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EXCLUSIVE INTERVIEW, Gold & Silver
Andy Hoffman: This Dollar Ponzi Scheme Will Collapse
By Anthony Wile - September 21, 2014

Introduction: Andrew ("Andy") Hoffman, CFA joined Miles Franklin, one of America's oldest, largest bullion dealers, in October 2011 and serves as Marketing Director. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies. Andy's articles can be found on the Miles Franklin Blog, at www.milesfranklin.com.

Daily Bell: Good to speak with you again, Andy. What's new with you?

Andy Hoffman: Working harder than ever to dispel the mistruths and misinformation permeating the clueless, captive MSM and historically manipulated financial markets. Thankfully, despite multi-year lows in Western Precious Metals sentiment, Miles Franklin is as strong as ever, as we complete our 25th year of operation.

Daily Bell: In a recent blog entry you referred to the "potentially cataclysmic Scottish referendum." What did you mean by that?

Andy Hoffman: Just from a pure economic standpoint, it would indeed be a lethal blow to the UK economy – which, like the U.S., is supported solely by unfettered central bank money printing, which has created nearly identical equity and high-end real estate bubbles. Scotland generates just 10% of UK GDP, but theoretically would have title to 90% of North Sea oil and gas revenues – which not only could prove devastating for England, but could yield years of bitter property disputes.

Of course, the bigger issue is the expanding secession movements we wrote about last week. Whether or not the Scotland vote turns out "yes" or "no," the inexorable movement to escape oppressive social and/or financial governance will only accelerate as the global economy collapses. The situation is particularly tenuous in Europe, with its myriad cultures and nationalist movements, where the first such "yes" vote could catalyze numerous others – starting with Spain's Catalonia region, which will hold a similar referendum in November; and afterwards, the famed Italian city of Venice. Catalonia accounts for a whopping 20% of Spanish GDP; and Venice, 10% of Italian GDP.

Daily Bell: What's happening with commodities?

Andy Hoffman: As I wrote in last week's "Commodity Crash," the weight of an imploding global economy has caused precipitous plunges in key commodities from copper – i.e., "Dr. Death" – to crude oil. Not all commodities are falling, of course, and historic Brazilian and Californian droughts, unfortunately, will likely put a floor on many key agricultural items for years to come. Given the unprecedented, and accelerating level of global money printing, what could be more ominous?

Daily Bell: And currencies?

Andy Hoffman: As I wrote in last year's "The Final Currency War," the politically motivated "race to debase" has expanded to epic proportions since the Fed, ECB, BOJ, BOE and SNB accelerated their respective printing presses in 2011-12. Consequently, currencies the world round have experienced dramatic declines – on average, more than 20% in the past three years – yielding dramatic inflation increases. Ironically, the greatest money printer of them all – and chief architect of the aforementioned worldwide currency volatility – has been "strengthened" as a result, but only in the foreign currency markets. In what really matters, however – its purchasing power against real items of value – it has declined significantly. This is why the covert suppression of gold and silver prices is so important to TPTB; without it, these traditional "barometers" of inflation would be giving dangerous, politically damaging signals.

Daily Bell: Lots of news this week. Anything significant from the FOMC meeting? Have they assured us the Great Recession (that we're not having) is over?

Andy Hoffman: The FOMC statement, as always, could not have been more dovish. The Fed simply buys time to extend its "ZIRP to Infinity" mandate, and simply adjusts its language based on where the financial markets stand at the time of publication. This particular statement said utterly NOTHING incremental; i.e., the economy is "moderately" improving, yet "significant underutilization of labor resources" remains a material fear. And thus, they'll simply "wait and see" what happens, whilst continuing to keep rates at zero. They have not a clue what the real economy is doing, and the world's worst track record of attempting to guess.

Daily Bell: What's the report card on Janet Yellen? What's she doing? Is she living up to her dovish expectations?

Andy Hoffman: Janet Yellen is so dangerous because she is a career Keynesian puppet, with not a shred of success on her resume or even the slightest inclination to try anything other than enhanced money printing. Of course, it's not her fault that she inherited Greenspan and Bernanke's Ponzi scheme mess. But then again, she participated in it all along, as a member of Clinton's inner circle and subsequently the FOMC board.

Daily Bell: Where's the taper?

Andy Hoffman: "Tapering" is but a propaganda scheme cooked up to try and promote confidence in the Fed, and the economy at large. The problem is, that since they commenced it last spring, the economy has dramatically worsened, by every conceivable real metric. The amount of QE has never been what they said it was, as I proved in "proof of the tapering mirage" – let alone, the so-called "Belgian buyer" that mysteriously appeared when China announced it was selling Treasuries late last year. When rates fall too sharply, as they have this year, the Fed is just as apt to sell bonds as buy them – all covertly, of course. They care only of the fraudulent picture markets tell, which requires them to be "on call" for adjustment on a 24/7 basis.

Daily Bell: Has Mark Carney succeeded where Yellen hasn't? Is the British economy beginning to boom?

Andy Hoffman: LOL, "succeeded"? As noted above, London's property bubble – as in the U.S., limited principally to the high end of the market where the BOE's money printing funnels, is the only bright spot in an otherwise moribund miasma of weakness. The only reason the UK can even purport to be doing "better" than the EU – if 0.7% GDP growth is considered positive in the first place – is because unlike the ECB, the BOE has no beaurocratic constraints on its money printing. London is perhaps Europe's most expensive city, and the British populace is dealing with the same economic horrors as Americans. Not to mention, British banks are even more levered than American banks; and thus, just one crisis away from collapse. Ironically, former Goldman Sachs partner Carney just abandoned his employment rate "threshold" for raising rates for the same reason Yellen did earlier this year – because the UK economy, despite its reduced "unemployment rate," is suffering from the same, chronic "significant underutilization of labor resources" as the States.

Daily Bell: And what about Draghi – will he get his money-printing wishes or will the Germans stand in the way?

Andy Hoffman: Quite clearly, last week's ECB announcement – that a $1 trillion QE program will commence in October – gives that answer loud and clear. The way I understand it, Germany's Constitutional Court earlier this year may have disagreed with QE, but didn't outright overrule it. Germany is in an impossible situation, as the largest creditor of France – and by proxy, most of the PIIGS. They know they MUST keep printing, or else – which is why I expect the aforementioned secessionist movement to gain traction in Germany. Last weekend, the anti-Euro party made significant gains in local German elections – and you can bet that in the coming years, it will only grow stronger.

Daily Bell: We keep waiting for the euro collapse. Is it going to happen?

Andy Hoffman: It is happening as we speak, and the commencement of "QE to Infinity" this Fall will only accelerate this inevitability.

Daily Bell: Will the eurozone be divided into two? Will northern and southern Europe bifurcate?

Andy Hoffman: No one knows exactly how it will happen; but in time, it is a mathematical certainty that, either via secessions or expulsions, the Eurozone will break into two or more pieces. In my view, stronger players like Germany will inevitably be lured to the new "Eastern Axis" fronted by China and Russia while weaker players, such as the PIIGS, will plunge into the economic abyss.

Daily Bell: Are we going to end up with some sort of basket of currencies, worldwide?

Andy Hoffman: Not a chance. As fiat currency is the problem in the first place, why would a "basket" of fiat currencies be any better? Not only does such a concept – such as the fabled "SDR," or Special Drawing Right – make no economic sense, but there would be no political consensus behind it in an increasingly fragmented world. And oh yeah, the people wouldn't accept them.

Daily Bell: Remind us of your views on a gold standard.

Andy Hoffman: Ultimately, when the dust settles the only currency a hyper-inflated world will accept is one based on Precious Metals, given their time-tested, uncontested monetary properties. However, who knows when that will occur; perhaps next year, or perhaps two decades from now. In the meantime, we can't emphasize enough that we don't own PMs in anticipation of a "gold standard," but their historic tendency to protect one's net worth against fiat money printing.

Daily Bell: Should people be buying junior golds – or sticking to the physical?

Andy Hoffman: I spent nearly a decade owning mining shares, and six years working for mining companies. Three years ago, I once and for all realized the sector is doomed to destruction, by a combination of capital starvation, naked shorting and government decree. Thus, I only own physical metal, as I see no reason to speculate in risky stocks when I know my metals are essentially impervious to said issues. Now that my strategy is pure "financial defense," I have no issue in paper assets of any kind.

Daily Bell: How about ETFs?

Andy Hoffman: Even worse, particularly if you are speaking of GLD and SLV, which I believe to be two of the biggest frauds in financial history. Like other "paper PM investments," owning them does not constitute ownership of the actual metal one needs to protect themselves.

Daily Bell: There's an upcoming Swiss vote on gold. Will Switzerland end up back on a gold standard?

Andy Hoffman: That's a good question, and my close friend in the Swiss financial community is unsure himself. No one understands the benefits of hard money more than the Swiss, which until the turn of the century had the last remaining gold-backed currency. Since then, the Swiss National Bank sold the nation's soul by selling most of its gold at the market bottom, and devaluing the Franc by pegging it to the dying, soon-to-be "QE'd to Infinity" Euro. We can only hope the people make the wise choice – which, frankly, will be far easier for the rich Swiss than other nations, such as the PIIGS, which don't have the money to buy gold even if they wanted to. If they do vote "yes" on November 30th, it will be a global game changer for decades to come.

Daily Bell: Should other countries do the same?

Andy Hoffman: All countries "should," but most won't. Switzerland is in a unique position to actually save itself – assuming the gold their people desire is actually available to be bought; but for the rest, I'd put much of the world in the same box as America's hopeless "99%."

Daily Bell: And yet they don't. They move in the wrong direction. Report card on Abenomics? Japan just keeps foundering, doesn't it?

Andy Hoffman: The "Land of the Setting Sun" is so important to observe because it's "Demographic Hell" – i.e, having a population a decade older than the global average – caused their prototypical fiat currency bubble/bust a decade earlier than the rest. Having started their money printing orgy in the early 1990s – versus the early 2000s for the U.S., for example – they have QE'd themselves to 250% debt/GDP, the world's highest cost of living and an unmitigated economic collapse. I strongly believe Japan will be the first "first world" nation to experience hyperinflation; and worse yet, the rest of the West will join them far more quickly than most can imagine. Japan was fortunate enough to print its way to oblivion when the world still had a "charge card" to run up. However, the rest of the world doesn't have that benefit, as it's already passed peak debt. And by the way, both the U.S. and Europe are entering that same demographic hell as we speak, as their populations rapidly age.

Daily Bell: How about Asia generally?

Andy Hoffman: "Asia" is a very generic term, with widely varying economic and social issues. Clearly, China and Russia will lead the emerging "Eastern Economic Axis" in the coming years. However, before that occurs, the global monetary system must necessarily collapse, yielding the reneging on – via default or inflation – trillions of debts. Thus, nothing is "safe" until this happens, not by a longshot.

Daily Bell: What's your take on developing and frontier markets?

Andy Hoffman: This, too, is an ambiguous term, as so many nations on many continents can be given this classification. In a nutshell, the more "developing" or "frontier" a nation is, the more likely it will experience extreme economic and social dislocation when the "big one" hits global markets.

Daily Bell: How about China? Can they keep printing or will the economy finally collapse? We've been waiting for China for a while.

Andy Hoffman: China is collapsing as we speak – not in terms of its long-term viability, but history's largest credit/real estate/construction bubble. Its insane central bankers fostered a $20+ trillion credit explosion in the past five years; and today, even rigged Chinese economic data can't mask the fact that the nation is mired in massive debt, overcapacity, and – oh, yeah – money printing, as it continues to peg the Yuan to the dollar. In time, China will be the undisputed global economic power, if it isn't already; but in the meantime, I expect economic contraction and money printing – such as this week's "surprise" $80 billion QE announcement – to be the rule rather than the exception.

Daily Bell: Where is the Russian economy headed and why?

Andy Hoffman: This is a good question, as they are heavily resource-oriented in an environment of crashing commodity prices. If oil weakens further – and the "West vs. Russia" wars heat up (both economically and potentially, militarily), it's hard to see the world's most communist economy doing anything but collapsing. However, ultimately it holds cards the West doesn't – such as the aforementioned resources.

Daily Bell: Is the Ukraine war over or is it just heating up?

Andy Hoffman: Who knows what the truth is anymore? MH-17? Fraudulent "convoy attacks" and "peace treaties"? Historically suicidal sanctions against Russia, whilst the West proclaims "de-escalation"? Let's just say that after the Middle East, the Crimean peninsula ranks as one of history's most volatile geopolitical hotspots. And now that the West clearly aims to provoke Putin to the point of war, I'll simply say it ranks near the top of my very long list of potential "black swans."

Daily Bell: Will the fighting put even more pressure on the EU economy?

Andy Hoffman: Unquestionably. In the last few months alone, Germany has had an historic collapse in its ZEW business sentiment index; and this, following a European implosion so severe, the ECB has been forced to initiate NIRP and QE schemes. As noted above, I believe the European economy and union will collapse under its own weight irrespective. However, if the Ukrainian crisis erupts into full-blown war, I shudder to think of the horrific economic impact on Europe.

Daily Bell: What about ISIS – are the Middle East and African wars going to continue?

Andy Hoffman: Equally unquestionably. No matter what your view as to the "how" and "why" ISIS has suddenly surfaced as the "new al Qaeda," the U.S. – and others – have already made open-ended commitments to destroy them; in Joe Biden's ominous words, the U.S. will "chase them to the gates of hell."

Daily Bell: What's the outlook for gold relative to the military action now taking place?

Andy Hoffman: The same as if there was no military action at all – never more bullish. If TPTB want to escalate military confrontations as well – or, if they simply break out spontaneously – it will only accelerate the inevitable fleeing from paper investments into real money.

Daily Bell: Gold seems on a steady downward trend, though. Why is that?

Andy Hoffman: 100% manipulation, and nothing else. Last year, the world experienced record physical gold and silver demand, yet paper prices were attacked with a viciousness even I haven't seen in nearly 13 years of holding and observing precious metals. The suppression scheme that started at the turn of the century accelerated when gold hit its all-time high in September 2011 – per what I wrote in "the point of no return" – and went into its top gear in April 2013, when precious metals were attacked the day after a "closed door meeting" between Obama and the top "TBTF" bank CEOs. The closer we get to the inevitable end game of currency collapse, the mover blatant such manipulations – of all financial markets – have become.

Daily Bell: When is the breakout going to come? Is it going to come?

Andy Hoffman: It most certainly will, as sure as day follows night, and bust follows boom. The "when" is the hardest thing to forecast, given the aforementioned interventions to prevent it. However, given the quite obvious dwindling of global metal inventories – particularly in silver – and parabolic growth in debt, money printing and social unrest, it's hard to believe said "breakout" will not be sooner rather than later.

Daily Bell: There seems to be so much demand for gold and yet it has little effect on the price.

Andy Hoffman: Per above, there's a huge and widening gap between physical demand and the paper price it connotes. The further the metals are pushed down – in today's case, they are already well below their respective costs of production – the more quickly physical supplies will be depleted (think 2008, when the entire world ran out of silver) and production halted.

Daily Bell: What's going on in India? They seem to be making it impossible to buy gold.

Andy Hoffman: Not impossible at all, just with higher tariffs. Consequently, a massive black market has developed, making it difficult to measure actual demand. That said, silver saw record Indian demand in 2013 – despite the tariffs – which I believe has continued into 2014. And oh yeah, physical gold premiums – over paper prices – have never been higher.

Daily Bell: Stock markets keep making higher highs. How long is that going to last?

Andy Hoffman: "Stock markets" no longer exist, but are simply manipulated higher by the Fed and PPT on a daily basis – per the exact same algorithms utilized to suppress gold and silver. In the end game, stocks will either hyper-inflate (a la Zimbabwe or Venezuela) or crash. Take your pick which, but ultimately history's largest equity bubble – bigger even than 2000 – will end in massive real losses.

Daily Bell: Maybe people should put money in stocks and then invest the profits in gold and silver?

Andy Hoffman: People can do whatever they want. But as for me, I'll continue to play 100% "financial defense" – and thus, eschew speculation entirely in lieu of the safety of physical gold and silver savings.

Daily Bell: Long term, maybe gold does seem a buy, even if it is heading down for the moment. Where's it going to end up in 2014 – over US$1,300? Under US$1,000?

Andy Hoffman: I have no idea. Jim Sinclair says $2,000+ and Larry Edelson says $700, and I could not care less. There are much bigger forces at play here, and in 100% rigged markets, who can guess what will be three months from now? Not to mention, what's so important about December 31st? All I know is the bullish forces have never been more powerful – and at $1,235/oz, gold is dramatically below its cost of production.

Daily Bell: Which do you prefer these days – the white metal or the yellow? Or both?

Andy Hoffman: It's all a matter of personal preference. Silver is by far more undervalued, by many multiples. However, I prefer to maintain a 50/50 weighting, simply because it makes me most comfortable. That said, I believe the gold/silver ratio, currently at 66:1, will ultimately trade at or below its historic average of 15:1.

Daily Bell: We think this Wall Street Party may last another year or two – with some corrections (maybe major). What do you think?

Andy Hoffman: Tell me how long TPTB can prevent reality from blowing out, and I'll tell you how the "Wall Street Party" will last. Perhaps a "black swan" will usher reality in; or perhaps, the weight of history's largest Ponzi scheme – the current, global fiat currency regime – itself.

Daily Bell: Bonds are heating up, especially corporate bonds. Does the bond market look promising to you?

Andy Hoffman: Bonds are more overvalued than stocks, and particularly corporate bonds. We are talking about record, parabolically growing debt as far as the eye can see, the highest-ever global cost of living, a collapsing worldwide economy and generational geopolitical risks. And yet, care of worldwide QE – and those front running it, rates have been pushed to multi-century lows.

Daily Bell: Of course, the US bond market is dependent on the dollar. How's the dollar doing these days?

Andy Hoffman: No, the U.S. bond market is dependent on the ability of the Fed – both overtly and covertly – to consume all unwanted assets. There are very few actual market participants left – following the 2000-02 and 2008-09 debacles; and those that remain are simply front running the inevitable, global "QE to Infinity" – as I wrote this Spring, in "the most damning proof yet of QE failure."

Daily Bell: Any collapse in the cards? Any time soon?

Andy Hoffman: With 100% certainty, said Ponzi scheme will spectacularly collapse. However, I have no idea "when," other than to say all signs point to it occurring far sooner than most can imagine.

Daily Bell: We haven't heard about the IMF recently. Are they up to anything? What about the BIS?

Andy Hoffman: Both organizations act in the shadows, in their own ways collaborating with Western bankers to "kick the can" as far as possible. As far as I'm concerned, they are simply extensions of the evil "New York-London Axis" that has destroyed the global economy.

Daily Bell: Any other points you want to make or references you want to mention?

Andy Hoffman: Just that Miles Franklin is proud to be completing its 25th year of operations this year. We can be reached at 800-822-8080, and I can be personally reached at ahoffman@milesfranklin.com. Thanks!

Daily Bell: Thanks, Andy.

After Thoughts

Andy Hoffman is focused on purchasing physical gold and silver and since he works at Miles Franklin, that's understandable. But in pointing out that Andy works for a gold dealer, we want to make it clear that Andy, who has an impressive background, could probably work at a lot of places. He obviously CHOSE to work at Miles Franklin and what he explains about the larger economy makes sense to us as well – which is why we often invite him back.

There's really not much we can disagree with when it comes to Andy's perspective. In this interview, he mentions that junior miners are not going to climb much higher, as they did during the previous 1970s golden bull, and this comment set us thinking about whether they would or would not.

Certainly, there are bull and bear cycles in the securities markets and these are confusing because of central bank asset inflation that can disguise a bear market. In fact, we are in a "bear" securities market and have been since 2001. That was when the dollar started to move down hard against gold, eventually yielding a price of nearly US$2000 for an ounce of gold.

At that point, the cycle was unfolding logically and probably junior miners would eventually have started to move up, as they did in the 1970s. But instead, massive central bank interference plus a significant effort to damp the price of gold interfered with the normal business cycle.

As a result, from our standpoint, we've seen an incredible elongation of this latest golden bull. And that is the question that remains on the table today: Will the golden bull cycle eventually reach closure or is the current determined asset inflation going to end in some kind of new and more global trading epoch?

Eventually, one way or another this cycle has got to close, in our view. But it's certainly taking a long time. Central banks are doing everything from printing in concert to directly interfering in the market. And up and up the market goes … It could keep going for a while longer, too, and when it does collapse, perhaps all that will be left to hold is gold and silver.

We may disagree with Andy about junior mines, but we certainly don't about holding physical gold and silver. It's a timely message and one we hope will reach more people.

Posted in EXCLUSIVE INTERVIEW, Gold & Silver
  • Lynn Atherton Bloxham

    Good interview. Info for the sophisticated investor but clear enough for those who need to think outside the box.

  • Danny B

    Gold will come back in focus in the West because it never left focus in the East. India imported 5300 tons of silver last year BUT, “Gold was plated in silver and metal worth billions was bought for cash at the bustling market run by Kaloti Group”
    http://www.theguardian.com/business/2014/feb/25/billion-dollar-gold-market-dubai-kaloti
    While it is understandable that CBs depress the P.O.G. to avoid sending signals about inflation, I believe that there is more to the picture. Gold trades at a par with oil. http://goldprice.org/james-turk/uploaded_images/Oil-Price-780567.GIF
    It shows recent, small spikes that are probably a result of higher drilling costs. Saudi has a very big influence on the price of oil. If Saudi Arabia is responsible for linking the P.O.G. to the price of oil, there would be a huge motivation to hold down the price of gold. Reportedly, the Saudi gold in London is fast disappearing. There isn’t much they can do about it.
    Kissinger sold the Sauds a deal that “they couldn’t turn down” back when the gold dollar died. The Saudis are now aligning with China and have bought Chinese weapons. The Saudis aren’t yet ready to try to do a clean break from America.
    BUT, they can wait for gold to go naked and let the price of oil and gold rise together.
    If the West can NOT break the price link between gold and oil, they have to suppress the P.O.G. to survive. If gold went to $ 2,000 and oil to $ 150, the trucking industry would not be viable. It takes 7 times the energy to move goods by truck as by rail. Ship is even cheaper.

    America will fragment as the cost of transportation goes up.

  • Guy Christopher

    I like Andy Hoffman’s work–I read it almost every day, along with the other excellent analysts at Miles Franklin. The rub here is not paticular to Andy, but I see it repeated so often that it becomes a part of a false narrative. It has to do with incoming officials ‘inheriting a problem.’ How do you “inherit” a problem that you went out and begged to have and then promised to solve. I hear all the time that Obama ‘inherited’ Bush’s mess. Well, no, he didn’t. He asked for whatever came his way, which means he owns it a lot more than if someone had just shoved it onto his shoulders. He didn’t inherit anything that he didn’t beg for. And neither did Yellen. I see that Andy does a better than average job when he says “she (Yellen) participated in it (Fed policy) all along.” But please, folks, let’s stop giving these thieves and criminals cover by allowing them to pretend they ‘inherited’ anything. They didn’t just wake up one morning out of the blue with something they ‘inherited.’

  • Terry The Canadian Curator

    Thank you Andy. I have a question and wondering what you think.
    In an article I read by Charles Hugh Smith he made clear the difference between USD as trading currency and the USD as a World Reserve Currency (a much small percentage of promissory/IOU fiat over GDP [or if in the negative hard assets are promised?).
    What if the reason for the a continued acceptance of USD is that there is still more room to print because the Real Estate known as the United States of America along with its natural resources and skilled, specialist and entrepreneurial work force has been offered for collateral to back the World Reserve Status?
    A pretty solid investment I would offer – as long as the citizens do not wake up to the ground being taken from under their feet?
    The Cliven Bundy situation sure makes one wonder what The Department of The Interior are actually up to and who their bureaucrat masters to?

    • 2prickit

      Department of Agriculture-US Forest Service bureaucrats answered to North Eastern Lumber Industry interests when fabled John Muir was used by NE Lumber to create the Conservation Movement that we see today holding the door shut on development in Western States in the name of Environmental Protection.

  • Terry The Canadian Curator

    Sorry Andy – last line should say ” … bureaucratic masters answer to… “

  • http://www.electricsitar.com/ Gregg Fosse

    Outstanding questions from The Bell, terrific answers from Andy Hoffman, thank you both. There really isn’t much anyone can add to, or change about what has been said here – the only questions Andy does NOT answer clearly relate to timing which is as it should be. Personally I believe the manipulation of precious metals began with the Hunt Brother’s debacle many decades ago, and has continued in one form or another ever since. The manipulation of ALL markets has exceeded my ability to imagine how this could ever be accomplished on a day to day basis – and is a feat of financial wizardry that will go down in historical infamy. I am agog, at both the extent of these manipulations, and the extraordinary length of time this juggling act has been able to continue. Heaven help us. BTW, since PPT and collaborators have pushed equities ever higher, they are perfectly positioned to crush the stock markets of the world at any time of their choosing. Per “Reminiscences of a Stock Operator”, one accumulates a stock (market) until it is as high as is possible and then one sells on the way down……. there is an honored saying “nobody is bigger than the market”, but I am really starting to wonder if that has been permanently dis-proven : (

    • http://www.thedailybell.com/ The Daily Bell

      Thanks.

  • Dimitri Ledkovsky

    Every answer was soooo predictable. Almost as if scripted. Maybe I just read too much of this stuff.

    • http://www.electricsitar.com/ Gregg Fosse

      There really are not too many answers to these questions, are there Dimitri? It is what it is….

    • http://www.thedailybell.com/ The Daily Bell

      OK, It’s familiar, does that make it wrong?

  • http://www.nofica.com Rodger Malcolm Mitchell

    If only Andy understood what a Ponzi scheme is and what a dollar isn’t.

    A Ponzi scheme pays early investors from capital supplied by new investors. It collapses when there are insufficient new investors to pay the early investors.

    The dollar is created ad hoc, when the federal government pays bills. There is no need for “new investors.” Being Monetarily Sovereign, the federal government has the unlimited ability to pay its bills.

    For 230+ years, through wars, recessions, depressions, stagflations and inflations, the U.S. federal government never has failed to pay its bills (which no longer would be the case if we still were on a gold standard, which IS, in fact, a Ponzi scheme.)

    Perhaps, Andy might like to explain how that has been possible, for 230+ years, if this is all a Ponzi scheme.

    • http://www.thedailybell.com/ The Daily Bell

      Every time the Fed prints fresh money it reduces the value of the current money stock.

      • http://www.nofica.com Rodger Malcolm Mitchell

        As usual, you keep quoting the simplistic formula: Inflation = Money Supply.

        Sadly, that continues to be wrong, no matter how often you say it. The real formula can be found here: http://goo.gl/OdJRM6

        Don’t you even wonder why inflation is so low? And by the way, inflation is not a Ponzi scheme. Again, as usual, you switch subjects, when stumped by fact.

        • http://www.thedailybell.com/ The Daily Bell

          When you devalue the wealth of current stakeholders to pay obligations forward, that is Ponzi-like behavior.

          • http://www.nofica.com Rodger Malcolm Mitchell

            You forgot to comment on this: As usual, you keep quoting the simplistic formula: Inflation = Money Supply.

            Sadly, that continues to be wrong, no matter how often you say it. The real formula can be found here: http://goo.gl/OdJRM6

            Don’t you even wonder why inflation is so low?

          • Dave Meekhof

            Price inflation is so low because the general market has been largely captured by cronyism. Trust is being replaced by fear. If this is the world that one wants to live in and economic slavery is just fine, then ‘monetary sovereignty’ is definitely the way to go.

          • Danny B

            NOT taking sides here but, in a Ponzi scheme, the early investors get a full payout because the later investors pay in at full value. With a CB and fiat currency, the early investors get a reduced payback because the value of the payback is reduced by inflation. In a Ponzi scheme, the later investors supply the gain to the early investors. In a fiat currency scheme, everybody supplies the gain to those with the printing press. The fiat scheme runs for much longer because there are more contributors,,, especially if it is a worldwide currency.
            Roger may make the claim that America has always paid it’s debts. This is, of course, not true. When we closed the gold window, it was because we couldn’t pay debts at face value. All of our debt was marked down. America has been successful at stealing enough to pay our debts for MANY decades. This is coming to an end because there isn’t enough left to steal.
            The FED may indeed be able to carry along much of the visible economy. It can’t do much about employment. The economy is a body with an amputated leg. The FED must pump in blood as fast as possible to keep the body from becoming a corpse. There is no future and there is no hope. The FED is trying to maintain the core but, the extremities are failing.

            ,

          • http://www.thedailybell.com/ The Daily Bell

            Not necessarily so, Danny B. A government/central bank will print money to service debt. And some old debtors may be made whole at the expense (via inflation) of the new. Also Madoff ran a Ponzi scheme and many of his “old” investors surely lost as much as his “new” ones.

          • jeff

            I think the author’s reference to a ponzi has more to do with structure (hierarchy in this case) than it does with the application within the structure. Hierarchy, in any financial model, will breed temptation and attract the wicked. An apex is like a light to moths.

            We have been supply driven since the “apple was shoved in our faces”

          • bailintheboat

            Perhaps swindle would be a more accurate term.

          • http://www.thedailybell.com/ The Daily Bell

            Perhaps. Here’s the definition of a ‘Ponzi Scheme’ from Collins English Dictionary: “1. a fraudulent investment operation that pays quick returns to initial contributors using money from subsequent contributors rather than profit.”

          • William Scott

            HMMM… Sounds a bit like “Fractional Reserve Lending?!?” Leverage out to 19:1, loaning out the “excess reserve” against the original 10% kept on “deposit,” which is later reduced to 5%? (I saw it on Zeitgeist Addendum, several years back…) Then bail out some “to BIG… to fails” and loan Euro Banksters enough to stay afloat until 2015ish, or so… ratcheting the leverage up to 77:1, at present??? :-) WST

          • acudoc1949

            God forbid, Rodger Malcolm Mitchell, that one doesn’t multiply hypotheses a la the court economists dependent on ueber-complicated misdirection, and instead adheres to the straightforward understanding that Inflation = Money Supply. Money attaches itself to many items, preferentially and not equally. Try buying some land in Hawaii, or starting a factory that produces real goods. Get back to me on the costs of production.

        • Dave Meekhof

          DB uses the term inflation to describe an increase in the money supply.
          You say DB is ignorant when you use the term to describe a general increase in prices.
          I could say you are ignorant because inflation clearing relates to the amount of compressed air in a tire. But at least I don’t accuse you of switching subjects.

      • Gil G

        Every time gold miners produce more gold they depreciate the existing gold stock.

        • Bologna in The China Shop

          There is a big difference between typing numbers up on a computer and extracting ore from the earth.

        • http://www.thedailybell.com/ The Daily Bell

          Yes. there are plenty of historical examples of this. Gold crashed in Spain after the gold discoveries in the Americas. However, ,there is always appetite for some new metals stock. When it comes to central banks, there is no governor to moderate how much additional money is enough and how much is too much …

          • Lise

            There is no market driven governor …. correct. Hierarchy sucks.

        • William Scott

          And what if say CHINA (and perhaps also Russia and/or India?) later announces that they have FAR MORE GOLD than they claim to (aka lie about) at present? (China clearly does, for example…) SILVER however… should be a MINIMUM of 50% of one’s physical metal hedge, me thinkst. It’s nowhere near the historic 15:1 ratio… so at least 5x+ as “undervalued” as gold today, in all likelihood???

        • esqualido

          That is a fart in a gale compared to the tsunami of money printing (as in a tripling of the national debt in 20 years)

    • Dave Meekhof

      “A Ponzi scheme pays early investors from capital supplied by new investors. It collapses when there are insufficient new investors to pay the early investors.”
      Now think of ‘capital’ in terms of current goods and services and your ‘sovereign currency’ as the note. The further away in time the note gets from the original bearer, the less goods and services it returns. This pay it backward scheme does fit the ponzi definition because the notes never return, are never repaid.

    • esqualido

      The gold standard never was a Ponzi scheme. Fractional reserve banking was. When Britain went off the gold standard in 1931, it became obvious that the same thing could happen here, and depositors began exchanging their gold certificates (i.e. dollars (!) for the real deal, bullion. However, the banks only held $40 in bullion for every $100 in “certificates*, and one by one they went bankrupt (read Sullivan’s Prelude to Panic). Reinstitution of the gold standard is as simple as making the so-called “security thread” in currency out of gold instead of Mylar (now there’s a word that inspires confidence- Mylar
      *which nonetheless is a power of ten greater reserve than our fiat banksters provide today)

      • Earn nest

        I fear they may actually achieve an appreciable degree of price inflation with ensuing borrowing taking place over expectations as meanwhile they cover the tiny fractional requirement with fresh print. Oh wait, they already are?

        • esqualido

          There would be real public discussion and debate over expansion of spending for one undeclared war after another, “quantitative easing,” and the like if government had to demand citizens turn in some of their gold dollars instead of diluting the dollar in the act of deficit spending. In the not so distant day of the cattle rush, feeding salt to the cattle so they would take on water before weighing was a hanging offense.

    • David Horace

      Wow, Rodger, your junior high social studies teacher would be proud of you — unfortunately she didn’t understand economics either.

      All fiat money is debt. However, the money to pay the interest on the debt is not created along with the debt. Hence, the money to pay the interest must come from somewhere. Usually, it comes from the issuance of additional debt (US Treasuries), which need to be purchased by “new investors.” So yes, it is very much a Ponzi scheme. Charles Ponzi just ran out of “new investors” sooner because he didn’t have the ability to devalue the currency.

      As for 230+ years of success, look up the expression “Not worth a Continental.” Then look up the tricks Abraham Lincoln used to pay for the Civil War.

      The dollar being created “ad hoc” is why it has lost 97% of its value since the fed was created in 1913.

      • http://www.nofica.com Rodger Malcolm Mitchell

        I often wonder why people on this post are so paranoid about inflation, but don’t seem concerned about recessions and depressions — both of which are caused by the lack of money. Here we are still in a long, long recession, and all I see on this blog are worries about inflation. Odd.

        At any rate, your “lost 97%” figure almost exactly equals an annual 3% inflation, which is the Fed’s goal. Is that the right goal? I don’t know. But, inflation could have been lower, had the Fed wanted it to be. All the Fed needed to do was increase interest rates, and inflation would have been lower.

        For reasons unknown, the authors of this post think the formula for inflation is: Value = 1/Supply. I don’t know what “junior high social studies teacher” told them that, but the formula for inflation is shown at: http://goo.gl/HCqTHo

        Anyway, the point I was making is that all Ponzi schemes are characterized by eventually running out of money to pay investors. The U.S., being Monetarily Sovereigny, never will run out of dollars.

        And if you understood Monetary Sovereignty, you would know that the U.S. neither needs to tax nor to borrow. Taxing and borrowing are relics of the gold standard days, when the U.S. was not as sovereign over its money.

        I’ll tell you what IS a Ponzi scheme: Gold standards. With gold standards, it was possible for nations to run short of gold — exactly what happens in every Ponzi scheme.

        How ironic that this site should refer to the dollar as a Ponzi scheme, when in fact, gold has proven to be the ultimate Ponzi scheme.

        • http://www.thedailybell.com/ The Daily Bell

          You are mis-defining inflation as price inflation. You are mistaking a state-run gold standard for a market-based one. You are suggesting that readers willingly accept that the a small group of people make monetary and money-volume decisions for everyone else via the force of the state. You won’t get a hearing here because your suggestions are either economically illiterate or they rely on the monopoly power of a Leviathan-like authoritarian structure.

          • http://www.nofica.com Rodger Malcolm Mitchell

            “You are mis-defining inflation as price inflation.”

            Excuse me but I was responding to Mr. Horace, who said, “The dollar being created “ad hoc” is why it has lost 97% of its value . . . “ What kind of inflation is that?

            Anyway, the only kind of inflation people care about is what you call “price inflation,” and what everyone else on the planet calls “inflation.”

            Please show me an example of a “market-based” gold standard. Are you talking about barter? Are you talking about a nation with no official money, but rather, people running around with sacks of gold to pay their bills?

            Kindly provide an example of a market-based gold standard.

          • http://www.thedailybell.com/ The Daily Bell

            A market based gold standard is one in which people utilize gold (and silver) for purposes of trade and savings without the interference of government force to define value or volume. This has surely taken place for thousands of years before our current era of monopoly fiat paper.

          • http://www.nofica.com Rodger Malcolm Mitchell

            Otherwise known as a barter system. That should be “wonderful” in the 21st century.

  • http://GreatRedDragon.com/ EdwardUlyssesCate

    Highly respect Andy’s work (and Daily Bell’s).
    Andy”s not alone in thinking physical holdings instead of accumulating promises.
    This ran in the Telegraph UK a few days ago:
    http://www.telegraph.co.uk/finance/commodities/11104055/Super-rich-rush-to-buy-Italian-Job-style-gold-bars.html

    No wonder banksters are manipulating gold down; multiply each bar’s value by at least 20, and that’s how much
    the risk-addicted banksters are losing access to OPM (Other People’s Money), assuming at least 20-1 leveraging.
    it’s actually much, much more. The banksters are also grasping at Asian vaults, which would explain
    the Shanghai Gold Exchange opening date being moved forward from September 29th. Something gonna blow.

    • jackson

      Anthony Wile says:

      “Andy, who has an impressive background, could probably work at a lot of places.”

      Yeah?… you think so?

      Do you think Andy knows how to back-wire a three-way switch?

      Do you think Andy knows how to repack the front wheel bearings on his ride??

      Do you think Andy knows how to re-roof his own roof???

      Hey Anthony… are you capable of any of the above?

      • http://www.thedailybell.com/ The Daily Bell

        Although I rarely comment, this feedback is indeed from me, the very “capable” Anthony Wile, personally.

        I shall try to keep this brief. While I cannot speak for Andy, I sure as heck can for myself. I am, in fact, extremely capable of using my hands as well as my mind, both of which are equipped to get me through life in a strong way. Assuming otherwise is small-minded and foolish.

        First of all, to make such blatantly ignorant assertions about one’s character without any pretense illuminates your, well… ignorance.

        However, for the benefit of our intelligent readers, who do not wade through forums hiding behind aliases cowardly attempting to discredit others, I will verbally bitch slap you, although you really deserve an old fashioned whooping out behind a barn, which I would have gladly provided such an arrogant lot as yourself had you the guts to issue such “loaded” proclamations to my face.

        So, for my regular readers and fellow freedom lovers…. Here it is in a nutshell.

        I grew up in rural Nova Scotia on a farm that up until the age of ten had no indoor toilettes … that’s right, we used an outhouse to take care of business. And because this part of the world is extremely cold at night for much of the year, we used a peepot rather than trekking to the outhouse in the dark. All of the firewood used to heat our house (yes, we had only wood heat and a wood-fired kitchen stove) was cut and split by hand – by us – point being, no country club playboy youth for this kid.

        Being the oldest child, I learned very quickly what it meant at a young age to work hard. Our farm was primarily a beef cattle operation, although we also farmed Christmas trees, grew our own hay, oats and the like and generally handled all we could on our own.

        By the age of twelve I was operating heavy equipment regularly, including an old D9 bulldozer we had acquired to build roads throughout our property. I have spent thousands of hours using chainsaws in the forest cutting out fire roads, and an equal number of backbreaking hours working with a homemade pee-vee to roll the cut logs to the side of the to-be-bulldozed fire road.

        Onwards… my father built from the ground up a heavy industrial business specializing in manufacturing, selling and servicing platform, truck and commercial weighing systems in Atlantic Canada. Because he was away much of the time traveling to keep the business growing, I was often left to work the farm alone – as a 12-year-old boy.

        I spent my entire youth, when not on the farm, working with my father’s company in every capacity. By the time I was seventeen I could take an entire 40-foot truck scale that needed to be overhauled and coordinate cranes for removal, then personally dissemble the entire lever system, remove the pivots and bearings, rebuild them back in the machine shop, reinstall them and the levers and level the scale back into its saddles. Then I would calibrate it. And, oh yeah, since most had digital indicators by the time I came along, I was also “street” trained on how to repair them. Back-wire a three-way switch… what a joke that is.

        Then the roofing assertion. Funny thing… my brother-in-law owned a roofing company in Calgary, Alberta. After I graduated from college I moved there because it was the ONLY place in Canada at the time that had an economic heartbeat and I was convinced, naively so in retrospect, that I wanted to be a stockbroker.

        In order to eat, while studying in the evenings to become licensed and living in my sister’s unfinished basement, I worked during the day as a roofer, and did this for several months. I also worked as a bouncer on weekends, another job that I had lots of experience with having spent my entire four years working in that capacity while in business school. But I digress, back to the roofing… I will admit it was backbreaking in its own right, although far from mentally stimulating.

        Then there was your point about “repacking the front wheel bearings on my ride.” …
        Listen, pal, for sport we used my best friend’s Shell Gas old-style service station’s bays on weekends, together with another close friend whose family owned the only auto salvage yard in town, to turn automatics into sticks and swap rear ends … just because it was something to do. Then we’d race ‘em on the back roads of Lunenburg County, which usually resulted in more than one scrape – or it wasn’t really fun – and then we’d repair those … and it was just sport to us.

        I still miss my ’77 Dodge Aspen.

        Speaking of mixing ingenuity and hours in the service bay working with my hands, that Aspen wasn’t just souped up for racing. It was souped up for mixing – Rum and Cokes, that is. Who knew there’s more than one use for a windshield washer fluid container and hose? Yup. We replaced that Aspen’s reservoir with a brand new one from Canadian Tire, and ran an extra long hose through the hole we cut in the firewall and right into the back of the glovebox. We kept the extended tubing rolled up, discreetly stowed in that glovebox except when we were using it. One turn of the washer fluid switch and out it came. Came in might handy on a number of occasions, especially when police would line up outside of the drive-in. My Aspen always had a lot more young people hanging around it than most other cars for some unknown reason.

        Anyway, I have addressed your ridiculous assertions, as stated, not for your benefit but for that of those readers I actually care about – and for whom I freely provide this forum, to discuss the subject matter of our freely provided content at The Daily Bell. Cowards like you who throw verbal mud while hiding behind identities really should experience what it feels like to lay face down in a pile of well-aged cow manure after getting an old fashioned ass kicking.

        Anytime, old sport… the old barn still stands there and it’s been a while for me to enjoy taking the smugness off a coward’s face. And there are plenty of barns right here in Ontario. I’m sure we could find one … I could use a little exercise.

        Oh, and just for the record … my assistant editor, who replaced the head gasket on her old Ford F250 extended cab flatbed by herself, in her driveway, said she’ll be happy to set an appointment for us at the barn.

        • Guest

          Not only does Anthony have brains, but some real-life substance behind that pretty face.

          • http://www.wendymcelroy.com wendymcelroy

            Congratulations, Anthony, you just won this exchange…and not because of your superb response to Jackson. You won because the minute Jackson resorted to character assassination he de facto admitted he was unable to deal with the arguments on their merits.

            I can’t tell you how often I encounter the same sort of paternalistic drek and it is always a decision on my part as to whether I should make a response or simply walk away. Knowing you, I suspect the passionate response was prompted by the fact that another person — a Daily Bell person — was the primary target of gratuitous scorn. I think you defend others more quickly and more aggressively than you defend yourself. That’s pretty much how I am, too. I can’t tell you how often someone who is rude to me has received a free pass…until they were rude to the person I was sitting beside. Then I tear their head off and, well… Let me remain a lady.

            I must say, however, that a timely and well-executed rant (such as yours) is a splendid thing on several levels. I very selfishly enjoyed reading the blast. For one thing, it *wasn’t* a blast but a controlled explosion that made me feel as though I was the one who had vented. Did I ever tell you Murray’s favorite term of encouragement? It was “Attaboy!”…and he’d say it even to me. So here’s an attaboy to you and a tip of my hat for making me smile. You know how to show a feminist a good time.

            Not insignificantly, I also enjoyed meeting a bit more of you.

        • PauloPortugal

          Good job Mr. Wile. He deserves to be whacked!

        • Billygoat

          Well done Anthony…Thank you for sharing your experiences with people that matter. Will you be selling tickets to the “Whoop Ass”? Your followers would like a front row seat.

          • Diocletian

            I will attend only if the fight is to the death. My money will be on Anthony !

        • WoodsWoman

          Hmm. So successful people who are intelligence smart people can be practical-skills smart, too? Who’d a thunk? Guess that’s more than Jackson was able to consider possible. Wonder why he hates successful people? (Yes, that’s an assumption on my part but … such bitterness comes from somewhere!) I’m going to guess Andy has a few practical skills up his sleeve, too, from what I know of him. Glad to see Anthony replied to this directly and thoroughly. I’m SO done with reading anonymous writers’ ad hominem attacks. It’s also nice to learn more about Anthony. Thanks for providing TDB and the forum.

        • Brad R

          Wow…I am truly impressed. Thank you for sharing that.

        • Danny B

          Damn, you had FUN as a kid. A D9… I never got past an 8n Ford. I rebuilt the engine on a cable D9 but, that was many years later. I’ve been poor but, NEVER poor enough to do hot-mop. Dad was a general contractor so, I started all that by age 7. Digging ditches and threading galvanized pipe and pulling THHN. 9 kids in the family so we all helped build the family house. In High school, I was 6’5″ and 215. Never got in fights,,, no interest. Tried drinking at the Double R bar in Kansas City. It didn’t seem to improve anything. Ran away with some criminals when I turned 18. That didn’t work out too well. I learned dozens of trades. Cut trees, built a sawmill and a boom truck and built my own log house in Oregon. Always too busy to move in. Spent 15 years on the road around the world. I spent years raising kids who weren’t any connection to me, other than the heart. No relationship to the mothers. I’m paying student loans, tuition and books because the parents squandered the money the grandparents left for the 10 kids. I bought 3 cars for 3 girls. Being girls, they’ve blown up 2 engines.
          I sent 2 of the girls to Europe so they could see it before it gets destroyed.
          Their mother hasn’t made a house payment in 6 years. I saved it 3 times but,,, no more. They will all be out on the street in 3 months,,,, another challenge. One of the girls is living in the log house in Oregon.

          I left it empty for 20 years. I taught all 4 of them to ride a horse and motorcycle and drive a stick shift and shoot a firearm.

          I’d have to say that raising kids was the best part of life. If I had my life to live over, I would do the same BUT, skip the 2 dozen crashes.

        • Diocletian

          A windshield washer fluid reservoir functioning as a rum dispenser–ingenious !

      • acudoc1949

        You should ask Andy, Jackson. Might be in for a surprise. We only see a man at the present arc of his trajectory. I have been in a couple of ‘abstract’ professions for the past twenty years, but in the twenty two years before that it was all concrete, hands-on work. It is so easy to judge…and usually so false.

    • esqualido

      “”These gold bars are usually stored in the vaults of central banks and are the same ones you see in the film ‘The Italian Job'” (ask the Germans how happy they are to have their gold bars stored in foreign Central Bank vaults.)

      • http://www.thedailybell.com/ The Daily Bell

        Last year officials complained. But more recently, German bankers have declared themselves satisfied with the situation. (Whatever it is.)

        • William Scott

          Good interview, Anthony… I just reviewed two Jim Rickards videos on YouTube recently, that (along with numerous other things) discusses a 77:1 FED leverage today… and he also mentions that the Germans were promised 50% of their gold back (based upon increased mining over a decade, I think?) but as they are now also debasing their currency, etc. to keep the EU and Euro afloat (i.e. playing basically the same games) they supposedly aren’t as interested now, in getting it back?! Seems a bit, far fetched? Perhaps they rather don’t expect to… considering who has it?? (i.e. Mainly London and NYC, I believe? And few believe it’s still stored where they claim… or that US reserves, for instance, still stand at over 8,000 tonnes??)

          YouTube references:

          “The Death of Money”: Q&A with James Rickards ” and see also his discussion with Peter Schiff regarding gold, etc. in ” Exclusive Interview: Jim Rickards & Peter Schiff Discuss Global Gold Markets [Full Discussion] ”

          Best :-) WST

  • Danny B

    The FED is trying to reflate,, to rescue all debt that is in danger of default. At the same time, Lord Keynes demands that credit grows at say 4.5%. There aren’t many takers, especially in Eurozone and Japan. So, while it may appear that the FED can just carry along the whole economy, they are pushing on a string.

    “Put simply, if credit needs to expand at 4.5% per year, then the
    private and public sectors in combination must create approximately $2.5
    trillion of additional debt per year to pay for outstanding
    interesting.”

    So, what is the long term viability of this scheme?

    “Bill Gross’ number is “approximately $2.5 trillion” to ensure sufficient
    new system Credit to service existing system debt. I’ve posited the
    U.S. system needs in the neighborhood of $2.0 TN of annual non-financial
    debt growth. Gross refers to a “credit-based financial economy.” Fair
    enough, although I believe it is also crucial to appreciate that the
    U.S. economy has evolved over time to be dominated by a consumption and
    services-based economic structure. From my analytical framework, annual
    $2.0 TN (non-financial) Credit growth is required to generate
    sufficient system-wide purchasing power to sustain various inflated
    price levels – certainly including incomes, corporate cash-flows,
    imports, investment and asset prices.”

    Ummm, what system wide purchasing power??

    ” He calculates $2.5 TN of required system Credit growth on total
    outstanding (non-financial and financial) debt of approximately $58 TN”
    http://www.prudentbear.com/2014/09/only-for-wonks.html#.VB9uq7uP_MV
    There is lots more in the article but, the main question is; How can credit grow $ 50 billion a week? How can $ 50 B be injected into the economy?
    The CFR planted the idea of direct cash infusions. This is a sign of total desperation. This is all related to debt service. It will only get worse. Student loan debt is the perfect example. No matter how the stock market does, this is no help to students.

    Free money or a jubilee would dramatically reduce defaults. Nothing else will do it. There will be NO resurgence on good paying jobs. The FED may print but, it can’t do anything about defaults. What good is it to have 10% of the economy doing great if 90% is in default?
    The U.S. oil majors and minors ( 147) firms took on $ 116 million in debt last year. They claim that they need new investment to the amount of $ 2.5 trillion per year.
    Look at the balance. Aggregate national income has crashed. Mega printing is keeping us out of crashing deflation. BUT, it can never stop popular default.
    $ 50 billion a week of new debt.

    • Indexwizard

      Have you seen ZSL lately? Take a look at that chart. Talk about parabolic, thanks to the PTB

  • Gil G

    Don’t ask a car sales rep if you need to buy a car.

  • therooster

    The dollar won’t collapse if the marketplace monetizes bullion. It must be an organic process, bottom-up because of the real-time environment. No crashes please. The elite cannot monetize bullion by any sort of decree because of this very real threat to the dollar. Supplementing debt based liquidity with added bullion based liquidity (debt-free) allows for the removal of debt through very conventional debt servicing and loan repayment. All the elite can do in this process (now that they set the table) is carry “the stick”. Gold is now real-time debt-free currency.

  • Randy

    Yeah, Gil. And don’t bother to ask a bankster if his bank is a safe place to park your fictitious electronic bookkeeping entries, or if the interest rate paid on those entries will at least equal the rate of inflation! Inflation in case you didn’t know it, is the gradual rise in the prices of goods and services due to a drop in the perceived purchasing power of a fiat paper currency/electronic bookkeeping entries system. Please see my follow up posts on this which will be appearing here shortly.

    Randy

  • Randy

    What
    is Money?

    One
    of the most esoteric, confused, convoluted and obfuscated subjects
    that has ever been debated in the history of mankind is the subject
    of money. And from money, we go into other subjects such as banking,
    inflation and finance. But let’s start with money first and get it
    properly defined, so that we can make some sense out of the whole
    mess, OK? And after we get money properly defined, we can then use
    that concept to think with and come up with good answers to some very
    perplexing questions. When you start to think about a problem with
    the components of that problem properly identified and named, it will
    be much easier to see the real causes and effects going on. So here
    we go now.

    All
    that money is, is “an idea backed by confidence”. That’s
    all, nothing more or less than that. And in that word confidence is
    buried the fact that certain people have agreed upon something to
    function as a medium of exchange. That medium of exchange is money,
    regardless of whether it is wampum, diamonds or precious metals. The
    confidence factor then comes into strong play here and is the whole
    basis of that medium of exchange. Money acts as a sort of
    “lubricant” in the dry mechanics of an economy. It’s just
    not always feasible for a person to haul around his crops, goods or
    livestock in search of someone who is willing to trade with him
    somewhere for what HE needs. So what do people do to get around
    that? Well, they use an intermediary which we call money.

    When
    people agree that some quantity of the money represents a certain
    amount of labor, it can then be exchanged with someone else for a
    similar amount of represented labor. And that’s the main thing that
    money does. It represents the fact that a person had to do some kind
    of work to come into possession of that amount of money. Usually.
    Now when someone either steals goods or money, or creates some
    “money” through some bogus means, then the confidence
    factor suffers and it becomes worth less and less over time. When
    governments print up fiat currency which has no real value behind it,
    it’s not worth as much as actual money, something which DOES have
    real value behind it.

    When
    you have two people, and one of them has to sweat out in the hot sun
    or work in freezing cold to earn a living while the other one does
    little or nothing, then there is a disparity and animosity between
    them. Why should one toil away while the other one is able to loaf
    and still eat? Welfare programs, and this includes government jobs
    which produce no real products (almost all government jobs fall into
    this category by the way!) run by governments with unlimited access
    to fiat currencies ALWAYS cause at first an “inflation” of
    the fiat currency, and then a total collapse of it. Now I’m not
    saying that we shouldn’t look after and care for those who cannot
    work due to some kind of disability, but it should be done with real
    compassion, and NOT with the viewpoint of making someone dependent
    upon the government so that they then agree with all kinds of insane
    laws just to keep the bread and butter coming in. These economic
    collapses are always the result of a socialist/communist/fascist type
    of government. And they never last more than several decades at
    most. The saddest part of the whole thing is that through the
    manipulation of the history books, people do not know the true causes
    of these engineered monetary debacles, and so repeat them with great
    regularity.

    Let’s
    look at gold as money. It takes a certain amount of labor and
    equipment to locate and then collect this metal. Now back in 1925,
    an ounce of gold would buy a man a pretty nice suit, and today, an
    ounce of gold will still buy a man a pretty nice suit. Why is that?
    It’s because back in 1925, the ounce of gold required a certain
    amount of time and labor to locate and collect it. Today, it still
    takes about the same amount of time and labor to locate and collect
    an ounce of gold. Please don’t get confused now over the fact that
    “dollars” today don’t equate with dollars in 1925. If we
    were still on the gold standard, the number of dollars that were
    equal to one ounce of gold in 1925 would still be the same today.

    Because
    of the fact that our “money” is no longer backed by
    anything of real value, it takes more “dollars” to equal
    the one ounce of gold. Why is that? There are several reasons why,
    so let’s take a look at a few of them now. First off, when these
    “dollars” are printed up willy-nilly, they lose most of
    their value right there. A big reason is that the “dollars”
    are all printed up with the exact same amount of ink and paper to
    them, regardless of their denomination. There isn’t twenty times
    more ink and paper in a twenty “dollar” bill than there is
    in a one “dollar” bill, is there? So with each bill having
    the exact same value, they all become worth the same as the lowest
    one. And not just according to what’s printed on it, but what it’s
    actual intrinsic worth is. As it costs less than 5 cents to print up
    a fiat currency “dollar” bill of any denomination, that’s
    about what it’s really worth. And in actuality, these pieces of
    inked paper are Federal Reserve Notes with no value to them, other
    than the fact that someone down the street or around the corner may
    be willing to trade something of real value for them. They are also
    known as debt bearing corporate notes, because the corporation known
    as the U.S. Government has been bankrupt since 1933, but not formally
    acknowledged as such until 1939 with the court case of Erie R.R. v.
    Tompkins case.

    Another
    reason that these fiat currency, debt bearing corporate notes lose
    value is because of computerized electronic bookkeeping entries being
    used instead of actual money changing hands. Every time that some
    government agency buys some goods or services with nothing but a
    change in bookkeeping entries, a bit more confidence is knocked out
    of the “money” and thus we have “inflation”. All
    that inflation is is “a decrease in the perceived purchasing
    power of a fiat currency”. That’s all it is, folks!! Forget
    all of these stupid proclamations that inflation is due to an “over
    supply of money” or some such clap trap. If that were really
    true, then just by taking money out of circulation we would be able
    to solve inflation. But it doesn’t. What it DOES do is make it even
    harder to purchase goods and services, and then the economy really
    tanks, big time.

    When
    John and Jane Doe perceive that they will need a greater amount of
    fiat currency tomorrow in order to maintain their lifestyle of today,
    they then have two choices. One, they can work more hours in the
    day, or two, they can charge more for the goods or services that they
    provide to the society in general. And since they can work only so
    many hours per week, they must then increase the rates which they
    charge. And so begins a vicious circle of everyone down the line
    doing the exact same thing until it comes back around to John and
    Jane Doe and then it starts all over again. And when thinking of
    inflation, think of it not in terms of things becoming more
    expensive, but rather in terms of the fiat currency becoming worth
    less and less, which is the truth of the matter. The instability of
    fiat currencies and economies becomes much easier to understand once
    you can do this.

    When
    fiat currency is given to people for no reason, or loans are
    defaulted on, there too, more and more confidence is knocked out of
    the fiat currency and it becomes worth less and less. This idea that
    there are “money multipliers” in an economy is just so much
    hogwash. There is absolutely NOTHING which can multiply human labor,
    and since money is supposed to be based upon human labor, there
    cannot be any money multipliers. See how simple this is? Granted,
    there may be more efficient methods found to do certain things, but
    they always come with some kind of a cost attached to them. There’s
    no such thing as a free lunch. Someone, somewhere, somehow is paying
    for it.

    Let’s
    go back to gold mining for a moment and look at a few things in more
    detail. When a person goes out into the wilderness to look for some
    gold, he must take with him food, clothing and equipment to survive
    with and make the discovery and collection of the gold possible. And
    while he is collecting that gold, he cannot possibly be planting and
    growing food or weaving cloth for his clothes or making a shovel
    either for that matter. So the prospector come miner must EXCHANGE
    some of his labor for these items in order to start his new pursuit
    and continue in it once he has found a place that has some gold in
    it.

    Mining
    is not like farming or ranching where the product grows and
    multiplies itself. It costs pretty much the same to obtain an ounce
    of gold no matter where it’s found or the process used. The result
    of a man panning a few nuggets and flakes out of a riverbed by
    himself, or a huge mine employing thousands of workers which makes
    several ingots per day equates to about the same overall cost.
    People must be paid a wage unless they are slaves, and machinery must
    be bought, powered and maintained in order to get the gold out of the
    dirt each day. This is why there’s no economy of scale (cheaper due
    to more volume) in mining and consequently the value of the gold
    stays on par.

    When
    Mr. Tailor sells his fine suit for an ounce of gold, it’s because of
    several reasons, but the most important one is that the sum of the
    labor involved in the making of the suit from raising the cotton or
    wool to the weaving of the cloth and then the sewing of the pieces
    together requires the amount of labor that the ounce of gold
    represents. With some allowance for a profit of course! If there’s
    no profit in a venture, it will fail of course. And when governments
    step in to prop up a failing venture or support one which never had a
    chance of succeeding in the first place, we again get a lessening of
    the confidence in the monetary system and that’s our old “friend”
    inflation coming to pay us another visit. And with friends like
    that, who needs enemies?

    Where
    actual gold and silver specie are used, there’s NEVER any inflation,
    if a free market enterprise economy is used. The reason for that is
    very simple. If someone gets out of line and tries to get rich
    quick, someone else will come along and pick up the business that the
    first person loses due to the price increases. And if the quality
    level between the two providers is about the same, the first one will
    drive himself out of business rather quickly!

  • Randy

    The
    Scam of the Financial System

    Just
    as there is the scam of the legal system (detailed in the treatise of
    the same name), there is also a scam going on in the financial
    system. It is referred to as “the financial system”, since
    that is all that we have all around the world now. One universal
    concept of stealing wealth from people via a fraudulent monetary
    system. There isn’t anything else than a fiat currency system
    comprised of phony electronic bookkeeping entries created out of thin
    air and some nearly worthless pieces of paper in the world. The
    coinage has been debased as well, and we will not ever again see real
    money circulating until the fiat currency system has run its course
    like any other disease and has finished collapsing under the weight
    of its own lies.

    Just
    as no one who is a member of the legal profession can stand to have
    the fraud of their enterprise exposed to any degree, so too, the ones
    who make an immoral and unjust profit off of the victims in the
    financial system abhor any amount of truth of it being brought out
    into the light of day. Is it really any wonder why banksters are
    typically referred to as vampires? They suck the life giving blood
    right out of us and can’t tolerate sunshine! Leech is another word
    that is more appropriate for them and their cohorts such as brokers
    and “financial advisers” than most people really know.
    Again, they suck the life giving blood out of us and give nothing of
    value in return. Unless you are really fond of the marks they leave
    upon your body when they are done feeding, that is.

    When
    a fiat currency system is put into place, it immediately begins its
    downward spiral. It starts out very slowly at first, but increases
    in rate more and more as the years go by. Before the age of
    computers, this usually happened in a decade or two, three at the
    most. But thanks to the dumbing down of the general populace and the
    injection of meaningless pastimes such as various unreality TV shows
    and sports teams, very few people are aware enough of what’s going on
    around them to do anything about it. A fiat currency system is very
    similar to the life span of a bearing in a machine. Leave it well
    sealed up on a shelf someplace, and it will last for 10,000 years or
    more, and be just like it was on the day that it was made. But, take
    that bearing and put it into use, and it immediately begins to wear
    out and ultimately fail. If it’s not overloaded too much or starved
    for lubrication, it will last for far longer than one that is abused
    or over worked. But ALL bearings fail one day. And sometimes that
    causes lots of additional damage when they do. Fiat currencies when
    left to die a somewhat natural death can last a long time, but the
    more that they are abused by the crooked and greedy banksters, then
    the quicker they will fail. Only so many guns can be employed to
    enforce the acceptance of the fiat currency, and only so many people
    can be killed in order to preserve it.

    Fiat
    currencies are fine to talk about and speculate about what can be
    done with them amongst others until late into the evening as the
    Merlot and aged brandy takes its effect upon the mind, but as soon as
    one of them is started up, it, on that very same day, begins to wear
    out to the point of utter failure. This has been proven over and
    over again, and is why the Founding Fathers decreed that nothing but
    gold and silver shall be used as money in the payment of debts. They
    knew full well the folly of trying to create a financial system out
    of nothing, that a real financial system has to be based upon human
    labor and the trading thereof, not the pipe dreams of some banksters
    and “professors” who never had a real job in their life.
    This is covered in the treatise What is Money?, a landmark work by
    this Author, from back in 1996.

    The
    fiat currency has no real purchasing power itself, as it represents
    nothing of any real value. Scant human labor goes into its making,
    the paper making process itself is a scam as they use old rags (the
    cheapest thing that can be found in order to increase the profit
    margin as much as possible) for a feedstock. Machines then macerate
    the old cloth and break it all down into a gooey paste of sorts, some
    chemicals are added in with a few security features and then it is
    rolled out and dried. And then some designs and numbers are printed
    on the paper to denote a pretended difference in value between them,
    and after being cut apart, they are shipped out to fool people into
    thinking that they have something of value in their hand. Why does a
    bill with 20 printed on it have twenty times more value to it than a
    bill with just a number 1 on it? It most certainly doesn’t have
    twenty times more ink or paper to it, so why do we accept it as fact
    that it’s worth twenty times more? Is it due to ignorance,
    brainwashing from an early age, or peer pressure, what is it? Maybe
    it’s a combination of all of those things plus a few more. Like
    force of arms. Who wants to be given some bullets as a reward for
    going against the tide of fiat currency? The jackbooted thugs are
    all too happy to hand out such a reward, it seems. Just read about
    The Credit River Decision sometime to find out just how far these
    criminals will go in order to preserve their crooked enterprise. Or
    maybe they’ll use the corrupted legal system in order to lock someone
    away in a cage where they won’t be too much of a bother anymore with
    their wild-eyed desire for spreading the truth far and wide.

    Probably
    the thing that is overlooked the most in a fiat currency system, is
    that as more and more of it is printed to shore up the lost perceived
    purchasing power of the fiat currency, more and more of it must then
    be printed up in order to offset the loss from printing up too much
    of the fiat currency!! This is insanity at its highest, and just one
    of the mechanisms behind the demise of a fiat currency. We also have
    a lessening of the power and ability of the ones who enforce the use
    of it to do so, the wising up of the people who are being stolen from
    so that they then look for other means to pay for things, and the
    people who speculate on the relative value of one fiat currency
    against another one knock the level of confidence out of all fiat
    currencies. Those are the big ones, there are several smaller ones
    also.

    When
    someone tells you that inflation is due to an oversupply of money or
    something else like that, know then that they are speaking either
    from ignorance or they are trying to deceive you. It’s one or the
    other. There isn’t any other explanation no matter how hard it is
    wished that there was one.

    It
    doesn’t take a rocket scientist to see truth when it is placed right
    before our eyes, all that it takes is a willingness to make an honest
    observation of the facts and see how they fit together. We have to
    be able to say what it is that we see when we see it, regardless of
    how much it might sting someone, even ourselves! This aversion to
    even a little bit of pain is what causes people to turn a blind eye
    to the crimes of others. If we look closely at the acts of others,
    we are then obligated to turn our attention inward as well, aren’t
    we?

    In
    the scam of the financial system and of course likewise the legal
    system, no one is told that there really are no valid contracts
    ANYWHERE AT ALL as they ALL violate what the definition of what makes
    a contract a contract in the first place, in one way or another.
    Look in a law dictionary sometime for the word contract and
    you will find that there are five essential elements to one. They
    are called essential because that’s what they are, they have to be
    there! Just as oxygen, food and water and relative warmth are
    essential for life to exist, so too must a contract have its
    essentials in order to exist. And no where in there can you find out
    to what extent an alleged contract can be violated and still be
    considered by any sane man or woman to be valid. That’s because
    there is no amount that an alleged contract may be violated and still
    be valid. This is in all likelihood the biggest secret of the scam
    of the legal system. This Author cannot think of anything that is
    bigger. And that is after a quarter of a century in studying the
    legal system!! This is all summarized quite well in The Three Magic
    Questions. What is the EXACT AMOUNT of fraud that ANYBODY has the
    right to commit? What is the EXACT AMOUNT of fraud that ANYBODY has
    an actual obligation to endure? What is the BASIC PREMISE that is
    being operated off of in the instant case? Those three simple little
    questions take apart anyone’s assumptions like a pack of hungry lions
    on a zebra. It matters not even one little bit what area of life you
    are referring to, they work everywhere! Just as communication is
    often called the universal solvent, the TMQs are the ultimate
    scalpel. They cut right through everything that they touch with as
    much ease as a powerful laser beam goes through tin foil. It’s
    because they are truth itself, and truth cannot be contained for very
    long. It always finds its way out. The logic of the TMQs is its
    director and shows it the path to follow. But this is not a defect
    or some kind of problem in design, as the criminals would like for
    you to believe, Dear Reader. It is the most beneficial property that
    anything could ever have. If it is not, then please explain what is
    actually better. Ignorance and slavery? Is that really better than
    knowledge and freedom? Not to this Author it’s not!

    The
    only correct and 100% workable definition of money is this one; An
    idea backed by confidence. So long as there is confidence that the
    medium of exchange will be recognized as a real representative of
    human labor expended, it will retain its purchasing power. But, as
    more and more people realize that the medium of exchange DOES NOT
    represent the same amount of human labor as it did before, then more
    and more of it will be asked for in order to make up the difference.
    And that is the sole reason for the price increases which we call
    inflation. Price gouging during a time of emergency or short supply
    is not the same thing as inflation, for when the emergency subsides,
    or more of what is desired in the market place comes along, the
    prices will drop again. Why should someone accept getting less pay
    this week than they did last week if they are working the same amount
    as before? Inflation is basically the same thing as a pay cut, but
    few ever realize that fact.

    In
    times of a fiat currency system, gold and silver are NOT a good way
    to preserve wealth from confiscation due to inflation, they are for
    holding onto until the fiat currency system collapses so that we can
    have something of value to use as a medium of exchange once again.
    When converting gold and silver back into fiat currency, you’re just
    back in the same boat as prices of goods and services in terms of the
    fiat currency have gone up! DUH!!

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