Could you elaborate on that a bit? Nixon precedes me.
Is it true that the Dow was exclusively trading American stocks with USD by primarily American people before 1970? If so, how can we connect that time with a fixed gold/USD price to a post Nixon global market with floating exchange?
"All information is already in the chart." Fair enough. But under 7:1, 4:1, 2:1, 1:1, 1:2 all look equally arbitrary to me.
In the '70s, the US was the world's primary free-world economy. The world's primary source of oil had shifted to the Middle East. In the late 1970s, the oil exporting nations realized their power and stood up against American dominance (largely because of irritation at being paid for their real asset of oil with worthless paper no longer tied to another real asset - gold). That triggered a general economic slowdown as the nation's source of energy was squeezed. This led to rather sudden asset and production deflation in the face of money supply that was still rising. As Hugo offered: stagflation. Over the years there have been several cases of similar resistance (particularly Saddam Hussein), though it wasn't a unified front as during the late '70s. Now we are seeing a global shift to remove the USD as reserve currency and reject American dominance. This is far more troubling, as there is no way for the US to prevent such a massive tidal shift in desire for freedom from the wealth-siphoning effect of the USD. Without being the reserve currency, the US will have to pay with assets instead of dollars. Gold for oil, and not cheap (sub-$1,000) gold - gold at its real value many times higher than current. It wasn't the greatest movie, but I strongly recommend Rollover (1981) for a good idea of how the interrelated aspects would cause serious consequences. The action can be seen in this video. Even though it's an old film, the depiction is still very applicable to the current situation. There is also a much more in-depth explanation from FOFOA, as well as a follow-up with additional clarification. I have to say, I recommend everything from FOFOA. If I'd come across his information (also that of Another, FOA, et al.), I wouldn't have had to discover nearly so much on my own. Make use of the resources offered by him to understand where the world is headed. With the chart, nothing really stands as support between here and the previous long-term lows of 2:1, then 1:1. Those are the targets for big money. When those ratio levels are reached, they'll start lightening up their positions. That will happen as the little guys who still have some investable wealth have finally decided to get into the game, providing potential for an overrun below 1:1 and putting their own heads in the noose. The rich get richer. OMG, you ARE amazing. you must blog for a living. don't you have a day job? i don't know how you consistently produce these tomes but they benefit all even though i disagree with some of your conclusions.  |
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Would someone please explain how the 70's are related to 2010's?
Stagflation. You are going to be hearing that word a lot from now on. i was going to launch into a long winded attempted comparison but that one word just about sums it up. |
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very strange. USD down, EVERYTHING else up. all one mkt except up. i don't like it.
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if there are any doubts about market manipulation just look at the straight line up in WHR (Whirlpool) stock today. i don't think i've ever seen such a straighter, unabated rise. this is why i'm so suspicious of parabolic rises; you don't know when they're gonna pull the rug out.
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That Joe Smith example was just to explain that the money is from nothing.
thats no excuse. he should give a true example of how it works. he implies Joe Smith has direct access to that monetization money. they don't; thats why the real economy is getting strangled. The excess reserves appeared when the federal reserve replaced the banks hidden losses (Through their derivatives) with cash, and banks are just leaving a lot of this cash around. What is your explanation to what happens to these excess reserves next?
And that is only part of the story, money has leaked out elsewhere.
i agree that "some" of this money has leaked into stocks, commods, and pm's by the banks recouping their losses. now that they have their bailout USD money and bonuses, why would they destroy the value of those USD's by hyperinflating it away to the benefit of the avg American? they made that mistake in the 1970's and i think have vowed to never let that happen again. |
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wow, this was from Robert Murphy in whom i generally respect? problems in his article i see: 1."For example, if the Fed buys $10 million in mortgage-backed securities from Joe Smith, then Smith will deposit the check in his own checking account. His bank will credit Joe Smith's checking balance by $10 million, but at the same time the bank's account with the Fed itself will rise by $10 million too." this is a terrible example and misrepresentative at best. the Fed doesn't buy the MBS from the consumer, its been buying them from the banks directly and they've been hoarding the USD's at the Fed in the form of excess reserves and NOT lending it out to Joe Smith. in his example he implies Joe Smith has access to this money in his checking acct and then can spend this money in the real economy. 2. as i discussed earlier up the thread the increase in demand deposits has been more a function of investors moving their USD's out of money market funds due to the UST debt downgrade. again, not a fx of those excess reserves leaking out into the economy to the accts of Joe Smith. 3. in that table of required vs. excess reserves he only points to the fact that the excess reserve column has decreased by approx $8,000M. he ignores that the required reserve column has increased by $5,000M for a net decrease of req plus excess reserves of $3,000M; not nearly as bad as he one sidedly misrepresents. in 2007-8 i was heavily in miscreanity's camp of stagflation. i got squicked by the dive in energy and mining stocks and a bit in bullion holdings offsetting my massive gains in stock shorts for an overall small net positive. guys like John Williams and others like Jim Puplava were screaming for the dreaded hyperinflation which never came. i still don't see it coming. |
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Ben: no mention of Operation Twist or repos. if bitcoin didn't like it what will gold do?
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interesting response by the stock mkt, eh? perhaps the spin will be "Ben finally advocating fiscal AND monetary discipline so buy, buy, buy!"
interesting how PM's aren't following. perhaps we'll have that multiday/week stock rally with PM correction i was talking about.
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Overshooting to the downward slope is a possibility, especially considering the similarities between today and the late 1970s. Could you elaborate on that a bit? Nixon precedes me. Is it true that the Dow was exclusively trading American stocks with USD by primarily American people before 1970? If so, how can we connect that time with a fixed gold/USD price to a post Nixon global market with floating exchange? "All information is already in the chart." Fair enough. But under 7:1, 4:1, 2:1, 1:1, 1:2 all look equally arbitrary to me. Ben's speech...no more direct QE and...
Bitcoin bugs did not appreciate the news. another way to look at the difference in opinions here is that I and S3052 believe in investing countercyclically, ie, selling on the way up before the crowd and buying on the way down. or should i better say trying to pick tops and bottoms? most others here believe in trends and momentum. of course others will just say they are following strong fundamentals which won't change the course or direction of the gold market. this will take time to play out. |
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just finished reading Ben's speech. the 2 most important messages i heard was 1. no more direct QE and 2. the need for more fiscal discipline.
comments?
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Excellent. Thanks for the report link. From a technical perspective, why shouldn't we draw bands somewhat as I have (green) below? Fundamentally, couldn't we see 1980 an undershoot after Nixon's shock wave?
Good chart. Overshooting to the downward slope is a possibility, especially considering the similarities between today and the late 1970s. Market participants will obviously be looking first for horizontal support at about 2:1, then 1:1. @ cypherdoc: Looks like Roubini has been doing a few too many lines of coke off naked strippers. LOL. Zerohedge is one of my favorites too! sorry but i had to add to my DZZ at the bottom this AM!!!  |
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Jesse always has the best photoshops. And thank god he wasn't able to keep that awful MIDI player when he changed to a blog.
Agreed!  he's as bullish as you are |
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miscreanity:
i have a question for you. what would it take for Ben to drive up the USD and to drive down the price of gold?
please don't say he won't do this. i'm asking a theoretical question and am interested in your opinion as to how he would do this.
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Did patterns exist before trading? What I mean is (I'll take an example) if the fibonacci trading techniques state that at a certain point an uptrend will reverse and people follow the techniques then it will reverse because people will be selling at that point wether or not there is any proper reason to. Does the market make the fibonacci patterns or do the fibonacci patterns make the market? no one knows. |
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another source is junk and corporate bonds which do poorly in Depressions. basically everything can get sucked down into the vortex black hole of UST's including gold. Antal Fekete has great insights into this altho he would disagree on the gold part with me.  |
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Didn't the Japanese central bank do the first package of purchases which was labeled quantitative easing? I'm not overly educated on the Japanese situation. It seems to me that the culture in Japan is a saving culture which the Japanese couldn't fix even if they were paying people to take on debt. The debt culture has completely worked in the USA.
You do realise that as the government debt increases in the USA, you need more money to support it? Where would this continuously increased amount of money come from if it comes from the savers of the world? The only way to support the ponzi scheme is to fund it with a central bank. It is a ponzi scheme because to pay off the old debt, they use new debt. They pay off the old creditors with money from new creditors. It gets increasingly worse with interest payments which will have to increase to encourage new investors until the scheme justs collapses.
some of the best work i've seen on Japan comes from Kyle Bass and Hugh Hendry. sorry, my thoughts are coming in spurts this AM. another huge source of funds is the stock mkts of the world. if we do a Phase 2 down header like the head and shoulders formation of the last 11 yrs suggests, all that money will flow into safe havens of which the UST's are a debatable one. thats what Depressions do. |
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Didn't the Japanese central bank do the first package of purchases which was labeled quantitative easing? I'm not overly educated on the Japanese situation. It seems to me that the culture in Japan is a saving culture which the Japanese couldn't fix even if they were paying people to take on debt. The debt culture has completely worked in the USA.
You do realise that as the government debt increases in the USA, you need more money to support it? Where would this continuously increased amount of money come from if it comes from the savers of the world? The only way to support the ponzi scheme is to fund it with a central bank. It is a ponzi scheme because to pay off the old debt, they use new debt. They pay off the old creditors with money from new creditors. It gets increasingly worse with interest payments which will have to increase to encourage new investors until the scheme justs collapses.
some of the best work i've seen on Japan comes from Kyle Bass and Hugh Hendry. |
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next wave of bad news for gold: USD beginning its ascent  |
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the trick was to come to this conclusion before they did. |
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