium=email&utm_campaign=digest

            -END-

          • bonbon

            Sheer fantasy. One does not buy prosperity with pieces of metal. China has no illusions about that. Some in India gov’t apparently do.

            We did not buy sovereignty.

            Completely out of the real world, it is not economics at all. It is more of the same from finance.

            A science-driven political-economics needs a totally different finance, national banking with public credit, as Alexander Hamilton elaborated after throwing out the empire. We threw out the same empire, and an economist organized that. No mention of metal, rather economics.

            National political-economics does not believe in “spontaneous, unknowable order from chaos”, the basis of von Hayek’s Austrian recipe. National political-economics recognizes universal knowable principles, as being real economics, not left to “its own – meaning pirates”, but stepwise increasing both energy flux-density per-capita and per sq.km. It means “soft” services, such as medical and education increasing per-capita and per sq.km. It means advance priductionn not simply raw-material extraction. It means advanced agriculture with a higher energy input. It means greening deserts, desalination and re-routing water, power generation in a higher mode than wind. It means a much higher population density and longevity. It means sovereign nation-states committed to the betterment of the other (Westphalia 1648).

            It means dumping the imperial relic and all its ragged monetaristic regressions. That’s what Glass-Steagall is all about, and that is why it is stunninly important the call came from London, after we campaigned massively. Who could have predicted Citigroup’s Sandy Weill, of all people, joining in this urgent action?

            Ideas and Free-will after all are decisive.

          • Tony Brogan

            Bon bon you are still out to lunch on this

            An economy relies on trade. to facilitate trade the concept of money developed.
            Trial and error resulted in most of the world using Precious metals as Money.
            The money must be trustworthy and function properly as money.
            It has been said, it must be HONEST money.
            Gold and silver by its nature is honest money. Most if not all other money is dishonest or outright fraudulent money.

            The basis of all sound economies is the use of a medium of exchange that can be relied upon and not easily corrupted.

            Before all, one require a proper medium of exchange, to have a sound economy.

            We do not fanticise as you suggest. Rather you are delusional.

  6. Adelaide

    Can Printing Money Save Their Ponzi Scheme?

  7. michaelcoughlan

    Hi adelalide,

    Not on its own. You also need to subjugate your neighbours by paying back the bonds they bought from you in the devalued currency you just printed. This is only possible if your currency is used as thr works reserve, you have the military to implement the rape and a general staff as amoral as the financial nazis in control of the banks.

    Excellent observation though!

    • Adelaide

      Are you interested in helping to establish a LETs system in Dublin city centre?

      Hi Michael
      (RE: your LETs suggestion)
      I took your suggestion from last week and attended the open workshop on LETs systems organised by Lawrence Vize at the Prussia Street Fair on Sunday.

      There was an informal discussion after the main talk and some of us (the attendees) are meeting again there on Sept 16th Sun 4pm-6pm with a view to establish a LETs scheme in that vicinity.

      If any reader is interested please come along, it’s simply an informal group of interested citizens.

  8. wills

    David,

    Is the article writing about the saving of the real economy or is it about the saving of the mafia banking counterfeit system looting the common wealth?

    • bonbon

      The article is about what bubbles Ben is likely to do, the stuff of tragedy. And Draghi likewise. It is clear it will not work, and only create massive trouble.

      DMcW is right, if the Mitt or Obama stay, and contract the money supply, WITHOUT a huge FDR-style New Deal and Reconstruction Finance Corp., a catastrophic recession will result. That is exactly what Hoover, and also Brüning in Germany did. Germany is thus very much aware fo the two-edged sword of austerity and hyperinflation. But it took FDR, uniquely, to turn the tables in 1933. Germany’s Lautenback and WTB Plans, almost the same as FDR’s approach were suppressed. The rest is history.

      • wills

        I respectfully disagree.

        Provision of credit must be taking out of private hands as it is proven now to be under significant abuse and looting.

        • bonbon

          National Banking, not private “fondi” – the Venetian model of the British Central Bank of England, is the way to go as Alexander Hamilton showed by putting the Credit Clause in the US Constitution. The FED is a British style private central bank, 12, put in place by Anglophile Teddy Roosevelt.

          So apparently we agree, top down private control of banking is passe. The idea of the Reconstruction Finance Corp, that Franklin Roosevelt used to counter the credit crunch of the private banks of Wall Street, is the correct way to go. Of course that worked, and very well, only when Wall Street’s private interests were split up by Glass-Steagall in 1933. With a functioning commercial banking system, sure there is room for honest banking.

          • wills

            With respect in para 1 you say one thing and in para 2 you say the opposite.

          • bonbon

            Honest banker do exist, and want to do honest work. Impossible in the Citigroup culture for example right now as their chief Sandy Weill well explained in August.

            The RFC, set up by FDR to counteract WallStreet’s credit crunch after 29, is Hamilton’s stroke of genius at work, what national banking is all about. Break the private banking units that are bankrupt anyway, and honor legitimate debt with a very large high-tech program. Synthetic debt from playthings like derivatives, CDS’, etc are simply not acknowledged to even exist.
            Paradoxical, yes, as any really scientific economic principle would appear to monetarists.

  9. michaelcoughlan

    Hi Shaneh,

    Your point of view on tony’s point is welcome but not entirely accurate. The worlds physical currencies are based on paper and the metal nickle, have been for centuries and will be for millennia to come. The issue with gold as a currency is that it restricts economic expansion and also most importantly fed issued interest bearing debt is where the problem is whereas govt issued interest free currency is the way to go not in gold but in a medium which can increase ad the economy expands.

    McWilliams is a very creative writer no question.

    Michael.

    • bonbon

      I remember the “free energy” debacle a while back. It seems some are promoting the monetary equivalent here?
      Remember the Tiger was “free cash”, and the LTRO’s will be free!

      Legitimate debt, caused by 40 years of no physical ecnomic growth, yes – none!, can be honored with huge economic high-tech programs.

      But ONLY when the synthetic derivative debt is rendered null and void by Glass-Steagall. That overhang would be fatal.
      The New Deal was not “free”, but was real. The real economy by 1936 was ready to defeat fascism in 3-4 years!

      So no more swindles of “free this or that”, monetary this or that.

    • ShaneH

      Hi Michael,
      I agree that Debt based money is a part of the problem, monopoly of the money supply is also a large part of the problem and changing that from the private banking cartel to government cartel will ultimately not resolve the problem.

      Posts like the below from bonbon is as much of the problem. It is ignorant viewpoints like these that are held by the majority of the population. If the last 5 yrs was not enough to wake people up, then what will?

      Shane

      • bonbon

        Seems you have a lot of parts of the problem. And agree with all points of view that show parts of the problem.

        Yet you know that these are parts of something that when added up do not in fact add up.

        I point out the full problem. by putting on the table, uniquely here I observe, physical economics. Something outside the “parts of the problem” you are expected to thrash around in.

        But then the comfortable wandering around with parts of the problem is over. But the Tiger epoch is over, the financial system is finished too.

        That’s when creativity comes into full force. We are not limited by any group slicing up parts for popular consumption, nor by any attempt to use metal to limit our future – golden chains.

    • Tony Brogan

      Hi Michael
      There is a body of thought that there has to be an expanding money supply to enable an expanding economy.

      however there is another body of thought that I subscribe to, that states there is always enough money in an economy. It is never extinguished as it is used and in fact passes from one to another in each transaction. Money is catalyst that enables the transaction.
      As an economy strengthens the value of the money rises and it requires less money for each transaction. That is each unit of account of the money buys more. Thus savers are rewarded, people in low paying jobs are not left behind and everyone is better off, more wealthy if you like, as the economy expands.

      Under the current system of an expanding money supply , inflation is induced and each unit of account is diminished in value and buys less. THe people in the low paying jobs are left behind and the people at the top of the feeding chain of the new money benefit at the expense of all others. The rich get richer.

      Even government issued money at no interest will be inflationary with the same overall results as the current system but without the huge national debt, a benefit I agree. Inflation will still ruin the economy, and the additional money added will still create distortions in the economy that will lead to malinvestment.

      Your point that money has been paper for hundreds of years is not entirely accurate IMO. Most paper money was currency backed as redeemable for gold or silver. The PM’s were the money, the paper a currency representing that money.

      Regards
      Tony

    • StephenKenny

      A currency is merely a means of exchange and store of value. It needs the confidence of it’s users: If it’s too easy to forge, for example, then people will stop accepting it, and finally just stop using it.
      A gold-backed currency, with a published exchange rate, simply gives a greater degree of transparency, and therefore confidence, in the currency. To create more currency is easy, you adjust the rate and print.
      Gold as a currency is deflationary, which in a world not used to it, has problems. In a world used to it, it’s lovely, as prices fall as technology and production quality improves.

      Gold has been a universal currency, as has silver; nickel, like bronze and copper, that of fiat currencies that come and go. The exceptions are places that have used currencies such as conche shells, certain types of rare rocks, and particular species of dead beetle.

      • Tony Brogan

        “Gold as a currency is deflationary, which in a world not used to it, has problems. In a world used to it, it’s lovely, as prices fall as technology and production quality improves”

        Absolutely correct. +10

      • bonbon

        Gold is of an epoch, 99% of human history, from today’s point of view, feudal, low population, no industry, and no real mastery of fire. We have moved so fast from that epoch, there is a nostalgia in oligarchical circles for the playground of the rich and few.

        We are now at 7+ billion, heading for 25 billion, with huge requirements for water, food, energy, transport. Any banking system that does not support this is immediately identified as a relic of that “glorious past”. That is why national banking and public credit creation for the common good of our rapidly developing population makes any sense. No Venetian banker of 1400 could even conceive of the modern world. Why are such private Fondi even listened to today?

        The mention of shells, rocks, is clear evidence of a retreat to cuddly fantasy. Certain public figures such as Prince Philip, Bill Gates, Dr. Schellnhuber, Bertrand Russel, want to reduce the human population to 1 billion, where their little feudal monetarist fiefdom would thrive.

        I take that personally.

  10. It’s all a tussle between hope and reality now

    • whatamess

      “Hope and reality” …that’s where it lies alright ,but the spectrum that spans between hope and reality is expanding exponentially every week i fear….

      I’ve posted about this guy before – Kyle Bass (fiduciary of hedgefund Hayman capital) He has been saying for ages that write down of debt/debt restructuring is the only way to go…. I know I know, that as a hedge-fund manager that he has placed BIG speculative bets and hopes that the metaphorical truck that’s currently dangling off the cliff edge(due to high speed ,wreckless driving and brake failure etc)will indeed fall off that cliff,and these ‘bets’ will really only pay off WHEN that truck does actually go into freefall.. This might get Kyle Bass an “insiders” badge here on DMW by some and that’s a perfectly legitimate stance to take ,but that said,he didn’t orchestrate the trucks demise ,but rather anticipated it’s demise with his observations that the likely outcome of the irrational & irresponsible behaviour of the driver and the truck’s inevitable mechanical failure due to lack of truck maintenance,would be that this situation of ‘over the cliff’ would eventually arise…
      These links posted below are a year old( and he made his speculations/intellectual insights/predictions year(s) before that…)
      I feel these links tie in with DMW’s last article and this current one

      http://news.bbc.co.uk/1/hi/programmes/hardtalk/9639507.stm

      and

      http://www.youtube.com/watch?v=rsCGI7s1SBg

      central banks ,fractional reserve banking and much much more here…very interesting stuff

      http://www.youtube.com/watch?v=xyzujydn2AU

  11. molly

    What we need is a proper banking system that is controlled by people who have a wide experience of how to benefit the country as a whole .
    This should be run as a state bank ,not a rescue bank,it’s ok when joe public says sure we own the bank.
    We may own the bank but we may as well not own the bank,for all the use it is.
    This country could stand on its own to feet but instead we have chosen the weaker option by electing a government of weak puppets,it’s really like buying something cheep that falls apart ,you should have bought the dearer item it will last a lot longer,we have a government that we voted in so we only have our selves to blame .
    We could of course get rid of this government by standing up to them.
    All the talk about the lack of money and cut cut ,I have not heard one TD saying start with me first and cut my pay and my perks.

    • bonbon

      That’s the point of Glass-Steagall. No commercial banking can function until we dump a lot of garbage. It is the absolute priority to open the gates for future functioning national banking as designed by Alexander Hamilton, and the theme of Arthur Griffith’s economics.

      • molly

        As I am sure you are well aware there’s a lot of people out there that would love to change there bank but thers no chance or no point .
        I tried to change my bank and gave up because of all the red tape and I got the feeling that one bank did not want another banks customers.
        If I was in the uk I would have no problem changing banks.
        If people could change to a proper bank there wood be a stampede .

  12. bonbon

    RESIST! EU’S “PEACE OF THE GRAVE” SPREADS OVER SPAIN

    Sept. 2 (EIRNS)–Is a government which celebrates that it has driven down its people’s expenditures on medications by 23% in one month, fit to survive?

    Spanish Prime Minister Mariano Rajoy declared in an interview with four European newpapers published on Sunday:

    “There has been a very positive piece of information: in the month of July, expenditures on pharmaceuticals in Spain fell by 23% as a consequence of the administration’s decisions.”

    That cold-blooded statement epitomizes Rajoy’s message to Italy’s {Corriere della Sera}, France’s {Le Journal du Dimanche}, Germany’s {Bild am Sonntag}, and Spain’s {ABC}. Public employment has fallen greatly, he told them; “and I assure you that in the next `Survey of Active Population’ it will also fall in Spain. That is to say, a great effort is being carried out, in large public services, which constitute 70% of expenditures…. In the end, as in many facets of life, when one manages money, be it of a family or a company, you have to know that spending has to adjust to income, and therefore you have to know how to prioritize and manage well.”

    “Managing money well” “succeeded” in reducing retail sales in Spain by 6.9% in July over the previous month–and reducing expenditures on food by 3.6%.

    The sharp increases in the VAT taxes on everything, which went into effect on Sept. 1, including on the most basic items (electricity, telephones, gasoline, some food, etc., etc.), will drive down consumption further. Before this latest increase, Spaniards were already using 21% less gasoline than in 2008 and 15% less diesel fuel.

    Spaniards are discussing that the situation has reached a limit; they now face breakdown. As of Sept. 1, the government cut off all benefits for long-term unemployed who live in a home where the aggregate of incomes and subsidies of all members of the home is greater than 75% of the minimum wage! The CCOO trade unions estimate that nearly 80% of unemployed youth living with their families will be cut off. That is, the income of the families of over 880,000 unemployed youth has suddenly been axed further. Widows who receive a pension benefit for the loss of one child, have received letters from Spain’s Social Security agency, demanding that they account for how they spent the money, and if they have another working child, for if so, the pension will be reduced or withdrawn.

    We are living in “a concentration camp!”, a Spanish activist circulating LaRouche’s solution exploded, in a discussion this week. And it is into this situation that the LaRouche movement has begun circulating the Spanish-dubbed version of the BüSo’s video rallying all of Europe to rise up to crush the “peace of the grave” of the EU’s proposed European Stability Mechanism.

  13. Dionysius

    The hyper-inflation during the Weimar republic ended badly. The current monetary crisis David is describing is different in nature. It is symptomatic and caused by even more difficult to manage fundamentals. Chief among these causes is our inability to govern and manage our species on this little planet. Indicative of how out of control we are is the unfettered population growth (now 7 billion) with no concomitant resource management. I have ten more such indicators but it will take a book to deal with properly. All of our currencies were never designed for sustainability and we have massive corruption in the banking systems at every level. The only cards now playable involve redistribution of wealth and this will not end well. A significant biotech breakthrough in energy and IT would be a possible abatement but it is a very long shot given the severity of what I now see from my vantage point here in Seattle-Tacoma, WA. Given all of this I am still very optimistic in that good people will prevail. It is the same type of optimism I would have were I a French peasant prior to the revolution.

    Keep up the good work David. What you are doing is more important that anyone of those who will be in Jackson Hole. Their footprints, both individually and collectively, are very small. I wish I could have Danton, Robespierre, and Marat pay them a spiritual visit of enlightenment as ghosts of times past, but would they listen let alone understand??

    • bonbon

      It seems the Terror has impressed you. Bringing the Guillotine into the discussion, however sideways, just shows the utter and complete void of the Tiger epoch mentality. The attempt at “fettering”, culling the herd, as the elites like, is another side of this mental vacuum.
      To even propose another dot.com is beyond belief, grasping at straws of the collapsed system.

      Now take a look at NAWAPA XXI, the Shannon Deep Harbour, the Arctic development, and the Eurasian Landbridge. This is real economics, not golden chains, nor the utterly incompetent “economics” of the financial dinosaur. We will soon be at 9 billion and ready for 25 billion, with water transport and power. Right now we need 6000GW, that is 6000 1GW nuclear power plants, right now. Thermonuclear energy has been suppressed by the doomed relic that blew bubbles instead. That will get a crash program, rather like the Moon program.
      Sure the Jackson Hole Lilliputians will pompously bluster, but we will make a giant step for mankind. So forget the Lilliputians.

  14. rebean

    Some interesting food for thought here alright. People are indeed paying back debt. If they can they are lumping money into credit cards. There is a real aggression out there to pay off as much as possible. People I know have given up on the pub and are getting rid of the second car. There will be no spending among huge numbers of people. People were definitely caught out when the crash came they wont be suckers a second time around. Not every one is as motivated. I see people who are in denial and I see people who cannot pay off the debt. There is a day of reckoning for everyone and there will be a day of reckoning for Europe too.

  15. michaelcoughlan

    Hi Tony,

    Your points are very well thought out. I am curious how the economy you describe can expand if there is no surplus currency to provide lending. If my earnings are earned through you spending where is the lump sum of money going to come from to fund new business and facilitate economic expansion?

    Just curious,

    Best regards,

    Michael.

    • Tony Brogan

      Hi Michael
      It is a good question and one that intuitively does not seem correct.
      I was interested in what formed money and how it worked and why it worked. I was interested in what makes good money and what makes bad money.
      It was only after 7-8 years of reading that I noticed the statement that it is not necessary to expand the money supply to have a thriving aconomy. I then in Detlev Schlitchter’s excellent book, Paper Money Collapse, came accross a lay man’s description of why.

      There is, or course the ‘world’ economy, and then there are ‘national’ economies and ‘local’ economies.

      For the point of the exercise in thinking this through let us imagine an economy in equilibrium. The members of the community buy and sell using a money they decided upon. Most people in the world , for practical reasons, I will not detail here, decide on gold and silver.

      Question? who sets the value of the gold and silver. It seems to be set by the demand for the money within the community. It seems self evident that no demand equates to little or no value and a high demand to higher or highest value.

      Both silver and gold are used in parallel as money. The relationship to value of one to the other is also set by the community individuals and so will fluctuate until an equilibrium is reached. It is important that the ratio of value one to the other not be fixed.

      for the sake of the exercise we will use silver as money.
      Suppose there was no gold available for the moment.

      Each person is issued 10 silver pieces and that is all there is. The value of all the products of goods and services are priced in ounces or fractions of ounces of silver.

      People are in business happily trading back and forth and exchanging the medium of exchange, silver in every transaction.

      Now a few people having a surplus of production over requirements do not ‘spend ‘ all the silver they have.
      They decide to save for a new car.
      In order to save they must accumulate silver coin and so they build up a stash.
      This does two things. Removes coins from circulation and removes demand for goods and services.
      All things being equal the rest of the economy has to make do with a little less money in circulation while the demand for goods and serices has reduced a little.Not much change.
      suppose a number of people increase the demand for money and save and reduce the amount of goods and services required.The value of money will increase because of demand while the price of goods and services decreases because of lack of demand.
      This means that an ounce of silver now buys more than it did.
      The people saving for a car see that they do not require as much silver to buy the car as they had supposed and are now tempted to buy and get the car.
      so more money comes back into circulation and the value of money drops and the demand for cars goes up so the price of cars increase .
      This action , reaction, takes place throughout the economy on all transactions. Saving increases the value of money and spending lowers it.Buying increases the price of goods and services while not buying reduces the demand and the prices.

      Suppose new innovation creates improved efficiencies in the ecomony. The result is more goods and a lower price for all. That means not as much money is spent as might have been on those goods and so people are able to buy more goods, or use the savings on other goods, with the same amount of money. What has happened is that the value of money in the commumity has risen . If there are a lot of effiencies in the economy the money supply keeps adjusting its value to accomodate the changes in productivity.

      As this continues it can be seen that there is no requirement to change the amount of money in the economy regardless of how effecient or large the economy grows. In fact any amount of money is the amount needed.

      What happens if the amount of money in the economy changes.
      If the amount of money is increased then the value of all existing money decreases as the economy did not change to match the changed money supply. Adding more money does not change the wealth of the community. There are still exactly the same amount of goods and services as there were before the change in the money supply.
      All that has happened is that inflation is induced to the economy. The purchasing power of all money is reduced. This is detrimental to those that do not receive the extra money but benfits those who receive it first. The central banks and the government can exercise cronyism, and to hell with the rest of the people.
      If the money supply is reduced then the value of the rest of the money increases in buying power and goods appear to be cheaper than they were. This benefits all the savers and those who have the rest of the money but if the loss of money in the community is because of destruction of the money then those who lost the money or destroyed it will be worse off.

      Gold and silver became money precisely because the money supply is not easily increased. It takes blood, sweat and tears to get gold out of the ground in a useful form as money. Ditto silver.
      gold and silver cannot be replicated or made from another substance. PM’s are readily divisable and two halves or four quarters are the same value as a whole.
      PM’s are fungible. Each piece is equal to any other similar piece and readily exchangable. gold is a good store of accumulated wealth as a little has a high vaue which allows it to be readily portable, Not so easily with silver the day to day coin.

      There are ways to debase a metal currency but it is readily decernable and that money will soon lose the confidence of the people and be rejected.

      • ioseebee

        Maybe we could use nano-technology to split silver into millions of tiny, very light currency units? with a nano-silver reading instrument at cashier’s desks…
        These could detect the nano-sized silver carried in ‘silver nano-notes’…if this detector could be made to read the silvers chemical compound or something….
        …combined with a microscopic lense that would show an image of the nano-silver magnified on a retail screen.

        The aim here being to make a ‘Precious Metal’ based currency practical in terms of populations sizes?

        What did they used to do in historic times? Bite the gold like Katie Taylor, and cut the silver into quarter ounces etc. sounds like it wouldn’t work without some newer technologies! :)

        • Tony Brogan

          You are almost there.
          It is very simple.
          Silver deposited in an account is spent by debit card in thousands of a gram. in any one of several currencies at present.

          goldmoney has developed the technology already.

          Their site is well worth the read and also a visit to the goldmoney Foundation has essays.

          http://www.goldmoney.com

          • ioseebee

            Haha! That makes sense! It is interesting to read about the practicalities of how this Gold Backed/Silver currency would work in the modern era!

            Thanks for the link!

          • ioseebee

            all the same it is regulated and audited by some of the same big corporations that seem to have got us into this mess …..

            ‘Your metals are always stored in the vaults owned and operated by VIA MAT, Brink’s, Rhenus and G4S. Every quarter, full reports by these companies and a Big 4 Accounting firm, which reviews a wide variety of our controls and procedures and provides proof of the 1-to-1 ratio of metal held in the vaults and metal recorded in our database, are presented on our website and within your verified GoldMoney Holding. Please see the GoldMoney Benefits page for further details.’

            I am not sure the reportss being audited by ‘A Big 4 Accounting Firm’ makes me feel very secure….given their recent history in bogus auditing of major banks, countires, and coporations….

            Even the idea that they have a phrase to call these auditing companies ‘The Big 4′ makes me feel uneasy….

          • Tony Brogan

            Well there you go. There is always a risk and it has to be evaluated. best is your own safe somewhere or a hole in the dround on the farm and be your own keeper with the coins in hand.

            still as far as one can see, Goldmoney is a good company and James Turk is reputable.
            The site is worth the read.

      • whatamess

        v.interesting Tony ! please keep it comin’ for all of us trying to educate ourselves

    • Tony Brogan

      Michael , I did not answer your question in my original response. sorry. Here goes now, short and sweet!!

      “If my earnings are earned through you spending where is the lump sum of money going to come from to fund new business and facilitate economic expansion?”

      From the savings pool.
      Either the deposit of the savings in the bank is loaned out to someone else making a good case for a business loan or the individual saver invests in a venture capital company who does a similar thing but the individual invests directly into the company, or the corporate savings are redirected from profits accrued into corporate research and development within the same corporation.
      There is no requirement to expand the money supply to do this.

      Remember all this extra saving also diminishes the money in circulation and so the value of money increases and your wages go further. Mild deflation that this causes is a wonderful thing and encourages thrift and savings. Also the point made is that most savings are not lost money to the economy but are in fact already deployed.

  16. Dionysius

    Right now the best place to be is first in real estate and next in US dollars. This may seem strange to many, especially here in the US, but after the metal bubbles implode it will be about who the last man standing is. Money is needed for expansion and yes in this context the only solution is to keep printing. Failure to print will guarantee a depression and politicians will never take such risk except for Germany perhaps.

    • Tony Brogan

      With all due respect, there is absolutely no evidence that PM’s are in a bubble. There is not one person in 10,000 who has any. And the amount as a percentage of the economy overall and in investment is a fraction of the historical norm. The price of PM’s are suppressed on a daily basis by central banks and government activity.
      silver is, the last time I saw a chart, at a 600 year low compared to previous pricing and gold at a low point too. It is expected that silver will increase as priced in fiat currencies by a factor of 5 times the amount of gold until the ratio is closer to 10:1

      Nowhere is the press or the investment community suggesting PM’s as an investment.On the contrary, most are panning, dissing, PM’s in the MSM as they are on this site.

      When your next cabbie tells you the place to be is in Precious metals then start to “get out” as the end will be near.

      gold is going to 5000-20,000 an ounce and silver up to $500- $2000 an ounce.

      http://www.kitco.com/charts/livegold.html
      The charts here show no sign of a bubble.

      • Dionysius

        Tony, what I talk about is the oversold state of gold. If every person who holds the paper that says they bought some were to stand up and say give me the metal there would be only enough to cover about 30% of amount. There is gold bullion out there with false core. Every trick than was played by Madoff and peers has also been done to gold securities.

        • Tony Brogan

          Yes, sorry if I misunderstood. you are correct that the promises are mostly paper. The futures market in the London gold pool is reportedly holding one ounce of bullion for every one ounce traded.

          Anyway the London exchange is now sold to the Chinese and headed to Hong Kong from what I understand.

          If just a few held out for delivery there will be resistance to do so. Persuasion, penalties, costs and finally cash settlements offered. However one day it will happen and there will be a default. that will cause a run and the price will go up 50% in a day. Not far off now.

        • bonbon

          So why not be honest, as I insisted blogs ago, you want a return to the British Gold Standard.

          The Austrian School wants the British Gold Standard, a panacea they say. Of course then it would be London controlled, exactly like the “paper” system of the Inter-Alpha today. Same operatives, same imperial policy, same utter bankruptcy of the mind – which leads to bankruptcy.
          Old lamps for new as Mustaffa said to Aladin’s servant.

          • Tony Brogan

            These discussions have nothing to do with a gold standard.
            It is Simply using coin as money by a sovereign state.
            You, however seem unable to differentiate.
            Old school, new school, Austrian school, common sense school.
            Who cares what it is called. The concept was developed and used by those who never went to school as there were none, fortunately, to go to.
            Education clouds the mind and seeds propaganda.

    • StephenKenny

      “Money is needed for expansion and yes in this context the only solution is to keep printing”. This doesn’t make quite as much sense as it might seem, and certainly not in the context of the US.

      This is the long awaited recovery we’re talking about here. It’s worth bearing in mind that the last recovery was actually the property bubble in the making, after the collapse of the dot coms. The previous recovery (mid 1990s) was the DotCom bubble in the making. Prior to that, the recovery (mid 1980s) was in fact the start of the financialization bubble of the US economy, under Reagan.

      So it will be interesting to see what this new recovery is all about.

  17. ioseebee

    Is it just me, or does it seem that the consensus here is that no matter what, whether in 5 months or 5 years, we are going to see a dramatic and tumultous collapse in how our society’s economic system (& thus implying our social system)?

    With global power linked to historic exploitation of resources & now teetering on the brink of global reserve currency in dollars threatened. The very same globalisation of capitalism & the march of technology that has peaked has now made the world as a whole susceptible to greater global sized shocks. And western society has the greatest distance to fall…which includes us here in Ireland.

    This globalisation of capitalism & technology that now leaves every ‘citizen’ vulnerable to the whims of global corporations & out of control banks, and in turn the governments who are in their pockets (whether by choice or by lack of any clear strategy or backbone to regulate these corporate behemoths, for the protection of their peoples.

    Is it by accident that we are moving in the direction moneyless society i.e. electronic accounts, transactions ….taxation at source of wages/earnings? That in order to try and maintain the basics of living such as a roof over our heads, that we HAVE to borrow multiples of our lifetime expected earnings?

    That at a whim of the markets the pensions of elderly people can be wiped out whether by misinvestment, or be multiple QE. And at the same time our childrens’ future earnings are being borrowed to pay for our past, barely even covering the present?

    Sometimes I think it would be a beautiful thing to see everyone in the country withhold paying all taxes, and withdraw all their monies and wages from one month,, from the existing banks and set up a new national one, owned by the people, with a constitutional charter to protect the people. …maybe it would be directed to buy gold with the first tranche of deposits?

    This seems like a remote possibility anyhowz,
    considering the following;

    1) Most people in general don’t fully understand or care about what is happening….until it will be too late.

    2) Even if they did the existing banks can close down people’s access to their own money in an instant…electronically.

    3) People do not have a choice in this elecronic era to withold taxes for demonstrative purposes.

    4) The Government which should have regulated & then enforced capitalism’s rules on the powerful wealthy banks run by an elite, who are it seems untouchable, should have provided us with an alternative bank, as in Iceland. To attempt to move the people to organising tehir own bank would be treated as rebellious and put down forceably I believe.

    Can you imagine a people’s bank inspired by the people for the people, to replace what we have had shoved on us now? Maybe linked to a people’s own gold backed currency set up as an alternative to that which exists?

    How long would it take before that kind of economic and social rebellion was put down forceably, I wonder?

    I am not talking about a communist or socialist revolution, but the application of democracy and morality
    to the economic systems we employ as a people. Is this idea reconcilable with capitalism? A moral capitalism?

    Maybe it could be a new system, arising from failed capitalism, named ‘sustainism’, where value is given to ethical, sustainable, sociable development.
    I don’t think we have done all too bad in our recent modern history of civilisation, but the rotten greedy core at the heart of our current systems has created the potential to return us to war & poverty yet again, when we seem to have so much potential for a far far better world.

    Sorry, these are just my musings, I am interested most sincerely in how the common work-a-day person – europe wide, U.S. wide, world-wide is being exploited and also possibly being led towards the possibility of a violent or poverty stricken future. Right now we seem to be stuck in an economic & social grind, nationally, in Europe, and globally. We are at an impasse that currently is sapping the creative & productive energy of millions, & which has the potential to threaten untold hardship, misery, and potential violence for many…..

    Money is only a physical thing which will not bring true happiness or peace in it’s own right.

    The most important thing for anyone, and all, is that we need to test every action we make, every word we utter, every thought we think with one question each time:

    ‘Is this action, word, or thought going to make somebody unhappy, make life harder for someone else (whether that is a person I know, or will never meet)?’

    This question – asked over & over again by as many people as possible – is the key to a greater peace, wealth, creativity and happiness throughout the world.

    This is the ‘gold’ on which the currency of our capacity for love should be backed.

    ……………

    P.S. it would be genuinely interesting & cool to meet everyone who blogs on this site, one day! I am not an economics expert by any stretch of the imagination, but I do have a feeling for when things are just plain wrong….and I think that is shared by all here.

    • Tony Brogan

      Good thinking, 99% correct (never give 100% as there is always room for improvement:)

      Central banking system is designed to endebt all people. The attendant social chaos results in a cry for help responded to by the very powers that indebted us in the first place. authoritarianism to protect us, is offered. Thus are we emeshed in the debt trap.

      • Bull Lions

        Too many people are now hoarding gold and how they do it can be dangerous to their personal wealth .

        We assume too much in the normal protocol of business practice and this will in good time prove to be a Big Mistake for gold hoarders .

        Like a thirsty man in a desert there are hungry vultures in the distance watching you .You know you are dead man walking waiting in denial .

        When Currencies become a Crisis all Trust breaks down between governments and also between the people they govern.The local national laws will be enacted to include the full confiscation of all private gold held in person and in kind either directly or indirectly .In return the values of the gold confiscated will be acknowledge by the national government by the issue of Government Coupons that only have intrinsic value and a promise of payment of a stipend .

        Those whom the government have not secured the gold from will probably be robbed anyway by Gangs with foreign connections .Border Controls will increase even between and within UK and Republic.Passports may even be restricted in use and constrained in practice .

        Other valued wealth will also be seized to include forestry , productive farms , and other national resources .

        Politics as in real politics looks like the best place to be in the longer term and only if you are ready to make changes and where ideology takes preference no matter .In time our present government will be ousted and new faces on the bloc will replace them all and they are the real Vultures in our midst NOW .

        • ioseebee

          Thanks for that comment John Allen, it captures very vividly my own hesitation regarding any real possible dippping into the gold markets for saftey net….as surely when the time comes to liquidate this asset, everyone will be trying to do the same at the same time. I could not afford to tie up the miniscule amounts of earnings I currently have in gold wealth stored in a bank, which would require immaculate timing in order to be liquidated eventually into any new currency to sustain a living once again.

          All that glitters is not gold it seems….

          It is very unique to hear someone comment ‘politics is the best place to be longer term, and only if you are ready to make changes and where ideology takes preference no matter’

          Have you ever considered politics – or were you ever involved…. I personally haven’t – either of the above).

          It seems like more and more who ought to be active, shy away as it is tarred with such bad name…..

          but those who have changed the world for the better have been those who have at least actively engaged with or against their current political system…

          ….think Ghandi, Nelson Mandela…..

        • dwalsh

          Best way to make money from gold today is to get into the scam of buying it from the public in one of those huckster’s offices that have sprung up everywhere; or selling thoses phoney certs online.

          As John says, if things really go bad gold will likely be confiscated….and you cant eat the stuff anyway. The best currency if the shit hits the fan will be local neighbourhood networks, practical skills, gardens etc.

          • Tony Brogan

            Quite right. get some land to survive on.

            sounds as if nobody will do anything as trust in government is gone. Robbery is contemplated and expected.
            join the political apparatus and bow to the current ideology. Sell your soul to the devil. Is that the thinking?
            Then there is no hope.
            I talk not of hoarding gold but of using it to the public good as a sound money system. one persons savings is anothers hoard. depends what side of the fence you are on.
            Each will do what they think best, so good luck to you all.
            If things get as bad as you suggest your garden will last one night, your cow will be butchered and your sheep fleesed and eaten. no hope for anyone.
            Better off in the hills and wilds with a hunting rifle and a fishing line. Oh and a small bag of gold and silver just in case. After all it will be the ‘wild west’ returned.
            Part of me is afraid you could be correct.

          • dwalsh

            Tony

            I can understand your reaction to what I wrote; but I didnt suggest returning to the wild; I suggested connecting to and developing local community.

            I know you are into the whole gold thing; I’m not. I dont see it as the way forward at all.

          • Tony Brogan

            dwalsh
            We are on the same chapter in the same book. The ending is now debatable for the who dun it. Will it be this or that.

            I was suggesting that if things go bad this is what it could look like.

            Neighbourhood watch will have a whole different meaning. god help us all.
            It is what the PTB want in order to send in the UN troops to restore order.
            The final step in the march to one world governance dictat.

            In the meantime enjoy what you have and give thanks for small blessings.We will turn it around.

            Tony

          • bonbon

            Check out the US Confederates Agrarian movement’s brochure “‘I’ll take my Stand”. Same Recipe, gold and land for the plantation.

            We are being swindled right back to 1860! I thought Abraham Lincoln settled the issue! But as only Britain supported the Confederates CSA, it is not surprising the link to monetarism is so strong.

        • Tony Brogan

          Moon wobble?

    • Dorothy Jones

      Go to Kilkenomics to see the troops! I’m still in the bold corner from 2 years ago :)

  18. Tony Brogan

    Keep printing David, and the sooner it all blows up, but it won’t be pretty.

    From Franklin Saunders

    What does it say to y’all that after comments from a German former ECB official & a Bavarian politician recommending that Greece leave the EU, the German Chancellor Angela Merkel pleads in public for everyone to “weigh their words carefully”? Does that sound like someone who has a solution, or someone who sees the wheels falling off & wants everybody to keep his mouth shut?

    What is proposed for the ECB is to buy the debt of Spain, Italy, Greece, etc., effectively monetizing that debt. Since Germany in the Weimar inflation (1920 – 1923) saw the Reichsmark fall from 4.23 gold marks to the dollar to 4.23 Trillion marks to the dollar by precisely this process, the central bank buying up govenrment debt. In the process German society was undermined, the middle class impoverished, and the way paved for Adolf Hitler.

    By the way, when Ben the Bandit & his Friendly Feds buy all the leftovers at US Treasury debt auctions, they are following exactly the same process.

    • ioseebee

      That is a an interesting and clear cut way of describing what the ECB and FR are doing…..question is what is the tipping point for all this?

      What was the tipping point for hyper-inflation in Germany before Hitler’s rise reletaive to where we are in inflation levels today? And how quickly does it all unravel?

      Those gold price indexes via your link are interesting also….check out this 100 year index…..

      http://www.goldprice.org/bob/2006/08/100-and-25-year-gold-price-charts.html

      AND also Ron Paul’s very interesting opinions regarding Gold Prices starting to change significantly for the first time in years in 2006.

      http://www.lewrockwell.com/paul/paul319.html

      • Tony Brogan

        Thanks for that.
        Lets hope others take the time to read the links.

        The tipping point has arrived and been blunted .

        Notably Saddam threatening to sell oil in Euros. He has to go. Kadaffi proposing a pan African gold dinar for currency. He had to be taken out. Iran under embargo agreeing to sell oil in euro or gold . Iran has to go. Syria I do not know unless because they are cosy with Russia.

        When confidence in the US dollar results in a failure and it is abandoned around the world . Already the Fed monteizes up to 70%of new bond issues according to one report I read. The only thing keeping US interest rates from spiking is the monetization of the dabt by the fed and the government then pretends that the issue was subscribed.

        The next thing will be when US dollars are refused as payment for goods or trade. US dollars will flood back to the US creating mega inflation and then a crisis could allow a burst of hyperinflation in the currency with a corresponding apparent jump in prices that will paralize the US economy.
        A hyperinflationary depression will be at hand.

  19. dwalsh

    @ bonbon

    The biosphere is not being left to its own. Humanity is already involved in non-conscious geoengineering on a planetary scale. The first responsible step we must take is to address the impact we are already having on the biosphere; and we cannot do that until we get our political house in order.

    Planetary development is not a simple matter of creating a gross increase in the energy-flux density of the biosphere; no more than proper human nutrition is a simple matter of consuming a larger quantity of food. It is a matter of creating the right increase; and in the right way; or eating the right foods in the right way. We are nowhere near having either the maturity or the knowledge to assault the biosphere in the manner Larouche preaches.

    I find the philosophy underlying the LaRouche program alarming and dangerous. The elites are already involved in similarly misguided interferences in the energy-flux density of the biosphere by means of the deployment of atmospheric aerosols, popularly known as chemtrails; and no doubt many other technologies kept out of the public view.

    • bonbon

      Non-conscious? Now that is a bit weird. We are the only, and uniquely endowed species on this planet with creative powers far beyond any other species (99% of which went extinct), and we are supposed to remain non-conscious? We see the result on non conscious economics, the people’s mind went fishing.

      NAWAPA XXI, as the Moon program, the TVA, and the Shannon Scheme, put this issue firmly on the table. There are biospheric scientific principles, which the great Vernadsky first elaborated. We are in the position of a sweep of evolution, and we can understand it. It is characterized by a stepped increase in energy flux-density, and a speedup. Understanding this to take part and move to the next stepped increase is the point.
      The Biosphere, when one understands this natural process well, is an stunning effect of life, not chemistry. The noosphere, as coined by Vernadsky, is an huge jump. The use of stepped increased in energy flux density of fire, is what the biosphere was doing over 500+ million years.

      We have no reached the use of thermonuclear fire, and if unconscious “elites” such as Obama and Blair, get their way, it will be used to destroy this entire sweep of history in about 60 minutes. It is now acutely necessary to consciously apply modern economics, and engineering, not destruction.

      • dwalsh

        You misunderstand me. I used the term ‘non-conscious’ to indicate the impact we are already having on the biosphere without conscious awareness of it. My point about responsibility refers to the necessity for humanity to become fully conscious of its activity in the biosphere.

        This is gradually changing; but there are many who still insist humanity has no impact whatsoever on the biosphere. Some say humanity cannot have any impact on the biosphere; and some Larouche people claim that the biosphere is dependent on human activity; that it would collapse without human activity. I hope you can assure me those are not Larouche’s views.

        The noosphere is newly emergent. Our first task is to come to a sufficient level of social integration (noospheric integration); and responsible or conscious noospheric integration into the biosphere. We have to manage the mess we already have (socially & biospherically) and stabilise our incipient global civilisation.

        We are nowhere near ready to begin the kind of planetary geoengineering projects you suggest.

        • bonbon

          To become fully conscious of anything means identifying a principle that only the mind can know. Gravitation or fire for example. The Biosphere, as Vernadsky beautifully elaborated in the 1930′s, is characterised by a stepped increase in energy flux-density. The so-called mass-extinctions, 3 of which are dramatic, in fact were huge jumps in that measure. Mammals, while in various forms during the Dino epoch, and the corresponding flora are completely different. Berries appeared just as a much higher energy flux density of fauna flourished after that inflection 62 million years ago. This principle of life is knowable, and is now voluntary for the first time in evolution. It is a scientific principle, a universal built in principle.

          We began biospheric engineering long ago in fact, We have irrigated, moved rivers, built canals, for ages. We now know we can modify the weather along the Pacific rim for more rain, evaporation, and cloud, with the NAWAPA XXI project. It is the ultimate green project. To leave deserts enlarge is brown, and brown political-economics. The test of any “solution” is to handle the PLNHO Mexico and NAWAPA US and Canada engineering.

          For Africa, we have the Chad plan from the Italian firm Bonifica to move 10% of the Congo. We started the Sudan swamp canal (Sud) but it was stopped by war. Even the Soviets had the Aral-Arctic Canal ready to go. It is now back on the table.

          For Ireland, the largest European nation buy maritime sq.km we have the Arctic route opening up. Russia becomes now a strategic partner, as China realizes too.
          Russia will build the Umka island city with space-station modules, a true “extre-terrestrial” initiative right here. Ireland wake up!!!

    • bonbon

      Never mind the silly “aerosols” it is a scientific fraud, a swindle from the bubble-heads.

      Check out the only really serious CERN experiment, CLOUD, for the true story of how clouds form :
      http://press.web.cern.ch/press/PressReleases/releases2011/PR15.11E.html
      They have verified Svensmark’s Danish experiments and more. Clouds are a cosmic phenomena!

  20. The Spirit of The West

    In the past few years some of us have met informally for a few hours or so to share a banter or two . It may be opportune again to make another call and rekindle our thoughts again .

    Suggestions are welcome .

    Adare has been a meeting point more than once for those in the West/ South.

    Arise ….I say …hark I call ….come in from the dark …..key in your names below if you are interested .

  21. michaelcoughlan

    Hi Tony,

    I really admire your passion re gold. I am a gold bug. I use goldmoney to buy gold in a vault in Canada and Switzerland. I don’t buy in the vault in the Uk Or hong kong for fear the authorities will confiscate in the coming collapse. I agree a worldwide collapse is coming. I still am not persuaded of your arguments regarding fixing the supply of currency. Before the revolutionary wars in America the Spanish doubloon coin was capable of being broken into 8 sections to facilitate the increase of the money supply as the value if the currency rose. Bill still in his videos gives a much better explanation than I can why it’s not a good idea to use gold as the currency.

    I believed like you that gold as a currency was the way to go up to a year ago until I watched the secret of oz by bill still.

    Regards,

    Michael.

    • breltub

      Bill Still makes some really good points and I do think he want to get to the same kind of society envisaged by gold bugs where essentially the whole economy is not centrally planned and the workers efforts are not debased to serve to cosseted few.

      But his FIAT currency still depends on a system where the issuing authority is still a group of people, and we all know how that ends up.

      He wants it to be constitutionally very limited, but constitutions are more debasable than gold.

      His essential point is that the money system in debt free, and that it does not require always paying off more money than is in the system at any one point.

      Doesn’t gold serves this function when left alone?

      In that situation wouldn’t we just need a very tightly controlled government to just take care of what it should and leave the money to a free society where is would undergo much less malinvestment.

      Still don’t know enough about Bill, but I’ve dabbled in his reports.
      Later,
      Brian

      • Tony Brogan

        good comments
        Just add the addition of sound money to be issued in parallel to the fiat to allow the people the choice of currency they would prefer.
        Issuance of currency as suggested by Hugo Salinas Price and as posted twice here would allow the development of a silver coin as currency without disruption to the economy.

    • Tony Brogan

      Hi Michael
      Thanks for your comments
      I got the really good description from Paper money collapse. Also mentioned by griffin in the creature and Alasdair McLeod od gold Money foundation.

      I am not adamant about anything unless I believe but I am always open to other information and then I try to compare.

      i am a little nervious re gold money , not so much that they do not run a good ship but that I may have a time I can notuse the net and get access to them. In that case it would be by phone and proving who I am would be a chore. it might take weeks for a resolution .

      There is risk in life. We may not have made it through the birth canal! After that journey everything else is easy!Do what we can do and enjoy.

      I had a lovely weekend at a regatta in Maple Bay. Warm , sunny and breezy. Could not have been better.

      On 11th Sept, yes that date, I fly to London with my bike. so hope to start a 3 month trip to England and Ireland.
      Travel by bike where I can so to visit relatives and friends.
      hope my legs can stand it not to mention the pain in the seat! 4 panniers plus tent and sleeping bag and mattress. 70 lb total. I hope the weather is kind.

      I also would like to visit A Coruna and take a look at the statute of King Breoghan, grandfather of Milesius of the last major invasion of the gaelic speaking celts. The people of Brigantia.

      Should be fun to do before I die. To see Galicia the land of Breoghan according to their national anthem. Then to Turlough Co Mayo to stir the bones of any long dead relatives. And to Wicklow to visit friends and Kildare too.
      Maybe Adair too!!

      • Tony Brogan

        Sorry
        Paper Money Collapse.
        G Edward Griffin of the Creature from Jekyll island.

      • martino

        Galicia is a magical place alright Tony. When I was there the Celtic connection was very present in my imagination. I pictured fearless seafarers setting sail from places like the ancient fort at Fazouro. It was like Ireland only the weather was much more pleasant and the sea bluer. They have good wine there too. Buen camino amigo!

        • bonbon

          And now the peace of the grave settles on Spain. How lovely for holiday goers. Soon it could be empty like Connemara after the British genocide of 1846-7.

          Peaceful, nature. I wonder what all those stone ruins were all about? Celtic maybe? Charming!

        • Tony Brogan

          Here I thought Brogan was a good ancient Irish name. Imagine my surprise that a google search for King Breoghan revealed a good ten businesses around A Caruna with the name Breoghan attached.

          I will take a fist full of my retirement cards and hand them out at these establishments!! Should be a good introductory talking point. I’ll wait a bit before I launch into gold and silver!!!!!!!!!!!!

          Thanks for the good travel wishes.

      • Dorothy Jones

        I work in A Coruna a few times a year. It’s a fantastic place, well worth a visit.

    • bonbon

      Still, that’s not economics, rather some kind of survivalist bug.

      Economics involves people, ideas, policies, education, a future for youth, jobs, medicine, transport, especially energy, science, exploration, maritime ocean-going shipping, rail, resources, food, music.

      Hard to put all that in a vault, and throw away the key, eh?

  22. Joe Blogs

    “Without putting too fine a point on it, debt — much of it in foreign hands — is growing at about an 8 per cent annual rate. GDP is growing at a 1.7 per cent annual rate. For every dollar of extra output, debt increases more than $4. Official debt is growing more than four times faster than the economy that is meant to sustain it” – At this rate of annual growth (8%) the present debt of $16 trillion will have reached $32 trillion by 2021, just a little short of 9 years! But does it really matter?!!! I do not know; perhaps David might?

    • cooldude

      I was also struck by this point that David makes that the situation in the US is somehow better than in Europe. But is it really? Along with their present debt of $16 trillion they are running annual deficits of over $1 trillion per annum and have liabilities of over $100 trillion if you include medicare and pension liabilities. If this was a private company nobody in their right mind would lend them a cent so who is actually funding this debt sucking monstrosity? Well according to a report in The Wall Street Journal they are actually buying up most of their own debt and to complete this win win situation by doing so are able to keep long term interest rates artificially low.

      According to Lawrence Godman, a former Treasury official and current president of the Center for Financial Stability the Federal Reserve is propping up the US economy by buying 61% of the government debt issued by the Treasury Department in 2011. This is up from negligible amounts prior to the 2008 financial crisis.

      So there you have it open and clear monetization of the debt on an increasing scale in the US. I am sure that David is aware that on every single occasion in history a government has resorted to this trick it has lead eventually to hyperinflation. As this becomes clearer to the foreign and domestic bond buyers the Fed will eventually end up “buying” close to a 100% of the US bond issues and all with newly created dollars. What could possibly go wrong??

      Mr Goodman goes on to say “Fed intervention in the government debt market makes demand for treasury bonds appear higher than it really is, as foreign creditors and other investors have fled US government debt instruments and are looking elsewhere until the government makes serious attempts to curb spending and narrow its gaping deficits.”

      So things are not that rosy in the land of the free if you look at what is really going on behind the scenes. And David seems to think that even more money printing might solve these problems. I’m afraid we will have to look more deeply than that.

      • cooldude

        Here is the link for anyone interested. I have a feeling I am about to be informed that Glass Steagall could solve all of this
        http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106

      • bonbon

        Nobody here believe is rosy in Obama’s USA. It is catastrophic right across the Atlantic. We have a bankrupt FED trying to bail out the Euro. Sheer insanity.

        It is catastrophic in Ireland, as DMcW diplomatically points out.

        No golden magic wand will fix this. I have put forward a 3-point program that only begins with Glass-Steagall. The next 2 points, Hamiltonian Credit systems, and massive necessary high-tech projects, all detailed.

        That’s hard work!

        • cooldude

          As expected Glass Steagall combined with a early Rothschild sponsored version of central banking and massive projects. The problems in the banking system are so huge that GS or anything else will not solve them. The whole system needs to be reset and it will be but unfortunately it is now too late for the reset to be voluntary and the political will isn’t there to do this. The reset will come after the present system of unbacked currencies implodes probably after some type of western hyperinflationary event. That seems to me almost inevitable but it does not mean there is nothing we can do. Far from it and here are some steps we can take on an individual level to take away the banksters power over us and to live happy and productive lives.
          1) Stop supporting this present system of banking which is based on debt based money issued by central banks. The simplest way to do this is to withdraw most of your savings from the banking system and purchase assets of real value which hold their value over long periods of time. The best of these are gold and silver although land is also good but not as convenient.
          2) Support local organic food suppliers and stop supporting the processed food industry. This will make you healthier and put you in contact with local sources of healthy food.
          3) Stop supporting the modern medical system. This system is totally flawed and is simply designed to sell as many pharmaceutical drugs as possible. Modern doctors are now just salespersons for this totally corrupt industry. Learn about natural health and make good lifestyle choices. http://www.mercola.com is a good start in this.
          4) Look into the well documented dangers of vaccines and fluortidated water. Make your own informed choices on these issues and don’t be bullied by any so called experts.
          5) Learn as much about monetary history and what is really going on in this world as possible. You won’t do this from the mainstream media which is completely owned by the large corporations and the bankers. Max Keiser on RT is a good start.

          These are just some steps we can take. The banksters and their corporations don’t own us unless we let them. We either take control of our lives or we, and our future generations, become debt serfs to the banking mafia.

  23. michaelcoughlan

    Hi cooldude,

    The answer is that the us uses it’s military to subjugate wealth creators in other country’s through repaying us bonds in devalued currency and any country which complains can take up the argument with the US air Farce!

    I’m not messing or left wing. I am an old fashioned right of centre capitalist.

    Regards,

    Michael.

    • Post world war II blockhead thinking is no longer valid anyways, it is not a question of right or left, but a question of how “we” deal with the emerging implementation of totalitarian structures.

      The biggest thread to the social engineers at work is solidarity amongst the people.

      The notion that we as a people are powerless in face of the forces that shape a new reality is wrong, but commonly accepted.

      David Vine is assistant professor of anthropology at American University, in Washington, DC. He is the author of Island of Shame: The Secret History of the U.S. Military Base on Diego Garcia (Princeton University Press, 2009). He has written for the New York Times, the Washington Post, the Guardian, and Mother Jones, among other places. He is currently completing a book about the more than 1,000 U.S. military bases located outside the United States.

      http://www.huffingtonpost.com/david-vine/us-military-bases_b_1676006.html

    • Post world war II blockhead thinking is no longer valid anyways, it is not a question of right or left, but a question of how “we” deal with the emerging implementation of totalitarian structures.

      The biggest thread to the social engineers at work is solidarity amongst the people.

      The notion that we as a people are powerless in face of the forces that shape a new reality is wrong, but commonly accepted.

      David Vine is assistant professor of anthropology at American University, in Washington, DC. He is the author of Island of Shame: The Secret History of the U.S. Military Base on Diego Garcia (Princeton University Press, 2009). He has written for the New York Times, the Washington Post, the Guardian, and Mother Jones, among other places. He is currently completing a book about the more than 1,000 U.S. military bases located outside the United States.

      http://www.huffingtonpost.com/david-vine/us-military-bases_b_1676006.html

      • bonbon

        That base is part of BIOT, British Territory :

        http://en.wikipedia.org/wiki/Diego_Garcia

        Imperial projection. No wonder Blair and Obama get along so well… Yes the British Empire launced bombing campaigns on Afghanistan from there.

        It is said Britain has its fingers on the nuclear US trigger, but it turns out their arsenal is US property.
        Since Truman (the Hiroshima/Nagasaki bomber) we have this “special relationship”.
        now why has Germany surveilance shipping near Syria? A little bit of imperial posturing there too? It has always proven fatal for Germany and the US to play along with Britain.

    • sorry for double post, I need a new mouse. :)

  24. Assumption

    The powers that be… it would be naive to think that the ECB as well as certain politicos are immune to the “wishes” of Geithner etc.

    With a vampire squid that occupied major functions in Europe, draw your own educated conclusions.

    x x x x

    This “eclectic” blog – LOL – has turned into an advertisement platform for a fascist political cult. Sadly, there is no function to IGNORE bonbon’s indoctrinate diarrhea so it would not even show in the blog once he is set to ignore.

    Interesting to learn that such is being tolerated, under the camouflage of free speech, but of course.

    • Try to think of it as keeping your emenies close.

    • bonbon

      Contribute, you too are invited. Slander is a bit worn don’t ya think?

      We even hear a lot about gold here, all in the name of free speech of course.

      We hear very little economics, physical economics. Time to right that wrong.

      • Tony Brogan

        Be careful what you say Georg. you will be sued by Larouche. I believe they have done it before!!
        If we are not careful it could be a class action defence by the DMW blog as he will be part of the action because we were not censored!!

      • bonbon

        Silly twaddle. Now contribute some economics. And take serious criticism like a man.

        The 3 point plan is now on the table. Comments, constructive are welcome.

        It is clear that anyone who puts real economics on the table faces a bunch of Marat’s, Danton’s and a Robespierre. Fine. That’s the way the British Empire works.

        No back to serious economics, political-economy, no golden chains, and no slander.

        We have problems to solve, a future to create for 9+ billion soon. No time for Robespierre’s, Maras’s or Danton’s, except of course as a pantomime.

        • Tony Brogan

          Yes twaddle begats twaddle. you are the one that talked Slander. you are pretty good at dishing out the inuendo smirking and ridicule of other posters.

          not so good at receiving in kind I note.

  25. Tony Brogan

    China can trigger the event to blow the US economy.
    Personally I do not think they will doit until they are ready. After they have wrung out all the benefits. They will suck off all the meat and spit out the bones.

    The Holter Report

    Is China Japan?

    Author : Bill Holter
    Published: August 27th, 2012

    Do you remember back in the late 1980′s when “Japan is going to take over the world” was all the rage? The Japanese had so much money that they bought US gem properties such as Pebble Beach and Rockefeller Center only to lose them just a few years later as their borrowed “pump” money started to dry up. Now, enter China, they have supplanted Japan as the biggest creditor to the US and our largest “trade for Dollars” partner.

    China bubble in “danger zone” warns Bank of Japan – The Telegraph

    If you look at the Chinese stock market, it looks very much like Japan’s did back in 1993 or so, it is down some 70% from the 2007-08 peak and now making new lows. Their trade surpluses and industrial productions are down no matter “what” they say officially, all you need to do is look at the electricity use to know that they too are entering recession with the rest of the world.

    The huge amount of US Treasury securities owned by the Chinese is a well known fact but not one that many have connected the dots with yet. We do know that the Chinese have definitely slowed their purchases of Treasuries but “no big deal” seems to be the reaction as we have “The Bernank” and his ability to print and buy. I ask, what happens if the Chinese become sellers of this horde of Treasuries? There are several scenarios where this could happen. What if they were FORCED to sell to protect their own domestic economy and repatriate capital? Or worse, what if they decided to use their Treasuries as a financial weapon against the US and sold bonds en masse to create or force interest rates higher? What if they did this in conjunction with turning all of their Renminbi deals on full force and shunning Dollars altogether?

    I ask these questions because China is certainly not Japan. Japan has been and is a US puppet that has done everything that we’ve asked of them, China is no one’s puppet. In fact, if you look back over the last 12 months or more, China has been quite boisterous about US over indebtedness, the dangers of the Dollar being backed by nothing and over printed, AND the virtues of Gold as money. No, China is not Japan for the simple reason that Japan rarely spoke about Gold (maybe because they have a huge cache under the Palace) while China rarely misses a chance to talk about it as they know that it’s our Achilles heel. China has become the biggest global producer of Gold and none of it is allowed to exit their borders. Added to this fact is that China is now a very close second place in the consumption of Gold to India and rising quickly. One other small (sarc) detail is that China is not levered nearly to the extent as Japan has been and is. I guess the best way to put it is that Japan facilitated our insanity and China is “resisting” it.

    “Resisting” it may be an understatement. China knows better than anyone the dangers of a fiat currency as they invented paper currency and over the years have blown up more fiat schemes than you have fingers and toes. In my opinion, China has slowly but surely gotten itself to the position it is now in, namely our adversary in a global economic and financial war! They have acquired and built their own “button” where they can push it and literally blow up our Treasury by forcing rates higher at a time that we are unable to pay. They have purchased the London Metal’s Exchange for the ham sandwich figure of just over $1 billion and plan to move the exchange to within their borders. Now, we hear rumors of a huge and out sized purchase of Gold in the works of up to 6,000 tonnes. Rumor? Yes. Substantiated? No, but…it does make perfect sense and if you ever have played chess before, a perfect move if they make it.

    Follow this through, China is our biggest creditor and can dictate our interest rates (higher) if they wish by simply hitting the “sell” button. They have slowly but surely replaced our manufacturing base with a new, state of the art one of their own. They have been circling the globe for several years securing and purchasing the rights to the raw resources and materials necessary to supply this manufacturing base. They have done this using contracts written in Renminbi terms and thus pushing the Dollar aside. They now have their own metals exchange and one must wonder whether or not some of this huge rumored purchase is meant to back the exchange? Or…whether it is meant to back their currency? But…but…such a purchase would blow the price of Gold to the stratosphere wouldn’t it? Yes, which, IF the Gold is actually present inside of Ft. Knox, West Point etc. will not necessarily be a bad thing…unless…it’s not there.

    I believe that what China has done for the last ten years was “training” to get themselves in the best shape possible to call our bluff. They, in my opinion are about to wage war without firing a single bullet (hopefully). Could it be that the Chinese believe our vaults are empty and our investment banks (JP Morgan et al) are short? I think we will all know very very soon as the physical stresses in the markets come to a head. One last set of questions, do you think that the Chinese give a rat’s ass whether their stock market is “down” and making new lows? Do you think the level of the stock market is important to US authorities? Is the price of Gold more important to the Chinese or how many ounces that they hold? Is the Gold price more important to US authorities or how many ounces that they hold? Answer these questions correctly and you too can have your very own “99 year plan!”

    Regards,

    Bill Holter
    Associate Writer for Miles Franklin

  26. bonbon

    As Ireland, Greece, Italy, Portugal, Spain head straight where Argentina was in 2001, here is a little reminder for the “international elite bankers” what awaits them :

    Argentine Judge Demands Arrest and Extradition of Bankster David Mulford

    Sept. 3 (LPAC)–Argentine Federal Judge Marcelo Martinez de Giorgi has ordered the “international arrest” of former Deputy Treasury Secretary David Mulford, in connection with the latter’s role in the usurious June 2001 “mega-swap” he orchestrated in Argentina, on terms intended only to loot the economy and the population. Mulford is now Vice-Chairman International of Crédit Suisse.

    This international bankster, who has repeatedly failed to respond to subpoenas issued by Argentine courts over the past several years, calling on him to appear in Buenos Aires for questioning, is now on the hot seat. Judge Martinez de Giorgi has charged the arrogant Mulford with “rebellion” and is ordering his international arrest for the purpose of extraditing him to Buenos Aires.

    The $30 billion mega-swap of 2001 was a piece of financial skullduggery that Mulford, then an executive at Crédit Suisse-First Boston, personally oversaw with his protégé, then-Finance Minister and Harvard man Domingo Cavallo. Their corruption and arrogance are matched only by what the same gang of murderers is doing today in Greece, Spain, Italy, etc.

    The swap was supposed to provide some debt relief to Argentina, but Mulford chortled at the time, “people will have to pay dearly for that little favor.” The deal’s usurious terms–bonds were swapped at an average interest rate of 15.3% compared to the 7% average rate on the original bonds–meant that over the 30-year life of the swap, Argentina would have paid $52 billion {more} in interest than it would have otherwise! Moreover, the seven foreign banks that served as “intermediaries” in the deal received an obscenely-high $160 million in commissions.

    At the time, bankers publicly laughed at how they had ripped off Argentina. But they aren’t laughing now. In 2007, Cavallo, along with former debt negotiator Daniel Marx, was indicted for “fraud against the state” and carrying out “negotiations incompatible with the public interest.” Judge Martinez de Giorgi announced today that he will send orders to Interpol’s Extradition Department, to the Argentine Federal Police and to the Director of Criminal Statistics to arrest Mulford, wherever he may be, and extradite him to Argentina.

    • molly

      Yes but can you give me the Irish version of who need to arrest for our mess.
      How many bankers ,government ministers ,top civel servants and the Nama bunch have I left any group out?

      • bonbon

        Don’t worry, they know who they are, probably close friends of Mulford. Never forget Britain went to war with Argentina, and looks like it wants to again. That’s just a bit different than your local corrupt favorite straw dog, don’t you think?

        The old British Robespierre trick of inciting the people to behead themselves, and that is exactly what France actually did, never worked in Ireland. Look very sharp at what Argentina is doing and what President Cristina Fernandez de Kircher actually say and does.

  27. martino

    Tony, this silver thing as money thing, well one thing struck me about it. Silver has to be mined, right-those who own the mines will have the same power of creating money as the central banks do now. How do you prevent this abuse Tony? What’s to stopping the mine owners becoming the new overlords?

    The Mexican Libertados are very pretty, and they have no face value-a bit like the coin you prospose to be phased in here.

    • bonbon

      The Treasure of Sierra Madre, Bogard’s story of gold miners in revolutionary Mexico has a lot to offer to clear the desert dust.

      I like the movie, the entire gold persona is there…

    • Tony Brogan

      Hi martino
      Silver is silver and has a world price currently around the $30 range. It can be traded and used as money no doubt between consenting peoples.
      To use as a national currency it has to be minted by a national mint. The coins so minted become the money and can be assigned a monetary value. In days past the value so assigned was stamped on to the coin. With this fixed value that did not vary it meant that as the market valued the contents higher than the stamped value the coin was melted down to achieve its higher value and the coins went out of circulation.
      To keep the coins in circulation the trick is to have the assigned monetary value higher than the melt value.
      The suggestion for a silver coin to circulate was to have no value stamped on to the coin but to mandatorily set a value by fiat (yes we would have a form of value assigned by government) that is always at least 20% above the world market price of the metal in the coin.
      The coin would simply have the weight of silver contained in the coin and the purity this guaranteed by the mint.
      Todays value of silver at $30 is grossed up by 20% to $36 and then for convenience round up to the nearest multiple of 5 which = $40.
      The government computer/website would up date this value each week and if the price of silver was now within 20% of the $40 the next adjustment of the monetary value would go uo up accordingly. If the market value of silver had dropped then the monetary value of the coin would REMAIN THE SAME AS IT WAS. THE GOVERNMENTT GUARANTIES THAT THE MONETARY VALUE OF THE COIN WILL NEVER FALL.
      The mint would be instructed to mint coin until the demand for coin was sated. Nobody could demand that the mint coin their silver.
      The silver miners would still produce silver and sell at the world spot price but they could not produce coin or silver money.
      Most silver is produced not from a pure silver mine but as a bi product of other mines such as lead, zinc, copper or gold mines.
      The Irish mint simply buys silver from the miners at the world price for silver $30, and sell the coins to the public at the monetary value of $40. The $10 differential covers the costs of minting, smelting and distribution and a profit to accrue to the mint. This profit would accrue as silver bullion and as it increases in volume would be the basis for the issuance of treasury notes that would be issued fully redeemable at any time for silver. These treasury notes would have the same monetary value as the coin. A one ounce note would have the monetary value of $40, a one tenth ounce note would be a $4 monetary value. a ten ounce note would be a $400 monetary value etc.These notes would eventually replace the fiat notesissued by the central bank and the currency would be fully backed by silver.
      People would become accustomed to pricing in ounces of silver. store keepers would program tills and pricing would be dual. Both fiat currency and ounces of silver pricing would be displayed. People would be quick to adapt.

      It is likely that the silver coins would initially be used as savings as they would be inflation proof whereas fiat currency is not inflation protected.
      Gradually silver coin and treasury silver notes would circulate as money.

      There would be no danger of the silver miners being the next overlords as you put it. They would be happy that the new demand for silver bullion would tend to rise prices and their bottom line.

      A miner might be happy to be paid in the newly minted coin as that would Hedge the value of the silver as the monetary value of the coin could not go down but only up whereas the bullion they sold to the mint could fluctuate in price as the world price fluctuated.

      Some beautiful Irish coins would be the pride of Ireland and the envy of the world. There is something magical in handing a silver one ounce coin. It actually feels like money and not a trinket or token.

  28. Clare Leonard

    Martino
    Cost of production re. Gold approx 1,200 per oz.

    Central banks cost of production re. paper money, press a button on a computer.

    Which is the overlord?

    Does that answer your question.

    • StephenKenny

      I’m not sure where that figure is from. This is a current view, via Bloomberg:

      http://www.bloomberg.com/news/2012-09-04/gfms-says-gold-mining-cash-costs-increased-19-in-first-half.html

      • Tony Brogan

        Cash costs as often quoted are the cost of mining with the mine in place.$725
        not included in this figure are the cost of mine development, cost of prospecting, depreciation and the cost of reclamation.
        I note the ‘all in’ costs quoted in the article were $1050 per ounce. Other well informed people have it at $1200 plus or minus. If it is not that high now then it soon will be as inflation for mining equipment runs high due to demand and actual cost increases.

        That is why it is cheaper for a major miner to over pay to acquire a minor miner as the losses of the development process have already been taken.

        They also quote annual gold mine production at about 2800 tonnes which is only up 300 tonnes from year 2000.

        Gold is hard to find and getting more expensive to mine. It is not much more profitable today at $1650 an ounce than it was at $1200.

  29. Clare Leonard

    Should you we wise enough to buy silver, at 30$ you are buying at below production cost.

    If fiat currency is good, why do Central banks need a monopoly, if fiat currency is not good, why are we still using it?
    Our government looks after the interests of the central banks and not the people who elected them. The Italians call that type of cosy arrangement fascism.
    Perhaps the Central banks make too much profit from
    their ponzi scheme to allow a free market.

    • bonbon

      The way to deal with banking, the creative way, is to use a tested principle, a national intervention – Glass-Steagall. This way a healthy commercial banking system can be encouraged to focus on the economy.

      Leaving them to themselves as for the last 12 years since Glass-Steagall was repealed in late 1999, gave them, well a major problem.
      The Shatterer of Glass-Steagall, Sandy Weill of Citigroup, himself has said since July (following us and the FT), that it is essential to re-instate that law! He will draft the legislation!.
      President Michael D, as elect, spoke about Glass-Steagall on RTE. The links are here. As far as I know the only president to do so. Argentina and Iceland are well on the way.

      I have and will post continual updates on calls for this from the most unexpected corners.

  30. Halo Effect

    My very , very best friend Bobbie Connolly is about to compete in the paralympics today, she has a chance of winning some gold, wish her luck —- the gold standard has now some merit.

    Printing money is about relativity and liquidity, but more worthless paper will only mutate the problem not solve it- but if one country prints in isolation as is the UK and the USA —this could be divisive and lead us to a dangerous place —- the “pivot of war machines to Asia’s south china seas” nice to see politics mentioned in Davids topic above, but his naivety in his world politic is obvious and is pro west norm — without factual analysis of the effect the west imposes on the rest of the world — I am aright Jack who cares that china per-capita income is at least 8 times less than the USA etc..screw the slanty eyed peasantry — Eh David! your aright JACK

  31. Halo Effect

    Cameron has a reshuffle with no economic policy but with new heads to promote nothing out loud – optics at large

  32. Printing Money can save local communities there is no doubt about it .It has been done before and can be repeated again.

    Currently on a national basis we only buy imported goods and this has been tested in a new program by TG4 to be screened soon.

    Local communities can create their own home markets and issue their own legal tender only to be used and cashable within their region.

    On a Sovereign basis Jersey , Guernsey , and Sark all separately issue their own notes and are not honoured by the UK Banks. But the system works for their economy.

    • bonbon

      G.K. Chesterton’s charming Communitarianism, Distributionist economics. So homely. The British Fabians loved it so much their poster boy Mussolini based his fascism on exactly that. Wall Street congratulated him repeatedly on birthdays. If Jersey the other offshore golf courses want to play poster boy, well fine for them.

      Ireland is a nation, under attack yes, as all nations are. Financially, and by subterfuge. Even some politicians want to sully the nation so badly that people fall into the hands of a Mussolini.

      The Euro is a disaster, and will soon dissolve. Hamilton national banking, after we split off the investment arms to fend for themselves. We have a nation to build.
      The Shannon Scheme was not a “community thing”, a windmill in the back yard. FDR was impressed and brought the Tennessee “community” (indigent malaria) up to a standard of living Communitarianism never grasped.

  33. bonbon

    Eggheads for Glass Steagall

    Sept. 4, 2012 (LPAC)–The 2012 Fall Issue of the Phi Beta Kappa Society’s 80-year-old quarterly, {The American Scholar}, which prides itself on including nearly 300 presidents of the leading colleges and universities in the United States among its 25,000 subscribers, delivers the message that it is time to restore Glass-Steagall.

    In about as many words as the magazine has subscribers, University of South Carolina law professor and former contributing editor of The New Republic, William Quirk, presents the case for Glass-Steagall under the title, “Too Big to Fail and Too Risky to Exist.” Banks are more reckless than ever, four years after the 2008 financial crisis, Quirk complains, and shouldn’t that be discussed in the election campaign?

    “What have we learned? Where are we now? What are the prospects for meaningful reform of the financial system? Will our debt crush us? Should we let it? Is it legitimate? What comes next? An open discussion of these questions needs to take place now. The health of the financial system, and of our republic, depends on it. Yet for the bankers, it is still business as usual….”

    Quirk declares that the news of the Libor rigging staggered him, like the character in {The Great Gatsby} when he learns that the outcome of the 1919 World Series was fixed. He revisits those damning emails between Barclays’ New York derivatives traders and its London rate submitters: “For Monday we are very long $3 m cash here in NY and would like the setting to be set as low as possible… thanks;” “Always happy to help, leave it to me, Sir;” “Done for you big boy;” and “Dude. I owe you big time! …. I’m opening a bottle of Bollinger.”

    Weimar strategies have been tried for the past 40 years; “the downside of this debt-fighting technique is that you can get a Hitler,” Quirk remarks.

    Dodd-Frank, the Volker rule, add complexity, when the system needs simplicity. “After the financial crisis, derivatives should have lost their immunity from gambling and security laws…. The solution to our problem is clear: the system needs to be simplified and the bankers’ incentives need to be changed. A return to Glass-Steagall and a repeal of the gambling immunity for derivatives would be a good start.”

    The South Carolina professor showed he has yet to understand the American System, however, by swiping along the way at Alexander Hamilton for “believing a strong government needed strong credit.”

  34. Tony Brogan

    Get out of the system and get out now.

    -Jim Sinclair

    Monty Guild, a friend of mine for more than forty years, is the most honest and capable man, in my opinion, in money management. I respect Monty’s feelings on many matters, certainly the macro picture. Monty, like I, believe it is possible that coordinated central bank actions in the USA, EU, Japan and China are being discussed. The economic problems are so severe, so international, so global, so entwined, so insoluble and still caused primarily by the greed of the 1990s to present finance in the form of OTC derivatives that only coordinated global action can kick this can one more time. Gold is truly going to and through $3,500. The gold business is the best business to be in.

    -Jim Sinclair

  35. So, would you know…?

    Good morning,

    ask yourself, before you had your first coffee in the morning, just jumped out of bed, could you tell the difference between:

    - The Council of the European Union
    - The European Council
    - The Council Of Europe

    So, would you know?

    I do, but that is only because I am a member of a species on the brink of extinction, I read, which is the strange behavior you will still find in some remote areas of this world where you can find people hiding their heads – they should be reported to THE AUTHORITIES! – behind some large format funny smelling paper that is riddled with strange symbols.

    Seriously though, we live at a time of great political deficit in Europe. People are questioning the legitimacy of the EU institutions, and rightly so!

    The over importance that is given to the financial capitalist industry, the powers of the European Commission, an institution that has no real democratic counterpart, and their activities, ranging from highly questionable to utterly Kafkaesque – Lightbulbs anyone? – has endangered the honorable ideas behind the original European project.

    • coldblow

      Georg

      Yes. Even Colm McCarthy wants a legal challenge of the EU/ECB’s actions towards Ireland.

    • bonbon

      Honorable ideas behind the EU project? I read that Churchill first proposed the United States of Europe, taken up by Sir Oswald Mosley months later. That is the intention, all honorable men I am sure.

      The Gholem Britain let loose on Europe to destroy every nation-state he could get his claws on was defeated. So the next attempt to do the same with a smile – witness Blair’s grin, continues the British project.

      Read between the lines. As Beethoven said music is not the written notes on paper.

    • bonbon

      The Thomas Pringle ESM/EU Case Has Been Prioritised By The EU Court Of Justice

      From an article posted on the Thomas Pringle website

      “There is a principle within the EU that if an issue is before the ECJ that could affect everyone else then implementation [of the ESM] should be held off until it is resolved,” Mr Pringle told the Financial Times. “If the ECJ agrees with me then the ESM is not compatible with EU treaties and cannot come into force.” — Financial Times 13.08.12

  36. molly

    Will the next budget bring down the government .
    Will there be a revolt against what’s comming in the budget.
    This government have allowed themselves to be back into a corner.
    This government will be on the ropes.
    At the end of the day we have to live here and yes there will be a hard budget but if the pain it’s not shared fairly I for one will be out protesting .

  37. molly

    David please do a post on the unemployment in this country will the number of people on the dole increase to 20 percent.
    If there was no emergration what would the unemployment figure be.

  38. Tony Brogan

    http://www.zerohedge.com/news/41-years-after-death-gold-standard-look-how-we-ended-economic-purgatory

    41 Years After The Death Of The Gold Standard, A Look At “How We Ended Up In This Economic Purgatory”
    Submitted by Tyler Durden on 08/15/2012 20:53 -0400

  39. [...] Read the rest @ DavidMcWilliams.ieBe Sociable, Share! Tweet [...]

  40. Tony Brogan

    The Holter Report

    Spain is already Greece, are you listening to the metals?

    Author : Bill Holter
    Published: September 5th, 2012

    Spain had a nearly $100 billion outflow from it’s banking system in just the month of July (Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain). They have a 25% unemployment rate, a declining economy and the sovereign itself probably has less than 60 days before it goes total “Greek”. This is a full fledged bank run in progress as their largest bank Dexia was bailed out last week. The bailout of $7 billion or so merely plugged the hole created over the last 90 days, it has done nothing to stop the losses. While speaking of losses, their real estate and housing sector makes ours here in the US look healthy which of course is another hole in their banking sector hull. The “hope” is that the ECB (Germany) will step in and save them, who will save Germany?

    The above is not really “new” news but it is exactly what was predicted. It was “predicted” because it (as everything else financial) is basically a mathematical equation of logic. Greece was logic as is Spain, Italy is logic as is France, as is the US. My point? This is global and it is systemic to the very core. It is completely predictable as to “failure”. The timing is not fixed nor is the exact path taken, but mathematically the “end” will arrive at default, non payment and new/changed currencies.

    This is so easy to see as all central banks and sovereign treasuries are floating adrift in the middle of the sea of fiat. As each banking sector or sovereign’s head goes below water, they are helped by those “stronger”. But…for how long can the strong continue to tread water while holding the up weakest? The problem…even if only one goes under and drowns, because they are chained to the rest, they ALL will go down and drown. Again, this is not new thinking but it is here now and in your face obvious.

    What is also obvious is that precious metals (real money) will be the one and only last man standing because they depend on nothing else for their value. Yes, I know, CNBC has paraded their clowns again to tell you that the metals have broken out because of “QE” expectations on a global basis. QE, no QE, whether it works or doesn’t work to buy some more time…it doesn’t matter. The metals have value because they “are”, not because they are “legislated” value. In fact, the precious metals will attain their highest relative values if the entire system collapsed in what would be called a deflationary heap. Inflation, deflation, it does not matter, the precious metals have only one way to go in the long term.

    The direction is toward more “relative” value versus anything and everything including food. I say this because the old saying goes…”you can’t eat Gold” and all non holders rebut with this all the time. No, you can’t eat Gold but you can surely purchase someone’s surplus food with Gold or Silver when nothing else spends. There by definition MUST be a “money” or a “currency” to transact trade or business with, whether the paper currencies are printed into oblivion or the banking system implodes into oblivion, it will not matter as the current paper monies will either not be accepted, not available or most likely not accepted when they do become available.

    The metals are just now beginning to “speak”. Roughly 1% of Americans even own precious metals. At best only 25% of these truly understand the metals. The other 75% are thinking now, “oh goodie goodie, Gold and Silver are going up and I’m making money.” Not true. When the metals go to new “fiat highs,” this will be a signal, a very very BAD SIGNAL! As the old highs are being taken out, consider this as your warning that the system is becoming untenable and unstable. The metals will tell you exactly when “game over” has arrived. Do not be “happy” as new highs arrive, be “happy” that you own as many ounces as you do because your ability live, trade and survive will depend on this. Do not make the mistake of counting your net worth in fiat because at the stroke of a pen, the whim or mistake of a trader, or the movement of the masses can zero out your paper net worth as fast as the Sun can rise!

    Regards,

    Bill Holter
    Associate Writer for Miles Franklin

  41. Tony Brogan

    Richard Russell (dowtheoryletters.com)

    September 4, 2012

    The national debt of the US is now well over $16 trillion and growing at the rate of over one trillion dollars a year. It can never be paid off through the “normal” means. Paying off by normal means would entail a huge, really killer boost in taxes and a brutal unmerciful, slashing of entitlements.

    The only way the US’s debts can ever be seriously addressed is to devalue the dollar.

    The US owns the world’s greatest hoard of gold. Here’s what I think the authorities have to do. They should unilaterally, overnight raise the price of gold to a high value, maybe around $10,000 an ounce. Thus, each dollar would be worth one ten-thousandth of an ounce of gold. This would allow our enormous debt to be paid off with vastly devalued dollars.

    This would be inflationary, since everyone who owned gold would own a pile of devalued dollars. The huge increase in the number of dollars would drive prices up, and that would work against the current forces of deflation.

    Nations owning gold would in turn (in order to compete) — devalue their own currencies, and thus be able to pay off their own “impossible” debts. In the end, a new world monetary system would have to be established, but the terrible problem of a planet choking on debt would be solved.

    I think this is the only way the world-debt problem is going to be solved. It will, in the end, be solved by devaluation (as Roosevelt did in 1933, when he suddenly and unilaterally raised the price of gold from 20 to 35 dollars an ounce). Interestingly, we now hear an increasing amount of talk regarding gold entering the world monetary system. Furthermore, I think we are going to hear even more about gold in future months. Smart, wealthy, well-informed investors will start accumulating gold. (Soros and Paulson are doing it already. I don’t doubt that Soros has inside information.)

    I also believe that the US will, in due time, start backing its currency with part-gold and the dollar will be convertible into gold at around $10,000 an ounce. This will render the dollar the most wanted currency in the world.

    I believe the Chinese are onto the same idea. But as of now, China does not own as much gold as they desire, which is one reason China has rushed headlong into the gold business — China is currently the world’s biggest producer of gold. It is also why China is encouraging its own people to buy and accumulate gold. China knows that gold is the future of the world monetary system.

    Subscribe to the Dow Theory Letters

  42. Tony Brogan

    Jim Sinclair’s Commentary

    I believe it’s going a lot higher. It’s going to have a parabolic spike, caused by some event or some loss of confidence. A US dollar crisis would be a perfect example. That will cause gold to go through the roof, and then everybody will want to own it. I don’t think we’re even close to that yet. Gold will probably have a much greater run than some of the other hard assets because it’s also a currency.

    - Frank Giustra, mining industry entrepreneur

    Jim Sinclair’s Commentary

    We will pay the Piper. There is no other alternative.

    Jim Sinclair’s Commentary

    When thinking about a Gold Standard please keep in mind that gold can guarantee a balanced system for decades, but cannot fix the system.

    Gold is the “Day After” long-term guarantee of a fix.

    The National Debt: $16 Trillion Dollars Of Moral, Cultural And Political Decay

    Bill Flax, Contributor

    Wow! We’ll soon cross Sixteen Trillion Dollars in Federal Debt! S-i-x-t-e-e-n T-r-i-l-l-i-o-n D-o-l-l-a-r-s. That’s a lot of vote buying even for Washington. Is this ruin? Have we indentured our children into servitude? Solomon warned borrowers will be slaves to their lenders. Add $120 plus trillion in unfunded forthcoming liabilities and, well, we’re doomed.

    Yet, as significant as this looks, and sixteen trillion of anything cannot be insignificant, the economic repercussions are the least of America’s worries. We still finance this cheaply. Rates on Treasuries remain low. Moreover, America endures as the world’s preeminent economic engine.

    Obviously, debt weighs heavily on markets, especially the spending which spurred annual deficits exceeding $1 trillion. Government intervention smothers more gainful private pursuits. As Washington nonchalantly politicizes capital the economy suffers. Private actors would invest far better than politicians bribing the electorate.

    As resources filter through the state’s machinations, liberty and prosperity are sacrificed to political ends. Massive debt is economically bad, really bad, and perhaps even hopeless; but much, much worse is what this reveals about America’s moral, cultural and political decay.

    Our present debt debacle frequents comparison to World War II. We borrowed then to save Western Civilization. That war would end in triumph. Today, we spend subsidizing civilization’s demise with no victory evident and no end apparent. These debts and the moral morass they sponsor will worsen. Acceleration is baked in as baby boomers only begin to retire and taxpayer supported illegitimacy spawns multi-generational dependency.

  43. Tony Brogan

    GATA (www.gata.org)

    So what has GATA been saying all these years? In essence, there is a structured Gold Cartel out there that has been managing the gold price in surreptitious fashion by borrowing gold from the central banks and feeding it into the physical market to meet a serious supply/demand deficit, one which runs over 1,000 tonnes per year. This is very significant as mine supply is less than 2500 tonnes per year and going lower.

    This Gold Cartel includes The Fed, US Treasury, Exchange Stabilization Fund, bullion banks such as Goldman Sachs, JP Morgan Chase, etc. There are those out there who will say the cabal is doing a lousy job … just look at rising price of gold. What these people don’t realize is the cabal is running out of enough available central bank gold to keep the price down. What you are witnessing is a managed retreat. Worse for them, the more they take the price down these days, the more the Arabs, Indians, Russians, and Chinese buy. With the supply/demand deficit growing and a dwindling central bank ammo supply, (along with mounting financial market crises), the Gold Cartel is in deep trouble. They know it. We know it.

    That’s why the gold price is taking off. There are those who reasonably say the falling dollar is the key to the price of gold. I see it differently. That certainly was not the case after the giant move following Gold Rush 21 and it certainly is rarely the case these days, save after the recent Fed’s audacious rate cut on Tuesday. One only has to observe what the gold price has done on a daily basis vis-à-vis the dollar to appreciate gold is roaring because demand for physical is overpowering the cabal’s short term ability to halt the rally on a sustained basis.

    Yes, a crashing dollar will have an enormous impact on gold as time goes by, but so will the growing concerns over counterparty risk and derivatives blow ups. They are all factors, which are collectively increasing demand for physical gold.

    It was business as usual for market observers who live on Planet GATA, and yes the stock market is managed too. It has been carefully managed since 9/11, probably on the excuse of a national security issue. Since then, FEAR has NEVER been allowed to creep into the market. Hail Mary last half hour rallies out of nowhere, for no apparent reason, are not uncommon.

    As many of you know, our sort of analysis leads us to the term most often used to deride the GATA camp … CONSPIRACY NUTS

    More irony again, in that mostly what GATA has done is deliver what is already of public record, just not talked about, or discussed, in POLITE company.

    For example, a couple of weeks ago Treasury Secretary Paulson said, “We Have Re-energized The President’s Working Group On Financial Markets.” OK, so who are those guys and what do they do?

    The Group (PPT) was established explicitly in response to events in the financial markets surrounding October 19, 1987 (“Black Monday”) to give recommendations for legislative and private sector solutions for “enhancing the integrity, efficiency, orderliness, and competitiveness of [United States] financial markets and maintaining investor confidence”.[1]

    As established by Executive Order 12631, the Working Group consists of:

    The Secretary of the Treasury, or his designee (as Chairman of the Working Group);

    The Chairman of the Board of Governors of the Federal Reserve System, or his designee;

    The Chairman of the Securities and Exchange Commission, or his designee; and

    The Chairman of the Commodity Futures Trading Commission, or her designee.

    Now, how does this GROUP, which meets in secret, accomplish its goals?

    … Partly by propping up the US stock market each time it is about to fail and by calming the gold price down whenever they can. Why gold? Because it is the most widely observed inflation/crisis barometer. They never want the price to go screaming higher for the simple reason that every time it does, the rant is about what a soaring gold price is telling the investment world … and that rant is usually about inflation or a crisis of some sort, both of which are bad for Planet Wall Street.

    The PPT is not alone when it comes to orchestrating US financial markets. We have the Counterparty Risk Management Group.

    Two years ago they issued a report “Toward Greater Financial Stability: A Private Sector Perspective.”

    CRMPG: “since we know that financial disturbances and even financial shocks will occur in the future, and we know that no approaches to risk management or official supervision are fail-safe, we also know that we must preserve and strengthen the institutional arrangements whereby, at the point of crisis, industry groups and industry leaders, as well as supervisors, are prepared to work together in order to serve the larger and shared goal of financial stability.”

    A bit Orwellian, eh?

    The leader of this group in July 2005, Hank Paulson, CEO of Goldman Sachs. Other members in the group: J Morgan Chase, Deutsche Bank and Citibank, all sued by GATA’s Reg Howe in 2001 for violation of anti-trust law and manipulation of the gold price. Other firms in this select, in-crowd group include certain hedge funds, such as that of the legendary Paul Tudor Jones.

    Then, of course, there is the Exchange Stabilization Fund. I think you get the picture. The manipulation of US financial markets is real, pervasive and is carried out by those organizations.

    As far as the public record about gold manipulation is concerned, it is all on the record too. You don’t need to only rely on GATA’s pronouncements…

    *Alan Greenspan gave his famous testimony to Congress on July 24, 1998: “Central banks stand ready to lease gold in increasing quantities should the price rise.”

    *Barrick Gold confessed to the gold price suppression scheme in U.S. District Court in New Orleans on February 28, 2003, when it filed a motion to dismiss Blanchard & Co.’s anti-trust lawsuit charging that Barrick was doing exactly what its motion admitted. The motion said that in borrowing gold from central banks and selling it, Barrick had become the agent of the central banks in the gold market, and, as the agent of the central banks, shared their sovereign immunity and thus could not be sued … the same sovereign immunity defense used in Reg Howe’s suit.

    *The Reserve Bank of Australia stated in its 2003 annual report: “Foreign currency reserve assets and gold,” the RBA’s report said, “are held primarily to support intervention in the foreign exchange market.

    *The Bank for International Settlements admitted the rig. The head of the bank’s monetary and economic department, William R. White, stated the following 15 months ago at the BIS’ fourth annual conference, held in Basel, Switzerland .. regarding the role of central banks:

    “And last, the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful.”

    * Republican Presidential Candidate Ron Paul said the following on gold in an interview with Market Watch’s Peter Brimelow recently:

    “It too is being manipulated just like all the other currencies.”

    • bonbon

      Ex- President George Walker Bush, (papa) was on the Barrick Board. A GOP’er. A Canadian company with a US ex-pres as top consultant.

      British Empire anyone? Considering Prescott Bush, granpa, and his funding of the NSDAP in the 1930′s, one get’s slightly wary, what?

    • dwalsh

      Hi Tony

      “For example, a couple of weeks ago Treasury Secretary Paulson said….”

      ??

      • Tony Brogan

        Hi Dwalsh

        It is in the posting above??I am not sure what you are missing. Try refresh??

        For example, a couple of weeks ago Treasury Secretary Paulson said, “We Have Re-energized The President’s Working Group On Financial Markets.” OK, so who are those guys and what do they do?

        I copied from above??

        • dwalsh

          According to my information Paulson has not been Treasury Secretary for some years.

          • Tony Brogan

            Correct
            I did not pick up on that. Whether the quote was from 2005 or a recent quote from the Ex Treasury Sec I do no tknow. Probably the former.would you like me to find out?

          • Tony Brogan

            As near as I can tell, it is a reference to Hank Paulson while he was the newly appointed Treas/Sec in 2005-2006

          • dwalsh

            So now i am confused. What you wrote above was not your comment; but was pasted from somewhere else?

  44. dwalsh

    Hi bonbon

    Humanity is not ready to engage in conscious planetary geoengineering. We have to address what we are already doing non-consciously; and put the human world in order.

    Just look around. The human world is in utter disarray. Socially, politcally, economically. The Western imperialist elites are beating their war-drums. They have wars planned decades ahead. Many of them consider nuclear weapons a tactical option. How’s that for geoengineering?

    Full-spectrum dominance as they call it. Global corporate hegemony for them; neo-feudal serfdom for us.

    The noosphere, or the human world, is a newly emergent level of natural order in the biosphere. Our first task is to achieve a stable integrated global civilisation; and conscious and responsible integration of the human world into the biosphere.

    @ Adam Byrne

    woof-woof!

    • bonbon

      Be precise, as I repeatedly point out here. Obama and Blair want war. Stupid people are supporting Obama now, and even some very nice people who should not do that.

      To put the danger on the table, look at the future we must have. It shows the insane quality of the Nero-in-Chief. Nero never wanted a future, and when he could not get his way, he raped and murdered.

      As human beings, the future decides our economics, not tiny steps from the feudal past. That is why most economics is totally incompetent.

      The Biosphere was never in “equilibrium”, instead stepped increases in energy flux density and cephalization. Take the O2 atmosphere, highly reactive, replacing the ancient methane archaeo-bacter one. “Overnight” that extinguished the previous life forms and a major jump occurred. Take bones even – modern ones use different elements.
      The Second Law of Thermodynamics is a joke when we look at life and further, us. In other words the real universe which we act willfully on, understanding this character.
      Life and mind are not “emergent”. Life only comes from life, and mind from mind. Chemistry, no matter how one juggles its “self-evident” aspects does not produce life. Adding monkey genes together will not produce man. Dr. Moreau, HG Wells “scientist”, in true British Darwinian fashion modifying animals to be Human-like is a lesson.
      Life is a universal principle built into the universe, mind also. Life modified this planet incredibly fast compared to geologic scales. We are a huge jump beyond that. Vernadsky, scientist, is the reference here.

      • dwalsh

        Simplistic attitude there. Bogeyman Obama. Obama is just a functionary. Does what he’s told.

        Your replies seem to have very little to do with my points; and to be mostly doctrinaire rants from Larouche.

        • bonbon

          Obama likes killing – he does the Drone list apparently at breakfast. No one needs to tell him to it. He has now the objective to go after Russia. Whether that fits with your view does not worry him in the slightest.

          OBAMA’S MASS KILLINGS CONTINUE: Within the last 24 hours, at least two major U.S. drone attacks killed 17 people, in Yemen and Pakistan. The U.S. acknowledges that 13 of those killed in Yemen were civilians, including three women–”collateral damage.”

          Regarding the noosphere, there was never equilibrium, the “urge” to seek it is purely non-scientific and dangerously simplistic. In fact on the cosmic scale no equilibrium exists either.

          The Nero phenomenon Obama’s mentality is made crystal clear when the issue of life, man, exploration, progress are put on the table. He continues to bail out Wall Street ($29 trllion so far), shutdown NASA, kill fusion research, and mandates a biofuel quota in the worst harvest in years. All regressive, as if the future itself is being attacked. He wants war with Russia.

          What we see then, when real economics is firmly insisted upon, a kind of suicidal, murderous attack. Why would moneybags spend $150 million to elect this guy the last time? For exactly this result.

          There is a tyranny – intimidation when real economics are discussed, scientific economics. As the empire collapses, and sees no chance of revival, it is determined to go for war. “Better rule in Hell, than serve in Heaven” is their motto.

          • dwalsh

            Hi bonbon

            Obama serves a murderous elite. He is their functionary; nothing more. Ditto with Bush before. It is mistaken to imagine these men do what they themselves want to do. The elites would never allow that. Really let go the bogeymen and see the bigger picture.

            Would you care to quote where exactly I said the noosphere or biosphere are, or ever were in equilibrium.

            This is what I mean about your replies having little or no relation to my points. There is no discussion; just doctrine.

  45. bonbon

    ECB Offers Choice “Between Plague and Cholera”

    Sept. 5, 2012 (EIRNS) — Hans-Peter Martin, an Austrian member of the European Parliament who was in the closed-door meeting with Draghi at the Finance Committee the other day, reported to his emailing list that we are now faced with making a choice “of plague or cholera.”

    “If the ECB now starts to buy state bonds on a large scale, the danger of inflation grows. Almost everything will become expensive, maybe not immediately, but in the near term. If the ECB does not do that, the insolvency of several states approaches, with unpredictable consequences.”

    Martin, who calls for a referendum on the euro, says that “financial markets and banks must finally be comprehensively controlled,” but he does not say how.

    However, once he was sent the last {EIR Alert} articles on the ECB and Glass-Steagall, he responded with the following message: “That is very interesting. This is precisely what I argue in the Parliament.”

  46. bonbon

    “Breakwater For The Eurozone” Is Crumbling

    Sept. 5, 2012 (EIRNS)–Germany’s Angela Merkel travels to Madrid on Thursday to meet with President Mariano Rajoy to discuss terms for an EU bailout of Spain — the same day that Draghi will be rolling out his plan for bond-buying and mega-bailouts. Options are few: either there is a European-wide Glass-Steagall reorganization of the banking system; Spain receives a bailout unlimited in both amount and duration from someone, somewhere, somehow; or Spanish government, bank, and corporate debt blows out. And that in the very short term. The EU, ruling out the first, continues to demand that Spain “ask” for a full bailout with Greek-style “Troika” takeover, and the Spanish government continues to insist that it get the money unconditionally.

    London’s Ambrose Evans-Pritchard denounced Spain’s “escalating game of brinkmanship,” on the eve of the ECB and Merkel meetings, infuriated by Finance Minister Luis de Guindos’s statement to Germany’s {Handlesblatt} that Spain would not hand over fiscal sovereignty to the EU without seeing all the conditions first. De Guindos suggested that “solidarity” would be well-advised. “My colleagues are aware that the battle for the euro will be fought in Spain. Spain is right now the breakwater for the eurozone.”

    Meanwhile, the Spanish government is running through all available cash and rainy-day funds it can get its hands on. Four of the 17 regions have already laid claims on over half the 18- billion-euro regional bailout fund — before it has even been created. It is scheduled to start operating in October, but Catalunya, one of the most indebted of the regions, announced today that it can’t wait until October; it must have money in September to meet payments. Several regional governments reported in the last few days that their plans to cover part of their obligations by issuing new debt have been blown out of the water, because the banks are refusing to buy regional debt, period.

    Then there is the Social Security system, which just raided its rainy-day fund to cover state pensions, and is talking about raiding the pension system’s 67-billion-euro reserve fund next. Labor and Economics Ministries’ projections of revenues that would be paid in, and expenditures to be paid out for unemployment and pensions, were blown apart by the unending increase in unemployment. The government paid out 8% more in unemployment benefits in July; new requests filed for benefits in July were 23.5% greater than in the same month a year ago. As it is, only two workers are now paying into the system for every one collecting a pension or unemployment, the lowest ratio since 1999, according to {El Pais} today.

    The cuts in government spending only accelerate the bankruptcy. For example: cuts in public investment threw 22% of remaining construction workers onto the unemployed lines over the past 12 months, a loss of 207,000 jobs, which also turned contributors to the Social Security system into beneficiaries.

  47. bonbon

    Traitors Get Cold Feet 1: Hollande and Monti

    Sept. 5, 2012 (EIRNS)–The imminent ruling of the German Constitutional Court with the possibility that the activation of the ESM could be delayed, is scaring European traitors. According to leaks reported by {La Stampa}, French President François Hollande and Italian Prime Minister Mario Monti discussed an issue “unutterable in public: what will the decision of the Karlsruhe Court be on the compatibility between the ESM and German law? At the dinner at Villa Madama … the latest rumors from Germany — one, in particular — were discussed with concern from both sides: The German Constitutional Court will utter a yes, but conditionally. In other words, the ‘Judges in Red’ will not say no, and not only because the Berlin Parliament has already made its deliberation on the issue with a greater than two-thirds majority. But the Court could bind the use of the Fund to the obligation to submit every request for aid to the binding opinion of the German Parliament. Such an option is feared both by Hollande and Monti, for the danger that it would paralyze the Mechanism, and also because of the risk of ‘contagion’ to other EU members that might be tempted to imitate the same scheme.

    “Of course, these are issues which two experienced figures like Hollande and Monti carefully avoided addressing in the press conference. As they avoided addressing the other taboo issue: Mario Draghi’s imminent decisions.”

    Traitors Get Cold Feet 2: Barroso

    Sept. 5, 2012 (EIRNS) — In a meeting with ambassadors to the EU yesterday in Brussels, EU Commission President José Manuel Barroso attacked the tendency to return to nation-states in Europe, according to a report in {Handelsblatt} today. “Some argue that international cooperation does not work and that only nation-states are capable of facing the challenges. That is wrong,” Barroso said. “We need this amount of shared sovereignty” in the context of globalization, he added.

  48. Clare Leonard

    It may be a wonderful and welcome opportunity for the Germans to let the Irish take the blame for the potential dismantling of the ESM.
    I believe no decision will be made on the 12th. of September by the German constitutional court.
    They will await the outcome of the Thomas Pringle case, which comes before the ECJ on the 23rd October.
    In his action Mr Pringle has questioned the compatibility of the ESM treaty with existing EU treaty provisions.He has questioned the lawfulness of a related amendment to the EU treaties. The Irish Supreme court referred these Q to the ECJ last July.

    Is the ESM treaty compatible with the EU treaties?

    Is the related decision by heads of government to amend the EU Treaties legally valid?

    Can the ESM come into operation before the EU treaty amendment comes into force on the Ist january 2013.?

    Irelands payment to the ESM is 11 billion,
    this payment will be our initial petty cash contribution.
    The Irish people are bankrupt as a result of the ECB privatising bank profits and socialising bank losses.
    This madness cannot continue, bailing out banks will lead to civil unrest.
    I hope the Germans put a stop to the ESM. The banks need to take their losses on the chin. What a pity
    the Irish will be blamed.
    Thomas Pringle is a brave man, we need more like him.

  49. [...] the banks. … The New Deal was not “free”, but was real. … Read the original here: David McWilliams » Can printing money alone save us? ← DON'T BLAME DOCTORS « the Burning [...]

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