Oldtent Archives 2007 - 2008

Thanks. And you came up with a password I will remember - you’re a genius.

aurum

In my view hyperinflation is America’s greatest threat. It is the natural consequence of what is called “big government” by some and “fascistic government” by others (including me).

The federal government is out of control, spending money it does not have and has no prospect of ever obtaining. Through its subservient central bank, the Federal Reserve, it is creating money out of thin air, thereby putting all Americans at risk because politicians’ thirst for money to meet their boundless spending aspirations is destroying the dollar.

In his “Economic Consequences of the Peace” John Maynard Keynes wrote: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

By this method they not only confiscate, but they confiscate arbitrarily and, while the process impoverishes many, it enriches some. The sight of this arbitrary arrangement of riches strikes not only at security, but at confidence in the equity of distribution of wealth. Lenin was certainly right.

There is no subtler, no surer means of overthrowing the existing order of society than debauching the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not

one man in a million is able to diagnose.” end

john williams reports that reconstructed M3 money growth was running at 15.8% in June. For comparison in the inflation prone 1970’s the high was 16.4%!

No sign of deflation! Which is why gold has to be stomped on with such ferocity because the dollar is looking into the abyss.
Cheers
Adrian

I received one email with a link which took me to IMDB site and I am okay there now. I need a link to restore the aurum login.  I never changed my password (nor learned it) and used the automatic login but that failed today and of course I don’t know the password.  Also my email has changed to gmail (beginning part the same) but I thought I had changed that on the Tent but maybe I only changed it on IMDB?

aurum

A GOLDEN PARACHUTE WITH A SILVER LINING

AN ESCAPE ROUTE IN A TIME OF DISASTER

Only those who have gone too far know where the limits should have been

Money served throughout history as a medium of exchange and as a storehouse of value. But when gold and silver coins were replaced by paper currencies, money no longer was the same. Paper money, no longer having intrinsic value, now functions only as a medium of exchange, a function that degrades over time.

The value of paper money continually loses value because the constant printing of paper money constantly dilutes the value of previously printed money. The more paper money printed, the less paper money is worth; and today, money is being printed at a faster rate than at any time in history.

In fiat paper money systems, today’s paper money will be worth less than tomorrow’s and will be worth less the day after ad infinitum. This constant degradation of paper money is known as inflation. When the process rapidly speeds up, it is known as hyperinflation. Remember that word.

For the first time in history, all money, all currencies are now fiat which means money no longer has intrinsic value. This is not because intrinsic value was deemed unnecessary for a functioning currency. The real reason is far less reasonable.

All money is now fiat because between 1949 and 1970 the US overspent its entire 21,775 ton hoard of gold and could no longer convert its currency to gold as agreed under the Bretton Woods Agreements in 1944.

Note: What gold remains in US custody today remains only because in 1971 the US refused to transfer the remaining gold owed to others; as its obligations were far greater than its capacity to settle.

Because at the time the gold-backed US currency anchored all world currencies, when the US dollar became fiat, all currencies also became fiat. For the first time in history, no currency was backed by either gold or silver including the international reserve currency, the US dollar. The destructive consequences of that act have remained contained for 35 years. They are no longer.

The sudden global switch from gold backed money to fiat paper money was not by design; it was the by-product of excessive US post-WWII military spending and corporate overseas expansion. Throughout history, the downfall of most paper money economies can be directly tied to wars and the military. The US is no exception.

The late central banker John Exter called today’s money IOU-nothing money, the best description yet of today’s constantly degrading paper currencies. Trillions of dollars are bet daily on FOREX markets as speculators bet on the value of government issued coupons masquerading as money. Someday, perhaps sooner than later, speculators will bet the coupons have no value at all.

THE DAY GOLD CORNERS PAPER MONEY

On that day, according to Professor Antal E. Fekete, a spontaneous gold corner could develop; but the corner would not be driven by speculators cornering a commodity to drive up its price. The corner will be caused by the refusal of those who own gold to exchange their increasingly precious metal for increasingly worthless paper currencies.

Since 1913 when the Federal Reserve first issued its debt based paper money in the US, the paper US dollar has lost 95 % of its value, a loss of 95 % over 95 years. Perhaps in five more years, 100 years after the creation of the Federal Reserve, the US dollar will have lost 100 % of its value—which means in five years the US paper dollar will be worth nothing.

Throughout history, no fiat money system has stood the test of time. All attempts to substitute paper money for gold and silver have ended in the total destruction and debasement of the currency.

This time will be no different. It is hubris to think otherwise but unfortunately the vast majority do—which is a clear sign they’re not thinking at all.

ALAN GREENSPAN’S REAL CONUNDRUM
THE GAME IS OVER WHEN PAPER MONEY LOSES ITS VALUE

This is the real conundrum of Alan Greenspan and all central bankers. When paper money loses its value, it can no longer function as a medium of exchange. Today, money is losing value faster than at any time in recent history. The end game, the end of fiat money in our time is approaching.

Inflation is reflected not only in the increasing costs of goods and services, it’s reflected in the corresponding decline in the value of paper money; and as money increasingly loses value, commodities, e.g. gold, silver, oil, gas, food etc. inversely become increasingly expensive measured in depreciating currencies.

Hyperinflation is merely an extended condition of inflation. In a hyperinflation, the value of paper money declines so quickly that costs rise exponentially in shorter and shorter periods of time. The end cycle of paper currencies is first inflation, then hyperinflation, then the collapse and destruction of the currency.

Today, inflation is rising everywhere as central bank printing of money is increasing everywhere. Hyperinflation is now a distinct possibility even as deflationary forces, sic collapsing and slowing demand, are themselves also in motion.

Inflation and deflation are not mutually exclusive phenomena as they have been in the past. Even now, we are experiencing higher prices along with decreasing demand, sic. stagflation. Stagflation is merely a less virulent version of the unthinkable—a simultaneous hyperinflationary deflationary collapse.

We are at a critical moment in history. Never before has money been debased on such a grand scale. Never before has so much debt been owed and never before have monetary authorities been so helpless to control the destructive forces they themselves set in motion.

THE FUTURE
SOVEREIGN DEFAULT

While it may appear to most that we are having a credit crisis or a liquidity crisis or a solvency crisis etc., the actuality is that we are having a monetary crisis—a crisis whose root cause is the increasingly pathological state of money itself.

Money is a medium of exchange and a storehouse of value. When money no longer serves those functions, its usefulness is over; and while the experience will be new to us, it will not be new to others.

History is littered with cast-off currencies, discarded attempts by nations to pay for excessive government expenditures with increasing amounts of paper money, sourced from an apparently limitless supply of paper, ink and human hubris; and while such are indeed limitless, the tolerance of such is not.

Economists Kenneth Rogoff (Harvard) and Carmen Reinhart ( University of Maryland) have recently done seminal research in this area. Their findings are a disturbing sign of what now lies directly ahead. Sovereign currency collapse and defaults are not uncommon, they come in waves.

Sovereign defaults come in waves and while the present trough has been unusually quiescent, the future may not be so kind. What lies ahead may be the mother of all monetary defaults—because for the first time in history, all currencies including the world reserve currency are fiat; and, when the US dollar, the lynchpin of the current fiat regime collapses, all currencies may fall as well.

The very ubiquity of paper money portends a level of economic chaos never before experienced. All nations are now using paper money without the constraint and backing of gold or silver. Indeed, that is the very reason why governments substitute limitless paper for limited supplies of gold and silver.

The ambitions of government are always greater than their resources, especially when it comes to war and geopolitical ambitions. Since the end of WWII, the US has spent more money on its military than any nation in history.

the rest of the article is very interesting…this guy is good

www.drschoon.com/

that looks like a heafty bugger. what is the weight and purity? cheers. wj

had a % backing but now no longer. can’t say when they removed it though but had to be long ago in a galaxy far far away! [gg]wj

……I see you just registered for the all but forgotten IMDB….that will be a different password…

Still better than US$ for holding cash (I hope).

Let’s leave the Dollar idea for a while.  If it does rally then targets can be set.  I have posted a cycle chart for physical - cannuckgold posted a newer version of it.

arch0708.goldtent.net/2008/06/22/aurumjs-reference-the-cycle-in-march03/

But in any case I believe that will happen.  I have no good way of charting the juniors so it is hard to say much.  My decision to move out of them quickly last fall as opportunities presented was based on a number of comments by different people and the fact that the seven or so I owned weren’t charting right.  For example RBY, one of the stronger, did not look right and so I posted at the time.  I gave details as to what I saw as failures in chart action at the time.  I own GDX now and that may have some juniors in it.  I also own CEF - which I will sell in the next few weeks in anticipation of the cycle low.  I have decided to sell GDX too although it may be that it will do okay and trade more with the general stock market.  I wish to have a large amount of cash in case we have a seasonal low this fall in the general stock market (although that low may not be as low as the recent low).

aurum

btw are you a closet member of the Aussie School Deflationomics ?

…but check your e mail.I just sent a new apropo one

all currencys are 100% fiat with none backed by gold. the only gold backing is the purchase in any currency of gold by the ounce. once in hand then the gold currency/coinage is backed by gold 100% [g]wj

Is that right?

by sabregold @ 21:22 pm.

The FED has been printing money?

~ ~ ~ Yep, just ask Bennie and the Jets.

The TAF was set-tup as a swap and not a money printing machine but no matter. The money out of thin air was created by Congress and that was your rebate checks.

~ ~ ~ Nope, the Congress don’t got no money of any kind, they just borrow and the Fed prints it right up.  ……… kinda like the drive-up window at McDonalds with burgers.

From a simplistic standpoint, the government is Keynesian but they are not offsetting loan losses and the unwillingness of banks to lend. That is deflationary. Kasriel gets it.

~ ~ ~ Well, you can say that till Ferret’s dongo comes home from the sheep tent, but the Fed is printing out the wazzoooo, loaning out assets, monetizing debt…………and it shows in the charts of M3.    Oh, yeah, Cousin Fed and Uncle Sammie cloaked the M3 numbers, didn’t they………….well, imagine that.

I am having a  bit of a problem getting a password for aurum:

“  Sorry, but your password cannot be retrieved because your account is currently inactive. Please contact the forum administrator for more information.”

aurum