Pat Gorman on How to Protect Your Wealth, Invest for Success and Protect Your Family
The Daily Bell is pleased to present this exclusive interview with Pat Gorman.
Introduction: Mr. Gorman has been actively extolling the virtues of honest money for nearly 30 years, the last fifteen of which he has spent as president of Resource Consultants, a Phoenix, Arizona based wealth advisory firm. Mr. Gorman has hosted the longest-running financial talk radio show in the Phoenix area, Hard Money Watch. And for the past 14 years, he has hosted an annual two-day wealth protection seminar attracting today's top free-market minds. Additionally, Mr. Gorman is the author of the 'Net best-selling book, The Value of Honest Money as well as a monthly investment newsletter outlining asset protection strategies. He is also a member of the board of directors of a public mining company.
Daily Bell: How are you feeling? Good to speak to you again. You had a health setback.
Pat Gorman: I sure did. On December 30, 2010, I suffered a major stroke. I am still working on getting my speaking skills back to where they once were. I am extremely grateful that I do not have any paralysis. My physical health is much improved and I am once again able to come into the office and work more, even though I do not yet spend much time on the phone.
Daily Bell: Good to hear you are recovering. Remind us about your business and how it's been doing in your absence.
Pat Gorman: I am the President and owner of Resource Consultants Incorporated. We buy and sell gold, silver, platinum and palladium coins and bullion. Our customers take delivery of their metals purchases. We also do many precious metals IRA's. Business has been nothing short of terrific. Practically all of our business comes from recommendations, referrals & repeat customers and we work very hard to earn their trust everyday. My wife and business partner, Linda, has done an outstanding job as Vice President in my absence. Our Wealth Protection 2011 conference was a huge success again this year and we are still selling CD's of the entire conference. Even the speakers commented that this year's conference was the best ever! We are a family run business and everyone has stepped up to take on a little more of the work load to ensure our clients continue to get the best service available.
Also, throughout the years I have surrounded myself with the some of the best economic minds in the country. These people have become great friends and colleagues and they have proved a wonderful source of support while I have been recovering from the stroke. We are truly blessed and grateful.
Daily Bell: You are no doubt following the metals' markets as usual. Give us a sense of where gold and silver are headed, in terms of purchasing power.
Pat Gorman: Up.
Daily Bell: Let us ask you some fundamental questions. How high will they go in your opinion?
Pat Gorman: I would be surprised not to see gold well over US$5000 per ounce and silver over US$100 per ounce within the next 2 ½ to 3 years. If I'm wrong, my timing is just off and it will happened sooner.
Daily Bell: Is the US dollar dead?
Pat Gorman: No, but it's twitching and the mutation that's happening is hideous.
Daily Bell: What may replace it?
Pat Gorman: No doubt something fiat-imposed as usual, which will only be a temporary fix. There is no doubt that gold & silver, "Honest Money" will eventually be understood to be the only real solution to bring about a sound economy. The transition will no doubt be a long and a painful one, with many stops and starts before any working monetary system is established.
Daily Bell: Is China headed for higher-highs or a crash as we think?
Pat Gorman: Higher highs with perhaps a hiccup for a while, but China is on its way to being more of an economic power than the US ever was.
Daily Bell: Is there any paper currency you would recommend?
Pat Gorman: It would be really tough to recommend any of them right now.
Daily Bell: Where is the euro headed? Will it survive?
Pat Gorman: It will survive for a while, but as a currency it really is in very big trouble right now, as is the entire European Union.
Daily Bell: What are your feelings about the Internet today?
Pat Gorman: There is now a heightened sense of awareness about many things. The internet has helped to bring this about. Research that used to involve hours spent in the library is now available with a click of a button. Now, it's just a matter of sorting through the propaganda and finding the truth. I have to say "The Daily Bell" is one of the few and the best places for free-market thinkers to go for an improved understanding of economics today.
Daily Bell: Thanks for the compliment. Are people catching on to the central banking scam?
Pat Gorman: For the best answers to the central banking questions I went to my good friend Sinclair Noe. Sinclair is the author of Eat The Bankers: The Case Against Usury, a must read for anyone trying to understand the banking system and its effects on our economy. Mr. Noe has been filling in for me on my radio show, Hard Money Watch, while I work on getting myself radio-ready again – and he has been doing a great job. Sinclair was also the Master of Ceremony at our Wealth Protection Conference again this year. Sinclair, what say you?
Sinclair: "Yes. The Internet has given us a window into the historically secretive world of central banking. Remember the Federal Reserve was conceived in secrecy, shrouded in ritualistic mumbo jumbo, and cloaked behind the intentionally indecipherable language of the dismal science. The Creature From Jekyll Island was never meant to be seen in the bright light of the sun. It is more than ironic that Ben Bernanke has recently started to hold press conferences. This is pure theater, but it shows two things: the Fed is getting nervous, and the Fed still thinks they can put on a dog and pony show and hoodwink the masses."
Daily Bell: In 2008, people started paying attention to the massive bailouts and they started to seriously question the scam. Where did the bailout money go? How much money was given away? Why hasn't the Fed ever been audited? What exactly is the Fed? Who does the Fed serve? Why the hell do we need a middleman? What is the moral or legal authority for the central bank? Why did we abandon Article 1, Section 8?
Pat Gorman: Slowly but surely the light bulbs are starting to come on. People are realizing that the Fed has not added one ounce of value in nearly 100 years and many people now realize we have witnessed the greatest theft in history. The U.S. Treasury was looted. We have seen the greatest redistribution of wealth ever perpetrated. If you want a blueprint for financial corruption, it is the central banking system and the thieves who stand behind it.
Daily Bell: Is the centralized banking elite in trouble now?
Pat Gorman: Yes. Any sustainable successful economic system must be based on principles of equity, fairness, justice and opportunity for prosperity. History has proven that systems built on oppression and injustices always fail in time. So, yes central banking is in trouble now but it has been in trouble before.
Daily Bell: Will central banking continue or will it succumb to public anger?
Pat Gorman: Change is not always quick and it doesn't always lead to the results you might expect. You have to remember that the banking cartel is extremely profitable; they can start wars; they manipulate education; they direct the sciences; they purchase and control governments and they own and control mainstream media. The banking system concentrates and places power in the hands of those who control it. It is a tremendous and real advantage to be able to print money out of thin air. While it may be interesting to speculate that the Fed is nervous about transparency damaging their moral authority, the truth is, the Fed never had any moral authority and doesn't seem particularly interested in morality.
Public anger can be powerful but fear is also powerful and it is a favorite tool of the elite. They will tell us that the power to print money is too important and too complex to entrust to partisan elected politicians; that the threat of terrorism, crime, and drugs are the reason to surrender our freedoms for the perception of security. They will try to sell us that censorship of the Internet will protect us. Of course we know the old saying, "He who sacrifices freedom for security deserves neither." I think that came from Ben Franklin and he had another saying, "Time is money." The longer the banking elite can stall reform, the longer they can profit. There's another saying, "Don't fight the Fed;" that probable came from somebody in the Fed, and whenever I hear that I think of the line from the Wizard of Oz: "Pay no attention to the man behind the curtain."
I know you've compared the Internet to the Gutenberg Press and that is a good analogy. I also like your decsription of the power it has to create reform – thus your nomenclature, Internet Reformation. Maybe the Internet can pull back the curtain on the Federal Reserve, but I don't expect the Fed's handlers to just hand over power to the people. So far, all we've seen are a few monkey wrenches tossed into the gears of the money power's machinery. What we haven't seen YET is a modern day equivalent of Martin Luther's Theses nailed to their front door.
Daily Bell: What about Ben Bernanke?
Pat Gorman: What about him?
Daily Bell: Is he weathering the storm? Do you think he will eventually resign?
Pat Gorman: Bernanke is nothing more than a puppet. Eventually he will exit the stage and be replaced by another puppet. Helicopter Ben is just a contrarian indicator. How much credibility can you give to a man who says gold is not money? What you have to watch out for are the people pulling his strings, they also hold the strings of our politicians and they control the guns.
Daily Bell: What should people be buying today? Paper metal or physical metal?
Pat Gorman: Having physical gold and silver is essential if you want insure your wealth against devaluation. It should be considered as the ideal means to preserve the purchasing power of your money. Paper, whether it is suppossedly backed by gold, is still just paper. You cannot beat holding the real thing.
Daily Bell: Will gold end up confiscated in the US and the EU? You didn't believe so last time we spoke.
Pat Gorman: I'm sure they would love to confiscate gold if they could get away with it. I still don't believe it will happen. Most people have had enough of the robbery and another confiscation would be too blatant a move to try and pull without setting off a revolution of sorts. It would be much simpler to just make your dollar worthless or continue to tax the people to death. Even that is getting dangerous. When almost all you work for is taken and given to someone else by someone else, why work? I don't think the populace will continue to just lay down for agencies taking much more than they already do without putting up a fight. At least I'd like to think they wouldn't.
Daily Bell: What do you think about states printing their own money?
Pat Gorman: Well, that is something they did many years ago before the American Civil War. At this point, we may not only see some states start to print their own currency, we might see several states attempt to secceed from the Federal government. Texas, South Dakota and North Dakota have already considered it and other states are talking about it.
If the Federal government continues to let the Federal Reserve run things the way they have been, the people will become "Fed Up" and are bound to rebell against it. The people who have lived in complacency are beginning to see how that's affecting their lives and the future lives of their children.
Daily Bell: Tell us more about why you started a precious metals business.
Pat Gorman: After working for and managing other metals companies for many years, my wife and I grew weary of the broker mentality of "selling" rather than educating. We thought there had to be a better way for people to acquire honest money. I started Resource Consultants Incorporated in 1996 with the philosophy of education before acquisition. We are a family based company and do business all over the United States. All of our business is through repeat clients, referrals and recommendations and we do not have any brokers calling anyone with a sales pitch. Some say we are the most recommended metals company in the country because of that. We simply do not pay for our recommendations.
Resource Consultants has a newsletter that we send out, free of charge. We also have a website – www.BuySilverNow.com. Additionally, I have had the longest running financial talk radio program in Phoenix, Hard Money Watch, and you can listen to it in the archives section of our website. As you can see, we try to educate people and hope they want to do business with us when they are ready. And many do.
Daily Bell: Explain why owning old coins (numismatics) is not a good idea. Or is it?
Pat Gorman: It depends. No one knows what will happen. Some of the older gold coins are good to buy if the price is right. The biggest problem most people have with old or rare coins is that they are gouged by a broker telling them it is the best thing since sliced bread and if they invest in this they will be rich two weeks from Thursday. That is not often the case. Just as investing 100% of your money in one gold mine is probably foolish, investing 100% of your money in one category of physical precious metals is not a wise idea either.
This is why Resource Consultants always recommends three categories. The first is what we call Insurance, this includes the bullion pieces such as 90% silver, silver bars and rounds, Silver Eagles, Gold Eagles, Maple Leafs and other easily traded bullion pieces that carry a very low premium.
The second category, we call insurance with a kicker. This includes Peace & Morgan silver dollars and the older American gold coins such as $20 St. Gaudens & Liberties in XF or slightly circulated condition.
The third category we call speculative, and this included the Mint State older US gold and silver coins. These coins are at very low prices as of late because there have been many people selling them back into the market. Since all markets are influenced by supply and demand, when the market gets flooded the prices come down. This is what makes this category speculative. You can do very well with these coins but you need to buy and sell right. Diversify!
Daily Bell: Are gold and silver becoming scarcer? Are People hoarding as the price goes up? When will they dis-hoard?
Pat Gorman: So far gold and silver is readily available. The demand is still very brisk. We do not believe many people are hoarding at this time. People are just beginning to wake up to the fact that the dollar is in deep, deep trouble. Many people think that with the price of gold being over $1600.00 that means the price of gold is going up. The price of gold is not really going up. The value of the US dollar is going down. If anything, what is happening is that people have been hoarding US dollars. As the world wakes up and realizes that the US currency is breathing it's last breath they will be dis-hoarding the dollar to buy gold as quickly as a beauty queen running from a leper! When this happens, the price of gold will be driven to at least $5000 per ounce or more.
Daily Bell: Are more mines likely to open up?
Pat Gorman: More and more companies are exploring all over the globe and it is inevitable that some will be successful and new discoveries will lead to the opening of more and more mines. Mineral exploration is a highly speculative field and one in which, more often than not, tears of pain are shed rather than tears of joy. Again, we hope if people choose to invest in mining exploration companies they are careful to make sure they are not being sold "The Brooklyn Bridge!"
Daily Bell: Moving on…are the powers-that-be trying to distract the populace with wars?
Pat Gorman: Absolutely.
Daily Bell: What are you doing to protect yourself and your family?
Pat Gorman: First and foremost, I am taking better care of myself. I have learned that the body needs attention once in a while and now I am learning to give it what it needs. I would like to be around for those who need and love me. A brush with death certainly gives one a new appreciation for life. Other than that, not much has changed. Remember the Y2K scare? Our family never really made any drastic moves or panicked back then, because we always lived with the Boy Scout mentality of "always be prepared." All you can do is the best you can do. But you have to take personal responsibility for what goes on in your life and say no to the dream peddlers who tell you they can do a better job of taking care of you, than you.
Daily Bell: Any other points you want to make during this tumultuous time?
Pat Gorman: My advice is get out and stay out of debt. Put away as much honest money as you can and invest in some good mining stocks too. These days having a little pioneer blood running through your veins doesn't hurt either. Know where your money is going. Know who your friends are and how to be one. Learn how to store food and have an emergency plan. Plan for the worst, but hope for the best.
It is also important to pay attention to what's really going on. Most of what you see in the news is just a diversion used to distract you, while your pocket is picked and your freedom is taken away.
Daily Bell: Any resources, books or websites that you want to recommend?
Pat Gorman: Sinclair Noe is the best source I know of for anything to do with the banking system. You can find his books on Amazon.com. Or you can call our office to order an autographed copy. Once again, our website address is www.BuySilverNow.com. You'll find all of our contact details listed there.
Additionally, Richard Maybury's "Early Warning Report" is one newsletter we highly recommend. Rick's website is www.RichardMaybury.com and his "Uncle Eric" book series is one of the best sources of education on economics you will find. Personally I think they should be in every home and school.
Daily Bell: Thanks so much for your time. Here's wishing you good health.
Pat Gorman: My pleasure, it's good to be back.
It was truly a pleasure to sit down with our long-time friend, Pat Gorman. Over the last six month's Pat and his family have had to overcome a lot of adversity as he strugled to regain his ability to communicate – a struggle he continues to win. And anyone who knows Mr. Gorman can attest, it's hard to imagine anyone who would have a harder time being silent.
During the past three decades, Pat Gorman has been a prominent voice of reason piercing through the fiat-money-fog that has clouded many people's ability to understand the ills of the Federal Reserve monetary system – and the US dollar itself. And due to his educational efforts, many Americans have awakened and taken action to protect their purchasing power. Gorman and his family business has literally helped tens of thousands of people to make the right moves by listening to their needs and suggesting appropriate, customized asset protection solutions.
This week we have a supposed August 2nd "deadline" that could see America's economy unravel. People are being bombarded by mainstream media with fear-based propaganda that creates the illusion that the whole "debate" is politically motivated. They certainly do not discuss the nature of the system itself. No, none of that. Just fear mongering meant to scare pensioners, seniors and anyone else dependent on Federal entitlements. But the truth of the matter is that America has been broken. It is in fact broke.
The central bank functionaries at the Federal Reserve – acting on behalf of those who stand behind it – have systematically been draining the wealth and prosperity from Americans for roughly 100 years now. Albeit at an accelerated pace lately. They are devaluing the dollar as a means of reducing the US debt, and will continue to do so. The country is being steered right into a financial hurricane the likes of which the world may have never witnessed before.
These words are not written without a lot of contemplation over the current state of affairs ... and how we got here. People must act now to get themselves and their families out of harms way. There is no way to know exactly when then hurricane will finally hit, but as I wrote in my book, High Alert – How to Prepare for and Profit from the Coming Financial Hurricane, way back in 2005, when the hurricane does land it will be too late to act. Civil chaos and general panic will undoubtedly sweep across America. To stand in front of those headwinds without having protected oneself in advance, will be an impossibile feat.
It is people like Mr. Gorman to whom many Americans owe a great amount of gratitude. He is a true patriot.
Posted by free on 08/02/11 07:22 PM
We are happy to here Pat is getting back to where we all like him to be, out front, showing people the road to truth.
We appreciate Pat Gorman, have listened to his show for years, have attended his events and got to know his family.
A smart and sensible man we listen to.
Thanks DB for the interview, we haven't from Pat for a while.
Get well soon my friend.
Posted by injun1 on 08/01/11 09:52 PM
There has been a fundamental shift for fund managers including myself as an individual investor. Currencies used to be intertwined in fundamentals and technical analysis. That has changed. Currency traders who looked at interest rate differentials now have nothing to invest in because the world is basically at zero interest rates.
It has created what is described as a fear portfolio. The downgrading of debt. China dumping U.S. bonds or perhaps their own economic down turn. I mention the Southeast Asian problem in an earlier feedback. I have established a fear based portfolio.
But no matter what I look at, I have one fear. And that is liquidity. It is highly possible to get caught in a illiquid market whether it's physical or not. I have 3 rules in investing today. Liquidity, liquidity and liquidity!
The world situations puts an investor at odds with the fundamental/technical reasoning. Until it swings back to stability, fear is the name of the game and liquidity is paramount.
Just a thought....
Posted by clark on 08/01/11 09:04 PM
Since I wrote that, and thought about it some, it doesn't seem scary. There's just so many things individuals have little or no control over,... it can be frustrating.
I couldn't imagine what it must be like not knowing many of the particulars about the causes. Somehow, it makes a difference knowing why.
If there were a, "massive rally in the US dollar"
Long-Term Chart of Swiss Franc in USD
Click to view link
...would gold and silver drop significantly? It does not seem like it.
Wouldn't the Fed pump like mad to reverse a big rally? I.e. get banks to lend.
Darryl Schoon's motto seems appropriate here, "Buy gold, buy silver, have faith."
Posted by injun1 on 08/01/11 05:06 PM
Clark it's not good. But until we change it, it's simply going to continue. The little guy doesn't understand what to do. He has never had to compete against global forces. Now that he has lost his job, there are no answers, there is only bewilderment.
And the spread between the have and have nots will simply will get wider.
Posted by clark on 08/01/11 04:44 PM
Sharks and social chaos combined with a more ruthless police state, I don't know about you all but I find that scary, and I don't easily scare.
This short talk by Ron Paul seems to support the discussion a bit:
Click to view link
"...if we refuse to change our gluttonous appetite for a free lunch."
I hope more People take this stuff seriously and start paying attention,... oh, I think we are in trouble.
Posted by injun1 on 08/01/11 12:19 PM
Dottie, you have hit the nail on the head. Bond markets are interest hounds. They sniff the world out for interest rates. The more trouble, the more interest. Since I am a currency trader (by admission)lol, most of the time they take the heat for chaotic movement. However I have a different view.
Bond markets can for a lack of better wording, extort on demand. And they can demand and extort for long periods of time. Which we are currently seeing in the ECU. The currency markets really don't go into clean-up mode unless the extortion payment isn't timely. I have always looked at the currency trader, perhaps being an ex forex fund manager, as a white shark.
Nobody knows them. Nobody has seen them mate or witnessed a birth.(lol) They can smell blood in the water for thousands of miles. They don't intentionally devour surfers, but surfers are sometimes mistaken for food. But when they attack, it is swift, it is brutal and it cleanses to the bone. In all my trading years I have never seen attacks happen without cause.
And countries that don't manage their people, their finances and their governments correctly, get attacked. They don't wait for the bond market to make that determination. They don't wait for the sovereign funds to make that determination. Those two will tolerate bad management, currency traders will not. Bad management is nothing but chum to the currency markets.
I travel extensively throughout Asia. The Sovereign funds are viewed as acquisition creatures. Buy, hold and destroy. The bond markets don't disturb most of the Southeast Asian governments, mainly because they know their governments don't give much credibility to the rating agencies (don't care) and major funds can't invest in unrated or less than perfect ratings, although both are subject to change. But whom governments despise with much reverence, are the currency traders.
But for the currency markets, that is where the coups and assassinations take place. Where the graft and corruption takes place. Where governments play their finances like slot machines and as I said before, the bond markets and Sovereign funds will tolerate it, but the currency markets will not. The so called white shark doesn't for the most part go looking for trouble. But as long as governments keep throwing chum in the water they ask for trouble. And our government is no different.
I depart for another trip to Southeast Asia in the near future. The Philippines to be exact. It's a wonderful country with wonderful people. It is also where corruption, assassinations, terrorism and government mismanagement is the norm.
However this little country is being stripped of its natural resources by a Sovereign fund,(China)and they booted the American military out a few years back and now want and need our assistance in keeping them at bay. Which by the way will not becoming anytime soon. Mainly out of payback.
The repercussions of what we do in the Philippines, Taiwan, and Korea will have great bearing on the future relationship we have with China, our debt and the sovereignty issues that linger between our two countries. It has the potential to disrupt interest rates. Huge interest rates. It may or may not happen, but I put my boots on the ground to at least assess the possibilities of which way the winds may blow.
The EU is not a concern for currency traders. The Middle East is not a concern for currency traders. Those are bond and Sovereign fund problems, at least for the current moment. But the little countries of Southeast Asia may be the tipping point of where the financial mold is cast.For all the world. At least that's the way I see it from here.
Posted by John Danforth on 08/01/11 10:05 AM
pre-cash should be pre-crash
Posted by John Danforth on 08/01/11 10:04 AM
Thanks, Dotti. I like your insights as well!
On your question, what the sovereigns do is PRINT (actually, printing would cost too much so they just hit a key) fiat currency and buy up each others' bonds with them. Japan is a basket case and yet still buys huge amounts of U.S. treasuries.
What they are trying to do is paper over all the worthless assets the banks are holding on their books that are backed by crashed real estate collateral, while holding them on the books at pre-cash values. They have to do it slowly, or there will be a bank run the likes of which the planet has never seen. What do you do when there's a tsunami coming and you can't run? You close your eyes, stick your fingers in your ears and say, "la la la I can't hear you go away".
Here's a snapshot of what the situation is:
Click to view link
Posted by dotti on 08/01/11 09:46 AM
John: 'Thank you for sharing your insightful wisdom and experience!'
That goes double from me to the two of you (John and injun1)!!! And other posters here, as well. Thanks to all.
John: 'The main players themselves are plenty worried. Because the entire system is insolvent, hopelessly insolvent, and they are desperate to keep everyone stupefied and placid. If the booboisie or sovereign funds lose faith in this last 'safe haven', the results could be huge, because this is the lifeblood of the central banks and the governments they own.'
Very succinct, indeed!
John and injun1, there are certain things that seem so obvious to me that are not being talked about in the MSM-not even much here at DB. You have touched on one of them.
The sovereigns all purchase one another's bonds, creating a circle of something that is really worthless. Why does one sovereign pay 4% interest to borrow money to 'invest' in bonds for a 2% return. (They all do it, right? Am I wrong about that?) It gives some sort of credibility (false) to all of them. My suspicion is that it is also the old thing of creating an alliance among all the sovereigns based on a mutual dependency.
I remember in the 80's being startled that a purely defensive weapon (what was it called, Starwars?) was considered an aggression. Then it was explained: it changed our level of vulnerability-making it theoretically possible for us to attack with less fear of reprisals. The system then in place depended on a shared threat of mutual annihilation-which provided security that no one would attack.
The other thing that seems to be largely ignored is that we are already functioning under manipulated interest rates. Without the Fed's open intervention in the bond markets, interest rates would be much higher. Yet, all the talk of the chaotic consequences of 'default' included the threat (I know I'm using the word 'threat' a lot, but it seems appropriate in the circumstance!) of interest rates being driven higher. The MSM reports give little or no consideration to the fact that interest rates are not being set by the 'invisible hand'-they are being manipulated by our own Federal Reserve.
Bottom line, as I see it-and thanks to anyone who can/will comment on this-is that these two bits of information are being obscured or distorted for the purposes of continuing the current game-a game in which only one side sets the rules and they are free to change those rules as they see fit. However, if this Internet Revolution thing really takes hold-there is some hope for change-change in the direction of a more fair system-which would be an improvement, even if the transition itself will be rough.
If we use the analogy of someone 'taking their marbles and going home', the central bankers will run with everything that they can get their hands on. They WILL SURVIVE to play another day-they always protect their wealth.
John and injun1, I have enjoyed your exchange. Your input, injun1, and your further analysis, John, are very helpful to me in trying to figure out where this world is headed.
Posted by Reformed Actuary on 08/01/11 08:37 AM
I get your concern about "deflation", but I didn't read that in Mr. Gorman's article. As to the likelihood of inflation, I think it is much less likely from a political standpoint than continued inflation. Yes, there is a natural tendency for air come out of the balloon, but governments will always redouble the size of the pump. I can show you hundreds of hyper inflations, and you can show me on or two deflations....and those were both policy "mistakes" that Bernanke will never allow to happen again.
Remember, what I'm suggesting is that you use some future fiat dollars (in the bush) to go out and buy a bird in the hand today!
Posted by John Danforth on 08/01/11 06:54 AM
Thank you for sharing your insightful wisdom and experience!
If those in power wanted to stampede the people like a herd of farm animals, a disruption in energy supplies for a week or two would do it. That's something that's hard to plan ahead for.
Posted by injun1 on 08/01/11 01:48 AM
I was in Europe when Nixon got off the gold standard. I recall overnight that my rent quadrupled because of the devaluation. It didn't take long to realize what one needed to do in order to survive and the underground black market was created overnight. Ha! We never had it so good. We made more money than we knew what to do with.
Having seen first hand what devaluation does to offshore markets and the different types of "markets " that are created to survive, was quite an experience as a young man. I never forgot it. No class room can teach that to an investor. I suppose that is one reason I believe it takes time to destruct because people are just too inventive when it comes to survival.
Financial markets move on, perhaps in different forms, legal and illegal but they do move and someone has to act as the clearinghouse. We simply became our own clearinghouse (self central bank) in the foreign exchange market for bartered hard products.(Booze and commodities) it was all pretty simple and effective. As they say, it made me what I am today, a financial trader.
The bond market however is a different animal. It can create hot money that can be very destructive when agitated. If there is a concern and one that I keep an eye on its the bond money markets. I don't invest in them but I sure keep an eye on them. Sovereign funds are a unique creature also. One that moves slower but can also be devastating when agitated.
I invest in a lot of sovereign class commodities. It is a rather simple investment method and successful because an investor normally has plenty of time to see the direction of a sovereign fund. I believe that sovereign funds will have the final say. Bond markets will create chaos. Currency traders will compound it, but the sovereign funds are not so eager to move as chaotic because of their sovereign debt holdings and hard assets. That debt and hard asset will eventually stabilize the important markets while the bond market will clean out the roadkill economies and the currency trader like me will simply play along.
And then the game starts over!(lol)
Posted by turbomango on 08/01/11 01:20 AM
Speaking of the Gutenberg Press, a knowledge-bank cartel has decided to take it upon itself to monetizing public domain and fair-use waiver material ... all knowledge regardless of when it was written... Locked up, accessible by paywall only, in many cases the only source of certain documents, which made them very valuable indeed. And they owned the only key.
The cartel started in 1995 with seven libraries. Sixteen years later, 7000 libraries find themselves members.Aaron Swartz protested a unilateral decision made by those who now financially benefit from the brains, sweat, and tears of the most intelligent authors on the planet, Mr. Swartz is considered worse than a violent criminal because he thwarted the intellectual establishment. JSTOR and MIT disingenuously claim they consider the matter closed- except it isn't closed for Mr. Swartz. The prosecutor can't figure out which legal theory applies, but they jail him anyway.In protest of Swartz's arrest, academic activist Greg Maxwell published an archive of 18,592 public domain articles from JSTOR's Royal Society collection on the file-sharing site Pirate Bay.
Click to view link
Click to view link the files
Click to view link
Posted by John Danforth on 08/01/11 12:56 AM
I think you'll find the article interesting.
It explains the fake gold standards that preceded the pure fiat we enjoy so much now.
Confiscation seems unlikely to me. Trust in government is low, and pot prohibition has resulted in a populace that is quite happy to possess contraband if they disagree with the law. They risk a huge blowback if they overplay their hand at the wrong time, and I think they know it. I think they know most people are not pulling their money out of banks and buying up coins and other assets, so they are not too worried about it. I think they figure they can inflate until it's time for new money with more zeroes on it, then another round with fewer zeroes, etc. All backed (but not really) by gold.
I hope you are right in your assessment that the house of cards is unlikely to collapse overnight. On the other hand, it seems there might be a risk of a bond market collapse. What we are witnessing with the unprecedented monetization of debt and the fear on the faces of central bankers worldwide tells me they are worried about the herd stampeding out of bonds, causing a cascade of failures throughout the banking system. The frantic nature of the theatrics going on over this debt limit deal are a big 'tell'. The main players themselves are plenty worried. Because the entire system is insolvent, hopelessly insolvent, and they are desperate to keep everyone stupefied and placid. If the booboisie or sovereign funds lose faith in this last 'safe haven', the results could be huge, because this is the lifeblood of the central banks and the governments they own.
I cannot conceive that there are not contingency plans laid for this eventuality. Probably all set up and ready to go. And establishment economists are out there in the influential papers laying the groundwork so it won't seem so radical if it must be deployed. The Bell has speculated that the crisis is being caused intentionally, to get people to demand a fix, ready to accept a worldwide fiat currency.
Posted by injun1 on 08/01/11 12:24 AM
Although I haven't read your link there seems to be a simple revolving door we are willing to go round and round with. I am not a gold bug but I do purchase the physical asset. I trade mostly financials and commodities but always stay liquid just in case.
The point being, I invest according to the psychological revolving door that GOV creates to provide the effect that they need to slosh their worthless paper around. Before we got off the gold standard, would one not say that was a fake gold standard?
The elite managed to a have a successful run of 40 years based on nothing. I would say it has simply run its usefulness and now it is simply time to go back to a fake gold standard that will provide the psychological cover they need to extend their game.
People tend to believe we are in crisis. They perhaps are right. However even if we are, our financial house, even though built of cards, is simply not going to collapse tomorrow.
In this game it takes time to destruct and we may, but the psychological game of creating public confidence seems to be heading back to confiscation in order to create the psychological coup they need to revert back to the fake gold standard.
What say you?
Posted by John Danforth on 07/31/11 11:22 PM
Catching up on some reading, I came across this article by Gary North:
Click to view link
Seems he agrees with my suspicion that the Next Level currency will be a fake gold standard. (It's backed by gold, but you can't have any.)
Posted by John Danforth on 07/31/11 10:43 PM
Be careful on that prediction.
There is only one thing that is going to paper over the Quadrillions of bank insolvency, and the banks are the only thing that matters.
That one thing is -- more fiat currency! (And more, and more.) And more, being celebrated tonight in Washington.
One more thing .... exactly which fiat currency economies failed with deflation? I can think of quite a few that crashed from inflation. Are there any that deflated into oblivion?
Sure, we are causing the downfall of the fiat/debt banking economy by not borrowing. But we have a lender of last resort, and a spender of last resort, and they are both working overtime according to the Keynesian formula.
Posted by John Danforth on 07/31/11 10:21 PM
There were plenty of fiat currencies floating around at the time the Constitution was written. Each state was printing its own. Inflation was ruining the country and a rebellion was brewing over it. It's one of the main reasons the states decided to form a union.
You'll notice the coining part is included along with weights and measures. The idea was to stick to coins (and paper backed by coins), with standard weights and purity (regulating the value) to prevent inflation the way the Roman Empire did it.
The intent was to render this service to prevent cheating. And to prevent states from printing fiat currency.
Posted by Danny B on 07/31/11 09:47 PM
More and more writers are coming around to the conclusion that we are going in to a deflationary depression. One should definitely consider this in any kind of investing. John Maudlin has an excellent paper talking about the end of the debt super-cycle.
Click to view link
He shows good cause, with the GDP shrinking even with all the pumping that the FED and GOV is doing.
Shadowstats says that GDP is actually negative 2 %.
One has to consider the inflation rate; 10 %
One has to consider the $ 16 trillion pumped into the system by the FED.
If 10% inflation is the best that can be done, we MUST be in deflation.
GEAB says that an additional $ 15 trillion will evaporate between now and January.
I seriously doubt that Big, Bad, Bald, Ban Bernanke can keep up with these numbers.
I don't see the implementation of mandatory wage increases. Without these, the economy will stagger from one price increase to the next,,,, a body-blow every time. GOV can't very well get high inflation without a wage-price spiral. Imagine what price inflation will do to the consumer economy when wages are shrinking. It will shrink the economy and the velocity of money.
GOV spends 44% of the GDP,,, much of it with borrowed money. QE III will flow into commodities and emerging markets, NOT to the consumer. Commodities and equities may inflate but, the consumer will disappear from the market. First, bi-flation,,, then, deflation.
Posted by rossbcan on 07/31/11 07:54 PM
"The natural progression of idleness, is debate turning into action."
Exactly. That is one of the fundamental reasons I post. To influence the debate and attemopt to insure the inevitable consequence of action is "sane" (maximal survival for the civilized, triage for the barbarians whom have certainly "asked for it").