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  1. #181
    Guru Dr_Who's Avatar
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    Quote Originally Posted by JBmurc View Post
    Fantastic article JBmure. Cheers mate.
    Having got ourselves into a debt-induced economic crisis, the only permanent way out is to reduce the debt – either directly by abolishing large slabs of it, or indirectly by inflating it away.

  2. #182
    FEAR n GREED JBmurc's Avatar
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    Cool Guru

    Financial Circulatory System
    by The Mogambo Guru

    I was surprised to see that the government made $81.4 billion in cash out of papers, inks, and base metals in the last year, taking the total Cash in Circulation (essentially the M1 money supply) to $907.4 billion, whereas the M2 money supply is about $8.3 trillion (9 times larger) and (saving the best for last) the M3 money supply, which counts everything that can possibly be construed as "money" in the most liberal sense and making all kinds of assumptions, is almost $15 trillion, as close as anyone has been able to figure out, meaning that the money supply, at least as measured by M3, is now larger than the economy of USA!

    For all you "velocity" freaks out there - and there are quite a few of them - substitute GDP as the "P" times "Q" part of Fisher's famous equation MV=PQ (or, Money supply times Velocity of money equals Price of everything sold times Quantity of things sold) and you get a Velocity of less than 1! Hahaha! What in the hell is a velocity of less than 1? Hahaha!

    Before you fire off another venom-laced email where you insult my intelligence just because I sound so stupid, act so stupid and look so stupid, I already know it doesn't mean anything that I can understand, mostly because I am kind of, well, stupid.

    But it is only an example of the kind of weird, strange crap you will see from now on, especially when all those trillions of dollars that have been created are exchanged for toxic assets, and all the future trillions of dollars to be printed by the Federal Reserve to finance the government's massive deficit-spending, start burning a hole in somebody's pocket, probably thanks to Congress coming up with some new "Get 'em buying!" tax scheme that will, inevitably, backfire and make everything worse and worse until it all collapses into what we hotshot professional economists call a Big Worthless Pile Of Financial Crap (BWPOFC).

    And the reason that I am so sure of things turning into a BWPOFC is that, as Milton Friedman so famously said, "Inflation is always and everywhere a monetary phenomenon," which seemingly guarantees inflation in consumer prices as a result of all of this new money flooding into the world's economy, which is a monetary phenomenon in itself, in that it has only been tried by desperate countries in a last-ditch, kamikaze blaze of what they hoped would be glory, but was instead, always and everywhere, turned out to be just stupidly suicidal.

    And how much inflation can one expect? Good question! The answer is remarkably symmetrical, as Howard Katz of thegoldbug.net says, "Over the past year, the amount of money in the U.S. has increased by almost exactly $1 trillion. This is a 70% increase from a year ago," and "it will cause an approximately 70% increase in prices with a 1-2 year lag time," which, looking at my watch before realizing it does not have a calendar, has already been 1 year of this "1-2 year lag."

    Billionaire Warren Buffet, who is not given to hyperbole and outlandish forecasts, says that he expects inflation to be as bad as it was in the '70s. And how bad was that? Mr. Katz says, "The greatest price increase in American history was 13.3%, in 1979."

    And if you don't think that gold will shoot up when inflation starts roaring like that, then you are obviously new at this investing business and you haven't had time to look at what happened to the price of gold when it was $35 an ounce in 1970 and over $800 an ounce by 1980 when the inflation (from the vast expansions of the money supply needed to simultaneously finance the War on Poverty and the War in Vietnam) was rising along this same parabolic ride.

    Until next time,

    The Mogambo Guru
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  3. #183
    FEAR n GREED JBmurc's Avatar
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    Default came across this very old article -Gold n silver as money

    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  4. #184
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    Worth a read the USD as much as the CNBC FOX etc want un to believe it's now going be all fine for the USD this link shows quite clearly it's not..........



    http://www.lewrockwell.com/sardi/sardi116.html
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  5. #185
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    Quote Originally Posted by belgarion View Post
    Hi JB, You seam pretty convinced that the USD is going to devalue big time in a very short space of time. Have you considered what effect the Fed would have on the money supply if it suddenly started selling the huge number of shares it has aquired in the last 12-18 months? Cheer, Belgie.
    Tis the reason i hold 35kg's of silver bullion as a safe guard I'm fully aware there maybe yet another major move down on world markets tight stops needed
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  6. #186
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    Default From today's Le Metropole Cafe . . .

    Just a minor difference?

    To all; with all the comparisons being made lately to the 1930's I am surprised that virtually no one points out the "small detail" that makes these times not only different but 180 degrees different. Yes I am speaking of money and the lack of "realness" and or backing by metal or anything else. Many advisors say "back in the '30's stocks did this and bonds did that and unemployment was whatever", I don't think a comparison to the thirties is even relevant because the U.S. Treasury was sound and the Dollar really "WAS as good as Gold".

    Fast forward to this century and the Dollar is backed by nothing and the Treasury is the largest debtor on the planet that survives only at the whim of foreign lending. On any given day our creditors have the ability to pull the plug on the U.S. financially, as a matter of fact the Pentagon did a study on "financial warfare" last year. The result was the financial destructionof the U.S. by the Chinese. Back in the 30's WE were the Chinese, the U.S. was the biggest creditor to the world and of course we had "excess capacity" in the manufacturing arena as do the Chinese today. Back then the British were the fading power as we are today and they ran trade deficits which drained their Gold until they exited the Gold standard.

    The point I am trying to make here is that the financial game is so different today because the money is different. The major players have changed seats at the table and are mostly 180 degrees backward from where they were during the depression. The problem that is unfolding and has become totally obvious to the rest of the world is that the Dollar is no longer as "good as Gold". This was the original deal they cut at Bretton Woods in 1944, then in 1971 we reneged on the Gold backing but got the Arabs to price oil in Dollars and thus the "petrodollar" era. Now even this is about to change as judged by statements from the world's oil producers.

    The upcoming currency panic has it's roots in the U.S.. We have abused our right of creating the world's reserve currency and entangled the entire global financial system in our web, if we go down the rest of the world goes down with us. The "games" that the U.S. has played for 50 years or more portraying a stronger currency than in reality has finally caught up to us. The latest comical game being played is "the auction results". This year 80% of Treasury and Agency paper issuance has been bought up by the Federal Reserve and paid for with freshly printed Dollars and each auction is reported as a "success". God forbid the Fed's printer gets a "paper jam" or runs out of toner! Even scarier would be the Chinese or Japanese deciding they want out of what they already have.

    Does the game blow up today? Tomorrow? Next week? I don't know and it doesn't matter as long as you know the end game. This end game will include a massive lowering of the standard of living across America. It will take far more Dollars to continue living in the manner we have become accustomed to. I am not talking about 5% or even 10% inflation, the end game for the Dollar will be hyperinflation. The books have been cooked, the Gold is long gone, all currencies are fake but don't worry because the recovery is just around the corner! The scary part is how many Americans know something is wrong but don't have a clue as to what it is because the media continuously points them in the wrong direction.

    Regards, Bill H.

  7. #187
    FEAR n GREED JBmurc's Avatar
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    Us dept clock anyone think the USD isn't screwed without a major war or huge inflation is dreaming


    usdebtclock.org
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  8. #188
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    Quote Originally Posted by JBmurc View Post
    Us dept clock anyone think the USD isn't screwed without a major war or huge inflation is dreaming


    usdebtclock.org
    Anyone have an understanding of what inflation in the US is likely to do to worldwide inflation? And particular in NZ/Australia? Will it be deflationary in a sense if USD denominated goods become cheaper?

  9. #189
    Guru Dr_Who's Avatar
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    Quote Originally Posted by lissica View Post
    Anyone have an understanding of what inflation in the US is likely to do to worldwide inflation? And particular in NZ/Australia? Will it be deflationary in a sense if USD denominated goods become cheaper?
    A strong USD will be good for AU and NZ economy and makes our export more competitive. The weak USD is giving our rural sector a harder time.

  10. #190
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    Default talk about risky business

    well don't know about you guys but this is got to be bad for so called free market
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

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