Big Al and Carter discuss “The Vacuum”
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Amen, Leary!
Big Al
Big Al and All!
Stop the presses! If anyone has doubt about Gold and the present market “conditions” please (Please!) read Dr. Michael Berry’s MORNING NOTES published today. In a very short, succinct amount of words (takes maybe three minutes to read) he outlines a VERY concrete argument for the necessity of a DE FACTO gold standard. Among points discussed:
1. Introduction to the Chinese secular quality of life factor (QOL) of 1.3 Billion people. This factor is defined by trade, knowledge, and consumption. It has doubled since 1980. This creates a tsunami of convergence. Digital technology brings this about much quicker and more personal to all the 3 BILLION (China plus 11 other countries coming on line) people looking to adopt a westernized, high consumption lifestyle of which China is only ONE example of this. He goes on to say that the BRICS and the other 11 countries (by population) are accelerating as the western world decelerates….the schism produces an convergence of extreme commodity demand.
2. The US dollar has been destroyed at a quicker rate due to fiat conditions and a destruction of its “POWER” as an “insidious form of taxation” for US citizens. Fiat systems create insurmountable debt and it is most evidently seen in CENTRAL BANKERS NOW stocking up on gold in massive quantities – the same guys that destroyed the golden anchor of economic stability in the first place! (Bastages)
3. DE LEVERAGING
DEFINITIVELY requires, some form of austerity, liquidity (QE and maintaining negative real interest rates and inflating away debt OR default. ANY combo of these factors – gold WILL benefit (silver too!) The current reserve status of the dollar is UNSUSTAINABLE as this convergence of factors become more predominate. In a nut shell, whether the “experts” like it or not, Gold is the DE FACTO reserve currency. Now, lets see what happens when the becomes as PLAIN as the nose on our faces!
Dr. Berry concludes with this maddening statement: “It is ironic that those who resent the qualities of GOLD the most are following policies that will bring GOLD to the fore.”
Now that my friends, plain and simple is FUBAR!
I humbly recommend printing this short and VERY understandable piece to almost anyone that disagrees with ultimately, the validation of investing in precious metals.
All the best,
Marc
Many thanks, Marc!
I will invite Mike On the weekend show.
Big Al
Hi Marc,
I’ve seen Dr. Berry speak a few times. Brilliant and charasmatic guy. Glad he’ll be on the show.
Al — sorry been away from the website for a while. Taxes were the easy part! So much going on this spring. I should have heeded the advice…beware the Ides of March. And April.
Dr. Berry is a friend and a fine analyst and gentlemen. We almost always agree with him on a long list of things. – Traderrog
Yes, I find Dr. Berry VERY reputable!
Marc: Things are speeding up quite fast are they not? Dangerous news about Europe, middle east, US and all over the financial world of debt based nations is coming faster and faster everyday that it can not be a coincidence or is it. Crazy is the first word that comes to mind.
But something about this gold issue and the efforts of the banks to hold the price down for such a long time, now that is about as close to a grand conspiracy as anything I can think of. For one thing the number of reported tons gold leaving London every month for last several years does not add up to supply unless the majority of this gold is coming out of storage owned by someone other than the banks. Frankly speaking I have the gut wrenching feeling that most of this gold is coming out of the sovereign holdings of Germany, US treasury, Spain, Italy and other nations who have intrusted their gold to the Federal Reserve in New York City.
Clay,
To answer your first question – I think you are exactly right! And I wholeheartedly agree with your following comments.
Marc
Clay,
Look for a very interesting post in a few hours.
Big Al
I think it was Aaron Task on Yahoo who noted this week that Europe’s crises used to take several months between flare-ups. Spain only took 3 weeks from the last EU fix in March. The mean-time-to-failure interval seems to be shortening!
Well, whatever IS happening, we know it is VERY HEAVY and EXTREMELY sensitive. We are in an eight month consildation – 8 is a fibonnaci number. Extremes in both negative sentiment and underlying fundamentals are growing EXPONENTIALLY.
Today, I spent some time looking at the technicals on weekly and charts using a double SLOPE indicator (13 & 52) and it appears we are getting VERY NEAR a bottom. We could see a “fake out” move where both metals spike lower during the “London Fix” or early Eastern Time trading (07:30 – 08:30) causing massive buying to flood the markets. But the way the pressure is building fundamentally, and with gold holding 1635 very well, we could see a rather surprising move to challenge the $1685 price rather soon. $1700+ is what really is needed to put a little fire under these miners. And to be quite honest, if we don’t brake the $1700 mark within the next week-and-a-half, then I’ll eat my socks.
I guess I better pull out the Ranch dressing.
Stay frosty
Yeah, and make sure they are properly washed, cleaned and sanitized :)…..we NEED you on this blog..wouldn’t want you real sick or anything! LOL!
Marc
Mark, better start to put some ketchup, mustard, and relish on those socks. Trader Rog called for a significant move this week and it’s not happening. We’ll see some move up the rest of this week and possibly early next week but in all probability you won’t see a move to $1700s for weeks. We’ll continue to see a slow move down toward the upper $1500s over the next 2-3 weeks along with a slow move down in the conventional markets. I believe (as I did 1 month ago) that the commodity breakdown is yelling GLOBAL SLOWDOWN. As I mentioned back then watch copper to break down as the last warning sign. Guess what, copper has broken down. I believe we are now entering a cyclical bear market in a long standing secular bull market and we’re about to break the back of the 3 year cyclical bull market. The oil market will go in the next 3 weeks and is already showing deterioration (as you know, I’m short the oil market). This bear market will last a minimum of 6 months and will surprise folks on its’ severity. The pundits are talking now about a 5-7% correction. As usual they’ll probably be wrong. We should see a correction of minimally 20%. I could be wrong but not according to the multiple charts I watch.
I meant to say “secular bear market” instead of secular bull market. Sorry.
Trader Rog is much better long term.
Big Al
It’s tough to call short term markets. The last half of my paragraph has to do with conventional markets. The gold bull market is still intact but it will probably lull us to sleep.
You would burst my bubble 🙁 Richard LOL!
DITTO…:(…that
Didn’t know the forum rules allowed such brnilialt posts.
)My guess is that you will not need the dressing!
Big Al
I’m no longer sure where you are getnitg your information, however good topic. I must spend a while studying more or working out more. Thanks for excellent info I used to be searching for this information for my mission.
I’ll take raspberry vinaigrette, thanks.
John w.
I LOVE that stuff!
Another thing I’ve noticed is that whenever the price of the metals move UP after market hours, then you can almost always expect a sell off the next morning. And if the price falls during after hours trading the price seems to rise next morning. This seems to be a consistent pattern but I wouldn’t be trading by it. But you can sure set your watch by it!
Mark: Somewhere I read about the Gold Carry trade using these prices to offload physical gold where it is leaving the west and going east. It almost appears that some new coalition has entered the gold market which is connect some way to the Chinese currency.
http://www.moneymorning.com.au/20120416/how-china-is-driving-the-gold-price.html
Clay!
EXCELLENT, EXCELLENT article! Thanks…many thanks for posting that. If that doesn’t wake some knuckleheads up – nothing will. 🙂
Thanks for the links gentlemen.!
Big Al
There are so many troubling things these days but what has bothered me most for a long time is how society has changed in it’s outlook towards people who live off the Public Purse, when I grew up there was a stigma attached to people who lived off welfare or got government hand outs now if you get government assistance you are seen by many as being a smart individual because you know how to beat the system, there’s that nasty word manipulation appearing again.
I completely agree, Shawn
How “funny” and I use that word loosely, because just today my wife and I were talking about the same thing. I even know people not friends believe me, who brag about all the gold they have hidden while getting food stamps and are on welfare. Disgusting does not even describe it.
No gentlemen, immoral is more fitting!
Big Al
I don’t see the connection beetewn the derivative bubble and the fed debt-based system. However, I do have thoughts on both.The administration needs to work with congress to repeal the CFTA (Commodity Futures Modernization Act of 2000) to re-regulate commodity futures. (Plus a lot more. Such as repeal Gramm-Leach-Bliley (1999).)As for the fed and the debt-based system, sure, too much debt is bad. However, what would do you do when there’s an emergency and you (or a loved one) might die if you don’t run up your credit cards? Well, of course, in almost every case, you’d use the credit cards. Chances are some day (as we’ve done before) the debt can be paid down especially if we don’t overspend. Clinton did it!
Marc – Using gold as currency and leaving the frationnal reserve banking system in place will do nothing to solve the existing problems. We have to remove the control of the currency from the crooks.
“The bank hath benefit of interest on all moneys which it creates out of nothing.” William Paterson, founder of the Bank of England in 1694, then a privately owned bank
MDT,
You are intellectually far superior than me…I won’t even try to compete with your studious knowledge of history including all these many quotes you expound on. Matthew, the professor, as I so often call him, is much more capable of running with the expediency required to keep up with your caliber of discussions. I will so willingly yield the floor to him!
All the best,
Marc 🙂
Miss.Taxes- you said “Politics is the art of deception, and I`m done going along with deception.” — Yet, you are for Bill Still’s fiat money that would be controlled by politics.
You also said: “As for Franklin, never does he suggest control over credit or interest rates, nor did Lincoln…” What you fail to grasp is that control of the supply of money equals control of both credit and the rate of interest.
The Austrians, by the way, advocate for 100% gold backing, no fractional reserves.
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HOT NEW……RUSSIAN DICTATOR, PUTIN, PUTS TENNIS STAR IN JAIL FOR SINGING…
(I know this is posted three times…..but, I believe this is big news….)
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I also quoted “Politics are the divine science, after all.”
“What you fail to grasp…” Do you really believe that? Credit, interest rate and issuance determine the supply of money under a fractional reserve banking system. Absent that system, only new issuance would determine the supply.
“The Austrians, by the way, advocate for 100% gold backing, no fractional reserves.” – Do you really believe that will ever be the system in place? If so, do you understand that the supply of money would shrink for a giant majority of the population, triggering the mother of all depression? Do you want to be stuck in your house for years too scared of the mobs outside?
The interest rate should be thought of as the price of money. It rises or falls based on supply and demand. Fiat money, whether issued by banks or governments, can be issued without limit. Debt monetization, bailouts, and deficit spending for wars and welfare, all add dramatically to the money supply. Because we have a central authority creating deposits out of thin air, and for whatever agenda they like, the level of savings in the system does not matter. There SHOULD be very high interest rates right now since savings are scarce and risks are high. Even without the current system, where debt monetization is the mechanism used to influence interest rates, those who control the money supply will ultimately control rates. If the treasury were in control instead of the Fed, nothing would change. Cheap and easy money would still be made available to entities in high places.
“(D)o you understand that the supply of money would shrink…” — This is untrue. Gold would simply have to be revalued to a much higher nominal price. The money supply WOULD cease to grow exponentially, which would obviously end the system as we know it; but that’s a good thing, right? It’s going to end anyway. The longer it is allowed to go on, the more harm it will do to a greater portion of society. Hm, it’s almost like that is the intention. [And of course, that IS the intention.] Keep in mind that the more they inflate, the more per capita net worth shrinks. Anyone who’s house, wages, or assets, haven’t gone down in nominal terms over the last 5-10 years, probably feels pretty lucky at this time. What they don’t understand is that the REAL value of those items has been crushed. Contrary to the propaganda, inflation does not aid or add to liquidity in the system as a whole. It actually aids the process by which liquidity is concentrated into fewer and fewer hands. Complete destruction is absolutely assured if this system isn’t abandoned very soon.
I completely agree with that – Matthew – spot on!
CLAY…Great link…..That is the point i tried to make the other day. I still believe the American people can save themselves & their COUNTRY. If the STATES GO IT ALONE Detach themselves from the nipples , of CONGRESS & WASHINGTON.
Nipples, great analogy!
States certainly can do a lot more than they do now. The constitution is also designed to allow the states to be a stop gate from Washington infregements. But when I saw the Texas legislature cow down to the TSA when they wanted to pass a law making it illegal (like it is not already) to fondle people`s private parts, I realized this system is totally overtaken by sociopaths. In any case, I do agree, any decend human being that has his or her fellow human being`s well being at heart should run for office to enforce Federal and State`s Constitutions protecting the people`s liberty.
“Complete destruction is absolutely assured if this system isn’t abandoned very soon.” – Nha, we can always claim all these debt based monetary system were just giants odious debt systems, which allows under international law the people to call for a jubilee where all these debts are written off. Now this, you can support, right?
Do you mean that ALL debts should be written off, or just consumer debt? I would prefer that the market is allowed to function. Bad decisions on both sides should have consequences.
There is simply no legitimate reason for the huge bailouts; but if the planners insist on meddling with the markets in the name of “saving” the economy, it would be far preferable to see those funds distributed to every household. At something like $100K per household, this would amount to a jubilee for those in debt, and a well-deserved reward for those not in debt. Debtors alone should not benefit do to the moral hazard. You don’t punish the sound and virtuous decisions of savers while rewarding reckless spendthrifts. So everyone should get the same amount, regardless of debt size. Either way, inflation would be a consequence. However, the much worse consequence would be that generations of debtors would have escaped a very important lesson. Human nature already ensures that history repeats. Such a bailout would guarantee that it repeats much sooner.
The definition of inflation is “an increase in the money supply”. $100k per household would bring on the $7 hamburger entree and $9/gallon regular gasoline overnight.
Forgiving mortgage debt for current-and-paid-up owners, or a massive deflation in mortgage debt, would help those who have paid now for 3+ years while others have either mailed “jingle mail” or lived in their house for 2+ years without a payment. The same would go for forgiving college loan debt in excess of $20k. But the unlimited Federal governmental spending has got to stop, if we are to not hit the $17 Trillion ceiling and bring on a QEIII.
The banks need to be punished for following along with the social engineering the Federal government insisted upon for the last 30 years. The states will be punished by a lack of property taxes as the housing bubble keeps crashing. The education bubble needs to pop. We need declassification of “new” technologies and bring back the manufacturing with those technologies to reduce overhead and create jobs. We need ultra-cheap energy and manufacturing to beat the slave labor overseas.
80% of the U.S. population needs Austrian economic education before they learn it the hard way, from the Great Depression II. And war.
I didn’t say that every household SHOULD get $100K, I merely said that it would be preferable to giving the money to the big banks.
It’s probably closer to 95% that need an “Austrian” education.
Notice that I said inflation would be a consequence.
The odious debt concept only applies to sovereign nations`s debt, not individuals. Bankruptcy for the individual is the way out.
Then I would agree that defaulting overtly is the way to go (rather than the current “covert” default by inflation). This would be a monumental and shocking event that would force the end of the system as we know it –which supports my assertion that destruction is assured if we don’t abandon this system. Confidence would be gone. The ability to pyramid debt would also be gone -the hallmark of the current system.
The adjustment would be very difficult since the U.S. now relies so heavily on imports of all kinds do to a gutted manufacturing sector and the inability to produce many goods competitively. The biggest export -the dollar, would no longer be accepted without (at least) much higher interest rates. Gold would likely be demanded for international settlements. The middle class would also lose a huge amount of money since they hold more treasuries now, than ever.
Miss DU…..if bankruptcy is a way out…….and since school loans can not be
dismissed in bankruptcy……how are the students, that have school loans, going
to get out of debt……they will be servants of the state until death….., or the
govt. gets them to inlist in their army, for release of debt…..
That is where involvment in politics becomes necessary. To use the force of government to enslave the people should never be allowed. Whether you`re sent to jail for a victimless crime or buried in debt.
“The United States has 5 percent of the world’s population and 25 percent of the world’s incarcerated population. We rank first in the world in locking up our fellow citizens,”
http://www.commondreams.org/headlines06/1209-01.htm
“Politics are the divine science, after all” – John Adams
The U.S. recently surpassed even Stalinist Russia for the rate of imprisonment per capita.
The U.K. takes second place, but still has fewer than one-fourth as many people in prison per 100,000 (700+ in the U.S. vs. about 150 in the U.K.). Germany has fewer than one-eighth as many. The numbers for other countries fall dramatically from there.
Miss Du…..
Bankruptcy…of student loan…..
solution….do not borrow the money…..go and owe no man….
there for avoiding controlled politics…..
By the way, Matthew, I really do hope this “Odious Debt” legal precedent gets traction and that the people of the world push it to add another international legal precedent: Debt incured by a nation under duress is null and void. All these scare tactics to bailout the too big to fail would be the greatest example of this.
@Jerry O^OTB – “there for avoiding controlled politics” – That is where this county went wrong. To think you can leave the power of government un-monitored and un-checked. A government by the consent of the people requires the people to get involved.
Now consider that 3 to 4 percent of the population are sociopaths and that their nature is such that positions of power are what they enjoy, and you have another reason to be involved.
Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master. – George Washington
As for do not borrow, I agree. And that should start with governments. They create demand for currency through taxation, no amount of interest or capital should ever need to be repaid on it.
MISS DU,,,,I think in terms of less govt…is better….and I do not think we need
anymore than one(1) per cent income tax…..and all congress should work for
free, as they did in the beginning , and no extras,
Their is just no real turning back to a more reasonable time. When we could apply common sence and justfiy the behavior the world is exhibiting. Worried! somehow does not cover the dread, fear and angziety I feel