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Author Topic: Gold collapsing. Bitcoin UP.  (Read 355752 times)
silverbox
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May 04, 2012, 06:40:15 PM
 #981

You crash the markets hard enuf and you get rioting in the streets Wink

Or you get thousands of state workers storming the state capitols Wink

wasn't 54% in 2001 and 57% in 2008 hard enough?

the state workers did go ape after 2008 Wink
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May 04, 2012, 06:41:04 PM
 #982

Its not bickering Wink

Its just  debating what will happen next.

you scared the crap out of me there for a moment.  i have a small Think or Swim acct but i guess it got sold to Ameritrade by Penson. Grin

The discussion becomes pointless when account funds vanish. Come back to debating after your assets are secured. I'll give you 15 minutes Tongue

A couple of good quotes from the post.

Quote
... don't expect that you're safe if Penson blows because there is no evidence you will be safe...

Quote
... if it [rehypothecation] happens again there will be no confidence remaining in the market, the break will be immediate and disastrous, and it is entirely possible that the proprietary trading of all brokerages will unwind and you will discover that there is no such thing as a safe brokerage in which to trade or invest as it is entirely possible that we will discover that all such banks and brokerages have enough proprietary exposure that they will all fail and you will lose all your money.

This potential is becoming a certainty the longer the debt game goes on. There's nowhere else to extract wealth from.

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May 04, 2012, 06:44:50 PM
 #983

Nothing much to secure here.  Most of my assets are physical.. 
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May 04, 2012, 06:48:30 PM
 #984


The discussion becomes pointless when account funds vanish. Come back to debating after your assets are secured. I'll give you 15 minutes Tongue

Quote

This potential is becoming a certainty the longer the debt game goes on. There's nowhere else to extract wealth from.


i must admit, i do worry about this and did extremely so back in 2008 but it never happened.  i suppose it could happen now but if i'm correct and the USD skyrockets, the USD reserve system may go on for another cycle and i'll be able to get my wealth out at that time.

in fact, at the very bottom (years out) it just may be the time to buy some gold/silver again; we'll just have to see how the Bitcoin/pm game plays out.
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May 04, 2012, 06:49:06 PM
 #985

Nothing much to secure here.  Most of my assets are physical.. 

Yeah, cyph better get some!

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May 04, 2012, 06:53:11 PM
 #986

Nothing much to secure here.  Most of my assets are physical.. 

Yeah, cyph better get some!

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May 04, 2012, 06:59:04 PM
 #987

i must admit, i do worry about this and did extremely so back in 2008 but it never happened.  i suppose it could happen now but if i'm correct and the USD skyrockets, the USD reserve system may go on for another cycle and i'll be able to get my wealth out at that time.

in fact, at the very bottom (years out) it just may be the time to buy some gold/silver again; we'll just have to see how the Bitcoin/pm game plays out.

The USD will almost definitely shoot up this month, but it'll come crashing down shortly after. Sure things could go on for another cycle, just not the same. What restrictions might be put in place? Could you move your assets out if there's a bank holiday or $1,000 daily limit on transfers?

I've been watching events unfold for a decade and have studied a lot of history. Things are hitting so fast & furious right now that Rahm Emanuel will soon have a field day. Assets inside the financial system in any way, shape, or form are as good as gone in that situation.

Even if there is another cycle or two, this is not the kind of gamble to be played lightly. Every time the edge is pushed to an extreme, the need to be ready for a final break becomes more important.

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May 04, 2012, 06:59:53 PM
 #988

Nothing much to secure here.  Most of my assets are physical.. 

Yeah, cyph better get some!



http://youtu.be/MCUnWIs88CQ

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May 04, 2012, 07:03:08 PM
 #989


oh my.  after that i'm done for the day... Tongue

edit:  you're right; after that i do want to get physical. Wink
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May 05, 2012, 12:56:51 AM
 #990

i must admit, i do worry about this and did extremely so back in 2008 but it never happened.  i suppose it could happen now but if i'm correct and the USD skyrockets, the USD reserve system may go on for another cycle and i'll be able to get my wealth out at that time.

in fact, at the very bottom (years out) it just may be the time to buy some gold/silver again; we'll just have to see how the Bitcoin/pm game plays out.

I suspect that the USD will have extraordinary pull on the worlds financial systems and be legitimately classifiable as 'the worlds reserve currency' as long we (the US) manage the availability of the energy resources of the Middle East.  That does not preclude volatility and and/or 'economic emergencies' if they serve the purposes of the relatively few entities who manage things.

Furthermore, our grasp on the management of these resources of the Middle East is probably a bit more tenuous than some people may think.  For instance, if we had to resort to boots on the ground in Saudi Arabia (and the likely simultaneous conflagration of issues in surrounding areas), I personally question our ability to strap on that many boots.  And I have less faith than most in the robustness of our very complex weapons systems when put to the test against our more capable adversaries.  (Excepting our thermonuclear offensive capability that is, but man do I not want to go there!)

The USD will almost definitely shoot up this month, but it'll come crashing down shortly after. Sure things could go on for another cycle, just not the same. What restrictions might be put in place? Could you move your assets out if there's a bank holiday or $1,000 daily limit on transfers?

I've been watching events unfold for a decade and have studied a lot of history. Things are hitting so fast & furious right now that Rahm Emanuel will soon have a field day. Assets inside the financial system in any way, shape, or form are as good as gone in that situation.

Even if there is another cycle or two, this is not the kind of gamble to be played lightly. Every time the edge is pushed to an extreme, the need to be ready for a final break becomes more important.

I've been paranoid about a sudden collapse for about a decade.  In fact, trying to understand the push into Iraq really triggered my extreme interest in (and paranoia about) the various monetary regimes around us these days.  My answer was PM's and I never really expected to _make_ any money on them (and am not completely sure that I have) but by happenstance I would have been unlikely to have done much better with any of the alternates.

I've always suspected that if/when a collapse comes, it will be shockingly rapid (as in hours.)  This in part because the most well connected will do better in such a scenario, and if a collapse is mathematical inevitability (which I believe to be the case) then one might as well make the most of it.  I suspect that the likes of JP Morgan have a current script which the update continuously dealing with how to manage a collapse.

Back to my point some pages ago about MF Global 'case law', although I am not a lawyer I believe it to be true that depending on the current state of the MF Global case, some assets which moved around in the first few microseconds of a collapse may either stay put during the subsequent legal wranglings, or need to be returned pending said.  (This assumes that there even exists a legal system after a significant collapse which is not, in my mind, a given.)

I use JP Morgan as an example here because as best I can ascertain, they ended up with the money from the MF Global customer accounts and have yet to part with a dime of it.  I'm shocked that the victims are still only at 80%...I expected they would have been made %100 whole within a few day on the back of my tax dollars and in the 'national security interest' of 'maintaining market confidence' or some such.  That that did _not_ happen got me to generating hypotheses on why.


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May 05, 2012, 03:12:37 AM
 #991

I've been paranoid about a sudden collapse for about a decade.  In fact, trying to understand the push into Iraq really triggered my extreme interest in (and paranoia about) the various monetary regimes around us these days.

Going off-topic here, but it's relevant to the bigger picture and gold ties in. While Europe is in the limelight:

What If A Collapse Happened & Nobody Noticed?

New Bill Known As Enemy Expatriation Act Would Allow Government To Strip Citizenship Without Conviction

Obama Mentor Wanted Americans Put In Re-Education Camps

Army manual for re-education camps applies to US citizens

EPA's Plans for Implementing UN's Agenda 21

“We are Preparing for Massive Civil War,” Says DHS Informant

Billionaire Hugo Salinas Price - Elites Plan to Control the World

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May 05, 2012, 03:18:27 AM
 #992

waveaddict:

couldn't we be setting up to do one of these?  a wave 3 of 5 down?


the 3 wave down would be expected to to be greater in extent and time compared to 1 would it not?  as it is, its a little shorter and the depth not as deep.

We very well could be (and that is why I continue to be heavily short) but that 2nd wave from your chart up looks more like a 5 waver instead of a 3 waver.

The three most likely wave counts from my perspective are here: http://imageshack.us/f/825/aaplw.png/

Enjoy!  Smiley

Like I said, the structure didn't look quite right for a wave 3 down starting just yet. I'll be re-shorting in the $600 -$610 range.

You gotta love it when a plan comes together  Wink

ah, who gives a shit.  it took me less than 7d to get back to where we were.
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May 05, 2012, 04:29:59 AM
 #993


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May 06, 2012, 08:33:49 AM
 #994

This one's for you, cyph:

Inflation or Hyperinflation?

The post being is incredibly important for the concept behind the budget deficit to trade deficit ratio. Unless Ron Paul is elected, hyperinflation is more than guaranteed: it's already begun.

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May 06, 2012, 08:52:55 PM
 #995

This one's for you, cyph:

Inflation or Hyperinflation?

The post being is incredibly important for the concept behind the budget deficit to trade deficit ratio. Unless Ron Paul is elected, hyperinflation is more than guaranteed: it's already begun.

this was an interesting read from FOFOA; and long.  so much so i had to read it twice over several hours.  the last time i read him being in the Fall when i gave you an extensive response to his writings.

the way i summarize his points are as follows:

1.  One day there will be an abrupt, overnight dollar devaluation resulting in HI.
2.  There is decreasing foreign CB buying of UST's at the margin which will soon create this end game plunge in the USD.  
3.  there is political support worldwide for a new one world currency.
4.  the US gov't will never cut its spending deficit thus facilitating the demise of the USD.  in fact, it will increase its deficit at the same rate as a general price level increase, never to be outbid.  this will just make it worse for the USD devaluation as a result.
5.  The US is helpless to stop this plunge in the USD now that it's lost both political and structural support.
6.  paper gold is for fools; physical is for Kings.

while these types of theoretical articles are interesting, i find them way too imaginative bordering on psychotic.  if readers find my bias towards deflation as being dour, they should find the hyperinflationists view of the world as Armageddon.  i don't see it quite so severe and i find FOFOA's thinking to be quite linear.  he assumes ppl/gov'ts will keep doing the same wrong thing over and over again and that the market will never apply discipline.  while its tempting to say markets can and are manipulated, and i often say so, its dangerous to always assume so.

as for #1, i find this to be fear mongering.  gold bugs have an affinity for this but i don't see such large and complex markets reacting so quickly.  turns in markets take time.  and sometimes they never come.

#2:  certainly it appears China has cut back dramatically in the buying of UST's and has been replaced by the Fed who is the main buyer currently.  this is concerning but in the opposite direction; its deflationary.  most ppl view low interest rates as inflationary as they supposedly will create negative real interest rates when factoring in a supposedly high CPI and encourage reckless borrowing and the throwing of ever depreciating USD's at all assets, esp. gold and silver.  i see it differently.  i see very little loan demand worldwide.  who wants to earn 2.5% on a long term UST?  most investors/speculators buy debt for price appreciation of the bonds, not for yield.  its too dangerous right now to loan money b/c there are truly very few credit worthy projects to invest in.  we are in the Age of Deleveraging.  This deleveraging will decrease the total # of circulating debt dollars and force up the value of the remaining.  We just saw Greece bond holders take a 70% haircut on their bonds as well as the Iceland and Ireland bond holders and the upcoming Spain, Italy, etc. bondholders.  all that deleveraging of either USD denominated debt or USD reserve based foreign debt is going to drive UP the remaining USDs.  You can see it in the chart of the $DXY.

#3:  i don't see this anywhere.  what's happening with the Euro says that this can't happen.  all govt's worldwide would have to agree to turn over their fiscal sovereignty to some mythical central gov't who then will have a mythical CB that will have the ability to print like crazy forever just for the benefit of their elite bankers.  i will buy 10 AK 47's or move to Mars before i let that happen.

#4:  what i see are foreign gov'ts being attacked by the bond vigilantes resulting in higher interest rates.  they are being forced to trim down via austerity measures which is good.  will it come here?  probably.  when?  i don't know.  i do see the gov't cutting back on certain programs like Medicare pmts to doctors and hospitals and Social Security pmts.  Extended unemployment benefits are scheduled to come to an end this month.  the Student Loan bubble is being reigned in and JPM is cutting back in this arena b/c they see a bubble.  i think that as the stock mkt collapses, gov't will also be forced to cut back.  there just is no money and the Fed will NOT go hog wild in printing to fill in the gap.  they didn't announce any QE this past FOMC as they want to preserve their "credibility" against inflation acc. to Ben.  yes, i laughed too but what if he is for real?  maybe he thinks the price of gold is way too high and is actually using it as a temperature for inflation as once was done decades ago.  to presume he is a linear thinker and stupid is dangerous.  i don't think the Fed wants to give up its pre-eminent position as THE central bank of the world.  and why destroy the USD when all their wealth is denominated in it?  does Ben want to go down in history as the sole central banker who destroyed the USA?

#5:  on the contrary, the Fed could change direction on a dime if it wants to and the gov't would be helpless to stop it.  they yelled and screamed back in 1980 when Volcker went as far as to increase rates but in the end they went along with him b/c they knew it was the right thing to do.  i'm not saying Ben is going to raise rates but just like FOFOA claims decreased buying of UST's at the margin can or will cause a change in the USD value to the downside, so can a decrease in QE cause a ramp in the USD to the upside.

#6:  i agree that physical would be the way to go if you're a gold bug.  but for all the reasons i've said before i think gold is in a bubble that has burst and the loss in value since last August is reflecting a world of deleveraging and deflation.  the miners suggest this very starkly.

and now for specifics:

FOFOA: "Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built America's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time."

ME: This part i don't understand.  i thought FOFOA is arguing that the political parties involved in this mysterious "structural support" wanted a one world currency to take the USD's place?  if so, why would they then engage in currency war's after the USD's demise?

FOFOA: "It is also a myth that QE is sterile money creation because (as they like to say) it is all just sitting on the banks' balance sheets as excess reserves held at the Fed rather than circulating in the economy. In fact, it is ALL circulating in the economy because the USG spends that money into the economy."

ME: This would argue against FOFOA's claim:



what i think happens is that yes, the US gov't spends those USD's gotten from UST sales into the US economy but then it stops after one pass/iteration.  i am a shining example.  my business derives probably 55% of its income from gov't spending.  what do i do with those USD's?  hoard them aka SAVE.  why?  b/c i don't see any productive investments out there encouraging me to circulate those USD's.  so the velocity stops dead with me.  except for Bitcoin that is Smiley

unfortunately FOFOA is correct that the never ending buying of UST's is worrisome but i think its a sign of deflation or of flushing money down a big black hole.  all those potentially useful debt dollars that could be going to private industry are now going to unproductive spending for the most part (except those paid to me of course Smiley).  this is terrible for the private economy and will cause stock prices to go down right about now which is deflationary yet again.

ok, i'm exhausted.  not used to pumping out such long tomes.  but you had to ask me...
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May 06, 2012, 09:35:20 PM
 #996

This is a pretty nice chart:


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May 06, 2012, 10:39:05 PM
 #997

$DXY back over $80, Dow, S&P, Euro, gold, silver, oil all down BIG in the futures.
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May 06, 2012, 10:43:57 PM
 #998

the way i summarize his points are as follows:

1.  One day there will be an abrupt, overnight dollar devaluation resulting in HI.
2.  There is decreasing foreign CB buying of UST's at the margin which will soon create this end game plunge in the USD.  
3.  there is political support worldwide for a new one world currency.
4.  the US gov't will never cut its spending deficit thus facilitating the demise of the USD.  in fact, it will increase its deficit at the same rate as a general price level increase, never to be outbid.  this will just make it worse for the USD devaluation as a result.
5.  The US is helpless to stop this plunge in the USD now that it's lost both political and structural support.
6.  paper gold is for fools; physical is for Kings.

...

as for #1, i find this to be fear mongering.  gold bugs have an affinity for this but i don't see such large and complex markets reacting so quickly.  turns in markets take time.  and sometimes they never come.

#2:  certainly it appears China has cut back dramatically in the buying of UST's and has been replaced by the Fed who is the main buyer currently.  this is concerning but in the opposite direction; its deflationary.  most ppl view low interest rates as inflationary as they supposedly will create negative real interest rates when factoring in a supposedly high CPI and encourage reckless borrowing and the throwing of ever depreciating USD's at all assets, esp. gold and silver.  i see it differently.  i see very little loan demand worldwide.  who wants to earn 2.5% on a long term UST?  most investors/speculators buy debt for price appreciation of the bonds, not for yield.  its too dangerous right now to loan money b/c there are truly very few credit worthy projects to invest in.  we are in the Age of Deleveraging.  This deleveraging will decrease the total # of circulating debt dollars and force up the value of the remaining.  We just saw Greece bond holders take a 70% haircut on their bonds as well as the Iceland and Ireland bond holders and the upcoming Spain, Italy, etc. bondholders.  all that deleveraging of either USD denominated debt or USD reserve based foreign debt is going to drive UP the remaining USDs.  You can see it in the chart of the $DXY.

#3:  i don't see this anywhere.  what's happening with the Euro says that this can't happen.  all govt's worldwide would have to agree to turn over their fiscal sovereignty to some mythical central gov't who then will have a mythical CB that will have the ability to print like crazy forever just for the benefit of their elite bankers.  i will buy 10 AK 47's or move to Mars before i let that happen.

#4:  what i see are foreign gov'ts being attacked by the bond vigilantes resulting in higher interest rates.  they are being forced to trim down via austerity measures which is good.  will it come here?  probably.  when?  i don't know.  i do see the gov't cutting back on certain programs like Medicare pmts to doctors and hospitals and Social Security pmts.  Extended unemployment benefits are scheduled to come to an end this month.  the Student Loan bubble is being reigned in and JPM is cutting back in this arena b/c they see a bubble.  i think that as the stock mkt collapses, gov't will also be forced to cut back.  there just is no money and the Fed will NOT go hog wild in printing to fill in the gap.  they didn't announce any QE this past FOMC as they want to preserve their "credibility" against inflation acc. to Ben.  yes, i laughed too but what if he is for real?  maybe he thinks the price of gold is way too high and is actually using it as a temperature for inflation as once was done decades ago.  to presume he is a linear thinker and stupid is dangerous.  i don't think the Fed wants to give up its pre-eminent position as THE central bank of the world.  and why destroy the USD when all their wealth is denominated in it?  does Ben want to go down in history as the sole central banker who destroyed the USA?

#5:  on the contrary, the Fed could change direction on a dime if it wants to and the gov't would be helpless to stop it.  they yelled and screamed back in 1980 when Volcker went as far as to increase rates but in the end they went along with him b/c they knew it was the right thing to do.  i'm not saying Ben is going to raise rates but just like FOFOA claims decreased buying of UST's at the margin can or will cause a change in the USD value to the downside, so can a decrease in QE cause a ramp in the USD to the upside.

#6:  i agree that physical would be the way to go if you're a gold bug.  but for all the reasons i've said before i think gold is in a bubble that has burst and the loss in value since last August is reflecting a world of deleveraging and deflation.  the miners suggest this very starkly.

This is a transition, not Armageddon - it will just seem that way.

  • Not fear mongering: mathematics - a geometric rise takes on characteristic abruptness from a linear perspective; this has happened numerous times throughout history where a pile of money supportive of retirement fell in a matter of hours to days, becoming worth a pair of socks, and there is no reason to expect reserve currency status to prevent that - in fact, it will magnify the effect
  • Deflationary for the US - running a deficit in a fully-saturated debt environment means either currency collapse or inflation to outpace competing bids on real resources as in #4; the rise in the USD is because others (esp. Europe) are experiencing austerity-induced capital flight from their own currencies
  • UN & SDRs - the US has already established UN law in place of domestic law, as of this month; the EU leadership made similar decisions earlier this year
  • Austerity is being used as a political tool, facilitating wealth transfer and increasing dependence upon the state; the US and Fed are big players, but are not the top of the food chain
  • Reversing course is guaranteed to result in massive civil unrest/war; there is only enough restraint in place to allow further concentration of control & wealth, designed to prevent exodus of both capital and population
  • Gold is gold and buys a similar amount of real assets no matter what, whereas other forms of money fluctuate wildly - sometimes buying more, sometimes less; outside of real assets like gold and silver, there is also the perpetual rat-race of yield-chasing, and this is not an environment conducive to any but the most professional of hardcore traders who may end up losing their accumulated wealth anyone due to rehypothecation events

FOFOA: "Now that the Euro block is passing a point where the Euro currency is viable; this same past dollar support that built America's illusion wealth will now fall away. In its place we will see the beginnings of a currency war like no other in our time."

ME: This part i don't understand.  i thought FOFOA is arguing that the political parties involved in this mysterious "structural support" wanted a one world currency to take the USD's place?  if so, why would they then engage in currency war's after the USD's demise?

US-dependent powers will struggle to support their foundation, no matter how rotted out it may be or how quickly their numbers dwindle. The war will be to determine which currency will obtain dominance. While the Euro has been developed as a replacement for the dollar, it is not guaranteed. There is now, and will be further opposition - all we need to do is look at China's Yuan.

FOFOA: "It is also a myth that QE is sterile money creation because (as they like to say) it is all just sitting on the banks' balance sheets as excess reserves held at the Fed rather than circulating in the economy. In fact, it is ALL circulating in the economy because the USG spends that money into the economy."

ME: This would argue against FOFOA's claim:



A little after that part, FOFOA went on to explain that the dollars may be deposited, but the fractional reserve leveraging process continues based on those reserves. While the domestic dollar velocity tanks, economies around the world carry the inflationary effects via that amplification effect. So banks might have billions in reserve but thanks to swaps and repo agreements, Eurodollars/Petrodollars are flooding the world and are not captured in the Fed's data since the M3 was discontinued (even then, M3 was unreliable outside of the US and likely an underestimate).

what i think happens is that yes, the US gov't spends those USD's gotten from UST sales into the US economy but then it stops after one pass/iteration.  i am a shining example.  my business derives probably 55% of its income from gov't spending.  what do i do with those USD's?  hoard them aka SAVE.  why?  b/c i don't see any productive investments out there encouraging me to circulate those USD's.  so the velocity stops dead with me.  except for Bitcoin that is Smiley

unfortunately FOFOA is correct that the never ending buying of UST's is worrisome but i think its a sign of deflation or of flushing money down a big black hole.  all those potentially useful debt dollars that could be going to private industry are now going to unproductive spending for the most part (except those paid to me of course Smiley).  this is terrible for the private economy and will cause stock prices to go down right about now which is deflationary yet again.

ok, i'm exhausted.  not used to pumping out such long tomes.  but you had to ask me...

What happens with all that hoarding of dollars, holding them in deposit because you don't see anything worthwhile to invest in? Liquidity rapidly evaporates and the economy grinds to a halt yet again. If real rates remain negative, there is little that can entice those dollars out, and if they are drawn out of hiding it would lead to inflation anyway. So the only solution to a liquidity crisis brought on by a debt crisis is to provide liquidity. That alleviates the liquidity, but exacerbates the debt. Thus, the relief is temporary.

At the same time, banks in the fractional reserve system amplify the deposits by putting their levered gains back on deposit with the Fed and others. That then locks up another round of liquidity, threatening economic lock-up yet again. Unless the debt can be addressed, this cycle will continue with the only resolution being either extreme hardship for the population immediately (guaranteed to result in severe civil unrest/war), or currency collapse after a delay (and the potential for similar civil unrest/war).

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miscreanity
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May 06, 2012, 10:52:10 PM
 #999

This is a pretty nice chart:

Understatement! That may be one of the best charts I've seen.

$DXY back over $80, Dow, S&P, Euro, gold, silver, oil all down BIG in the futures.

Gold/Silver spot are only down marginally. As I said, watch Euro @ $1.25 or so.

Japanese exports were hurting when the Yen strengthened, so the BoJ devalued. When the Swiss Franc caused internal pain, it was debased. The US will act no differently, especially because it is being pressured by Europe's "austerity". Stimulus will also boost the economy in time for the presidential election.

What I'm more interested in is how Bitcoin will respond Smiley

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May 06, 2012, 11:26:57 PM
 #1000


Gold/Silver spot are only down marginally. As I said, watch Euro @ $1.25 or so.


the slow grind down.
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