Golden Oxen
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Where would we be if they didn’t come in and save the financial system?
Would the deflationary collapse we got a glimpse of in the 2008 debacle created more or less poverty for children.
Deflationary collapse is possible, but not an option a sane person would ever choose if it could be averted.
Print they always have, and print they always will.
Nothing is perfect, but inflation and being poor in a country with a functioning financial and welfare system, sure beats standing in a soup line with the entire country.
This does not mean that there could not have been better ways to print out of the debacle than the one chosen, or that prosecutions and jail sentences for the bankster clan should have been so noticeably absent.
Hi Professor, Was about to post the same idea until reading your post.
Yes, Phase one was take care of the banks and the big guys.
The Muppets are next.
“Whatever it Takes” Isn’t fiat money just grand?
Let’s just lower the voting age to 16, and have the Fed mail everyone under 25 a hundred grand.
That will create an instant paradise for the left and shut them up for a little while anyway.
Of course they will want 200 grand next year to even up with those rich old people who worked and saved all their life, and are petrified of getting ill and being wiped out in a month by the medical profession.
The madness has reached a point where it might be wise to question the sanity of those running the show imho.
How can the lies, distorted economic figures, crazed stock and bond valuations, violent markets, Fed blabber, economic recovery nonsense, etc, be seriously analyzed by anyone who has remained somewhat sane and sober?
We may be wise to just watch the dementia in astonishment, wondering what lunacy is next, rather than succumb to the desire of the sane to make order or understanding out of the chaos.
Just as one small example, was perusing Ali Baba for a possible short sale if the end of this current QE might possibly cause some rational thinking. It has a market cap of 250 billion and sells at 25 times it’s sales and also 25 x book value. It is only one of dozens with such insane valuations.The market, of course, went up 200 rather than the other way that I expected, and it became apparent to me that to enter such an asylum would probably mean I had gone mad as well.
Best to watch Mad Money, let crazy Cramer make predictions, and wonder when, if ever, sanity will return.
Given the excitement that Thomas Piketty’s new book, Capital in the Twenty-First Century, has stirred up within the political left, the French economist probably should have titled it Fifty Shades of Inequality.
In Capital, Piketty presents a painstakingly researched case for doing what progressives ranging from Paul Krugman to Barack Obama want to do anyway, which is to raise taxes and expand the power and reach of government. Unfortunately for liberals, Piketty gets almost everything wrong, starting with the numbers.
Piketty claims that capitalism is in crisis, because the importance of capital in our economy is growing, the “Top 10%” owns most (70%) of it, and the “Bottom 50%” owns almost none (5%) of it. However Piketty’s numbers ignore the capitalized value of Social Security, Medicare, and our other welfare state programs. These programs are huge, and they disproportionately benefit the “Bottom 50%.”
http://www.forbes.com/sites/louiswoodhill/2014/05/06/thomas-piketty-gets-the-numbers-wrong/
You ain’t got 4000 years.
What’s my lifespan got to do with Gold’s historic role as money?
Waiting for another deflationary bust in a fiat currency can be quite time consuming as well, can’t it?
We would all be right for a while if we could be around for four thousand years. “Just A Bit Early in my Predictions” as they like to say.Yeah, why not trust Greenspan on gold?
In Gold we trust.
It’s four thousand year history of outlasting all fiats is testimony to it’s worthiness in this regard.
Greenspan is just another witness to history.
But, what of the comment the Maestro made on gold?
Hi Professor, It is the same comment made by Gold Bugs for generations.
“Buy the only world’s currency that the governments can’t print more of.”
Who knows better than Sir Alan about currency debauching?
• 50% Of American Workers Make Less Than $28,031 A Year (Snyder)
That was quite a list to ponder, but this one takes the cake.
Difficult to not see great trouble ahead with this number. Inflation has made it an extreme poverty wage in my view.
One can forget about this unfortunate group having any savings, and most likely debts that can never be re paid.
You learn something new every day, this item explained the whole OWS movement to me in a nutshell. There will no doubt be another, probably with a great deal more participants.
Stocks and Poker are not comparable in my view.
The fish in the world of investments are the ones who never participated, never bought quality stocks or funds, reinvested the dividends, understood and took advantage of compound interest, utilized dollar cost averaging to smooth the violent fluctuations in the market, never had a long term plan, just day trading in and out traders or speculators in the next hot item.
Fear of a severe market drop, which happens often, has cost more losses and poverty; the Cassandras will never mention that fact, than being a participant with a long term, sensible, conservative investment philosophy.Gold, and fiat cash, as well as some silver are part and parcel of that conservative equation.
The three Bills are a lot more different than their first names would suggest.
While all three became wealthy, one created something worthwhile, one was a nothing who skimmed fees from the dim, and one was a totally worthless self serving maggot.
Mix and match at your pleasure.Hi Professor, I am on your side of the coin my friend; but this was an exceptionally persuasive article.
Going to raise some more cash as soon as the markets open, it’s China that has me worried the most. Getting real bad vibes about the situation there, and I don’t scare easily.
This article is a clear reminder and picture of the corruption that has rotted our society, and it’s legal institutions.
The strongest argument I see for those predicting total collapse. How can a tree ever grow that has rotted to this extent?
@ reply Variable81
Sir, Perhaps being a member and frequent poster at Doomstead Diner makes me a bit prejudiced, but your remarks about not listening to our podcasts again saddened me.
We are relative newcomers to the podcast venue and are trying our utmost to put out a first class product. Nicole graciously consenting to be a guest of ours was a major event for us and I would like to take the opportunity to thank her for so honoring us.
We all have likes and dislikes of different personalities or the way someone conducts an interview, personally, I cannot stand Mr Puplava and his silly babble, but I became acquainted with Nicole Foss and TAE on his site, which more than makes up for my dislike of his style.
Please give the Doomstead Diner another chance. We listen to criticism, and are trying constantly to improve the delivery and quality of our offerings. I can assure you we will be having many offerings worthy of your time in the future. Regards, GO
I used to consider the Financial news put out by the MSM as funny, not any more though. It has actually turned into a disgusting cacaphony of unbearable noise.
Watching the business news on CNBC in particular is unbearable. The only way It is possible for me to put up with it is to have the mute on and just watch the prices go by on the tape.
You will hear them talking about how the entire economy is based on the sale off Apple’s new I Pad Air on Black Friday if you are not careful. Hit that mute button as soon as possible, don’t dilly dally for more than a second.
Water Water everywhere but not a drop to drink.
Money Money everywhere but not a dime for me.
Perhaps someone is going to whisper in the dear Banksters ears; lend it out the back door, OR ELSE! ??????
The mess we find ourselves in with these pensions is beyond my comprehension to think of any solution.
I have been trying to figure out how the municipal bond market can be so strong after this plain to see Detroit horror story, and of course the obvious forthcoming California debacle.
It is as if the world has gone completely mad and the obvious is just ignored by everyone who is not immediately affected. How can a sane person by municipal bonds?
Over the next 30 years, 1975-2005, the standard of living still seemed to rise, but if we look behind the numbers and between the lines, we see that much of the wealth increase over that period is illusional, because it was increasingly based on credit, i.e. it was borrowed from the future,
Not surprisingly this was the period shortly after the US dollar, the world’s reserve currency, severed it’s last link to Gold.
Doubt very much if it is a mere coincidence.
Professorlocknload post=7857 wrote: To add; The dollar is credit. It is no longer backed by things real. Why would I want to hold a “Federal Reserve Note” Bearer Bond IOU in an inflationary, let alone deflationary crisis?
Why would the “promise to pay” factor be any different for a “credit dollar” than it would be on a defaulted bond which backs it? Promise to pay in what, pray tell?
A note is a note is a note.
And Promises by governments are meant to be broken, broken, broken.
@Reply Pipefit
Pretty much the way I see things Pipefit. I do think however that when the inflation picks up enough to be noticeable to the masses, but before the hyper sets in, we will see a national sales tax of some sort which will shore up government finances for a brief period and delay the hyper for a while. The stock market orgy that will most likely result from the onslaught of the inflation will likely add to the government coffers as well, witness the internet madness a while back and what it did to tax receipts while it lasted.
Of course a deflationary bust cannot be ruled out as an accident, perhaps brought about by a bond market collapse. The resulting reflation moves, if that were to occur however, would make the current fiat madness seem like a friendly grandmother’s penny poker game.
However it plays out it would appear that gold and silver will come into their own as the Frankenstein monster of fiat money finally dies.
This entire shale episode is a sad one indeed. Not only is it a sham, but the cost to the environment and the amount of glee it has bestowed on the uninformed is frightening. Many liken it to their technology god being proven invincible once again.
Of course the pain will that much greater than it need be at the end. Main Street like Wall Street, only cares about today and not tomorrow; and warnings and exposes of this nature will be ignored as rants from sour grapes peak oil fools.
It is mankind and it’s moral compass that is the problem, not one of the many economic systems he may function under. Greed and destruction were around long before capitalism.
The hopelessness of the situation is certainly made clear by this article.
My only questions are, since a stopping of the current situation would no doubt cause an instant calamity; what’s next?
Legislation forcing banks to lend, they are after all scoundrels?
Negative interest rates?
Taxes on excess savings?
Cheap government loans for the middle and lower classes available at our now defunct post offices?
Perhaps a law that a percentage of all retirement accounts must be withdrawn and spent every year by everyone on social security or forfeited?
They all sound preposterous, I know, but what could be more insane than our current situation?
I am named in this post as labeling the author a fool. That is incorrect.
My dispute with the author was one of his constantly implying that Nicole Foss was a “Shill” for the fossil fuel industry. I cannot think of a more ludicrous or incredibly wrong view of that scholarly well intentioned lady. That false deduction about her casts much doubt in my mind about the legitimacy of his other theories.
It would seem Ilargi that you have acknowledged the effect of QE on creating a stock market orgy and finally concede that it might continue for a while longer. May I suggest that much of the rally in Gold was related to such endeavors as well, and we shall witness another bull run in the precious yellow as a result of the recent blabberings from the Princeton scholar. Just a guess of course; reality could always appear at any moment.
By the way, any ideas on what buffoonery we might hear from a Janet Yellen, or Summers?
Sorry I even mentioned it, have to run out and acquire more Gold and silver at just the mention of those two.Yes Professor, Gold most likely did an overshoot in price temporarily.
It is my view that when the banksters decided to screw us all by going off the Gold standard and severing any relationship of the dollar to sanity, they had to make Gold to appear just like any other commodity to trick the dim.
Thus we have a myriad of derivatives, options, futures, margins, the entire array of speculative and manipulative devices attached to them. This also brings of course the assorted fiat worshiping lice along with it. Speculators, pool operators, hedge funds, bankster trading desks. mad men gamblers, financial geniuses from Princeton with their learned equations, the whole gamut of lice that have destroyed the financial system.
A far and sad cry from the mostly cash market that was once the privy of gold.
Likewise, I am and admirer of Mr Williams, his credentials are first rate, and since I see much inflation in our future, whether or not we have a deflationary bust first, I do not discredit him because of his hyperinflation outlook. He merely replicates the figures the government used to use before they decided to become liars, spin doctors, and bull shit artists of the highest caliber.
Thanks for your reply, I look forward to your posts Professor, and would like you to know I feel I learn a lot from them.
Sir, If your inflation figures are correct, why has the cost of 1 oz of gold extraction risen to about 1200 dollars an oz??
Your inflation figures are absurd, try John Williams Shadow
Stats for better data.At 240 dollar an oz every gold mine in the world would be closed, which also disproves your remark on any fundamental basis applied.
So true! Gold is the pimply silent kid’s bedroom pin-up girl.
Currencies are my favorite bedroom pinups. I love the pretty colors, engraved with the lovely intangelo process; the gorgeous queens in all their regal attire are most inviting and my favorites.
I don’t have pimples on my face but hemorrhoids on my rear. Never lick, fondle, bite or hide my pinups, but find them useful, with the aid of a few drops of witch hazel in soothing my rear from a flare up. I doubt if gold would be of any help at all in such a situation; just beyond me why the dim hoard it. Can’t even wipe an inflamed behind with it.
Gold going down has importance and meaning and is telling us something, but when it is rising it is the foolishness of the uninformed that is at play. How amusing.
The violent collapse in the bond market, a most unusual and particularly violent down move of late is of much more importance to the future economic outlook in my view, Pimco alone has lost about 10% of its assets manged through redemptions in the past month.
How does this massive increase in Treasury yields in such a concentrated time period fit into this puzzle of the graphs. Should not yields be holding steady or making lows if the charts are telling us something? It is the US bond and Treasury market I am referring to with it’s US dollar reference point.
There is no UN for erasing everyone’s debt. Japan can hardly take any increase at all in bond yields. Before “everything settles” there will be victims. And they may not be the expected suspects. The entire game is based on an illusion of control that doesn’t actually exist. Because they’re so focused on this illusion, a lot of parties won’t see what’s coming.
The amount and caliber of people who should know better, and currently base all their judgements and actions on what they perceive to be the next move or interpretation of their leaders next and last round of babble is very alarming Sir.
We are currently having a debate amongst the financial titans and gurus of Fantasy Land on what the word TAPERING means. How disgusting and frightening at the same time.
Skip–My guess is that Krugman knows all that.
Pipefit ,Respectfully disagree with you. The gent is an imbecile in my view, plain and simple, just as he appears, nothing mysterious.
What a total complete mess. Amazing the whole thing doesn’t just go to zero today from the insanity of it all.
And the stock markets roar to new heights daily, and the press screams recovery, even housing is supposed to be great again. We also have enough oil for hundred more years as well.
Could we be in an insane asylum and not know it?
Yes, Dr. Bartlett explains compound interest rather well. It’s limitations in the real physical world are obvious.
What about in the make believe land of fiat currency as a testing of the experiment?
Sure gets mighty inflationary in a hurry doesn’t it? That’s why there are Gold bugs who seek the precious metal for refuge. Most deflation minded types shun Gold as they consider the fiat explosion to be real, or physical, rather than bankster folly and trickery.
Another brilliant interview.
How fortunate we are to have such amazing insights and scholarship handed to us.
Thanks to The Automatic Earth’s founders for their gifts of knowledge and insights into the problems that plague us. Most appreciated and very grateful.
The question remains: why are we on a perpetual growth path (be it in a general sense, be it in compound interest in specific) when we’ve known for generations that it can only lead to destruction? Is it our short attention span, is it our focus on our individual interests? Are we simply denying what we know to be true because it doesn’t fit with satisfying our immediate desires?
If you are suggesting we should have a world without debt and interest, you have my nod of approval. That would be just wonderful. Utopia has always appealed to me, as did the Garden of Eden.
Sadly however, we appear to be far flung from that glorious state.
Let’s try and make it a world free of inflation, impoverishing medical bills, politicians, oppressive taxation, as well as bloated military establishments as well while we are at it. Just a few of a very long list of desirable goals.
And good on ya if you think you understood it at some point and you believe the wealth it’s brought is a good thing, but if you acquired that wealth in a society that increasingly sees its wealth deplete – or concentrate – because of compound interest, maybe it’s a good idea to wonder how that will affect your good fortune down the line.
Benjamin Franklin was born in 1706 and thought it was a good idea. Three hundred years later and it has worked well for others. Where was the harm, those that utilized it acquired some wealth and those who didn’t remained without.
Is this article about compound interest, or another left hates the right diatribe on how wealth is bad and poverty good?
Hi Nassim,
Yes, another harmful unrecognized problem from government meddling in markets and destroying savers and thrift while rewarding debtors and borrowers. No answers to the problem from me, but feel certain that their mischief is rewarding very few and costing a great number of us dearly, morally as well as financially.
Compound interest was the greatest thing I ever had the good fortune to have explained to me as a young man of limited means about finance. Some sacrifice and going without at a young age, early twenties, made me independently wealthy. If you find out about it later in life it is of limited value since time is of the utmost importance in realizing it’s amazing benefits.
The facts about compound interest should be a basic part of all school curriculum in my opinion, and be presented as a way to avoid poverty and become wealthy for all willing to sacrifice at an early age to acquire some savings to participate in the Miracle as it is called by many who understand it’s benefits.
It is also a process that can be hyped up or speeded up by injecting the compounding pool with additional capital along the way, it magnifies the end result greatly.
Thank you Benjamin Franklin, Albert Einstein, and my high school math teacher.
Decades after his death, people have been trying to attribute a quote about compound interest to Albert Einstein. While the quote varies, and attribution is problematic, the sentiment holds true: “Compound interest is the most powerful force in the universe.”
Another popular quote, with an unknown origin (but sometimes attributed to Einstein) is this: “Those who understand interest earn it; those who don’t, pay it.” A great quote. If you understand compound interest, then you can use it to your advantage, building your assets.
