Gold - The Pulse of the World Economy

GOLD is no different than the Occupy Wall Street movement insofar as it is a means for the independent minded to hedge against the instability of what is taking place. The Democrats are cheering the Occupy Wall Street protest because it supports their Marxist agenda. Paulson’s statement when they appeared at his house made it clear that the top 1% pay 41% of the taxes in New York. Then Charlie Rangle basically said that’s not enough ! Rangle seems to think that the top 1% should pay everything so politicians like him can forget to pay taxes altogether as he just so happened to have done. This whole thing is really heading down the Marxist rabbit hole and the people have ABSOLUTELY NO CLUE as to what is really going on or who is to blame. I just recently wrote “The Paris-based Dexia's is a big municipal lending unit whose

operations are considered to be systemically and politically critical.” The REASON why Congress

bailed out the banks was by NO MEANS because they really cared about them. The REAL

In other words, the PRIMARY DEALERS (selected banks that buy the government debt and resell

it) were NOT too big to fail. That was all bullshit. They were STRATEGICALLY TOO IMPORTANT TO FAIL! In other words, IF the PRIMARY DEALERS collapsed, how would government sell its debt? It is NOT all banks nor is it Wall Street in general that are the culprits. Only a selected few who are the PRIMARY DEALERS! Without them, Congress CANNOT borrow forever without any intension of paying anyone back. To watch what is going on in France with Dexia illustrates the point I am making.

They were the PRIMARY DEALER to municipal governments in France. Eliminate that strategic source of borrowing and if you think Lehman was a disaster, you haven’t seen anything yet if government can’t sell new debt! That is WHY the banks are bailed out. It is a matter of self-interest to KEEP the whole system going. If TARP was intended to really impact the economy, then they should have shaved 25% of all mortgages and that would have PREVENTED the massive foreclosures and the 26 year bear market we face in real estate from 2007 (2033) would be mitigated not prevented. That would have eased the pain, but that was NOT the concern. If everyone stayed in their homes but the PRIMARY DEALERS collapsed, who would sell the government debt? So if you think the Democrats really care about the poor, think again! This is all about keeping the debt game going.

We now have Germany infiltrating computers of the “rich” to see what they are doing with their money. If Germany is using virus-like programs to spy on their citizens, you can bet the rest of them are doing the same. This is all getting really desperate. Governments need cash really bad to keep this debt game going. They are so dead BROKE we do not have much time left. The entire global economy is standing on the edge in the middle of nowhere. The slightest push is going to take down the entire financial system because the politicians refuse to look in the mirror. I am NOT trying to scare people for the sake of grandstanding. People need to start to pay attention to what is going on right now or your future will vanish in the blink-of-an-eye. We desperately need to revise the World Monetary System from the ground up. We MUST end the borrowing. We cannot keep this nonsense up much

longer. Governments are so distressed and in a state of panic searching for money the Democrats are embracing the great unsophisticated who are marching in this Occupy Wall Street dancing to the beat of Marxist drums even if they do not know it. The Democrats would just as soon destroy society forcing more industry to leave just as the rising taxes caused the Romans to flee from the cities that called “suburbium” setting the state for collapse of society. The Republicans are just the jack-boot thugs who take all liberty and freedom away feeling they need to create the world of George Orwell. They built a wall between US and Mexico but that is no different than the Berlin Wall for whatever it keeps out, it also keeps in. The freedom to leave is gone. They must know everyone who is in a plane at all times.

The moral collapse of the United States government is displayed for the whole world to see. The treatment of Pfc. Bradley Manning is an affront to everything decent. Those in the United States government are guilty of human rights violations because this kid was sickened by the corruption and abuse no less the countless lies of government to further their jack-boot agenda. Even Hillary Clinton wanted this kid imprisoned for life if not shot for giving the truth to WikiLeaks. Being thrown into solitary confinement for exposing the truth illustrates the hypocrisy of the American government. If the Occupy Wall Street crowd wants to show they are honorable people and it is not just all about them wanting free shit, do something patriotic and demand his release! Where is the 99% when injustice takes place openly? Manning is being tortured right now! They will turn the heat off and freeze you. Then they will turn up the heat until it will be 120 degrees with no breeze. They will keep the lights on to prevent you from sleeping. They will do everything in their power to try to get you to commit suicide knowing the press never reports all the countless suicides in prison and when they do report them, it will be the government’s slant that the “criminal” was overcome with remorse to hide the truth once again. They called the veterans in 1932 Bonus Army “criminals” to justify killing them as well. Many have said it that "A nation's greatness is measured by how it treats its weakest members. " - Mahatma Ghandi. America’s treatment of its political prisoners shows it has lost all sanity and forgotten what real

greatness is – the LIBERTY that allows the pursuit of happiness ! That is what the Revolution was all about, not for politicians to throw in prison and torture those who expose their lies. Manning stood up for what was right and he is paying with his life. Those in politics should remember that they will be judged as they have judged Manning. If the Occupy Wall Street crowd were real patriots, then understand what you are yelling about! And as for the press who have squandered the freedom they

were given to protect our LIBERTY and just turn a blind eye refusing to report the truth in Pravda style – there is probably a special place in Dante’s Inferno for your treason and self-interest as well that is destroying society and everything we had hoped would be for our children.

The Occupy Wall Street crowd may lack a clear target and they fail to understand the true ramifications of what is going on. However, the one thing that is clear is that they feel abandoned yet are yelling at the wrong people. We had more than 10 regulatory agencies who were supposed to be in

charge to prevent the crash of 2007-2009 and they accomplished absolutely NOTHING! We pay taxes and they will get lifetime pensions for jobs they have never accomplished. There is not a single economic decline they have ever prevented no less just mitigate. Not a single criminal action was brought over the CDS issue and they begrudgingly charged Goldman Sachs civilly quickly settling so they would not expose the inner-workings behind the event in a public trial. The SEC and CFTC are merely subordinates of the market manipulators and have done more to bring down the entire financial system by their incestuous corruption than anyone on Wall Street. William Cohan author of House of Cards called for the closing of the SEC because they destroyed all investigation materials that would have exposed those involved. And the SEC protects the public? They protect the banks!

The mainstream media protect this incestuous relationship and fail to provide any investigative journalism whatsoever. It is not even the journalists for it is their editors. The SEC will fight and slander anyone who targets the truth about them or the firms they protect because that is just how corrupt they truly are – rotten to the core. They will go after anyone who, like Manning, tries to expose what really takes place behind the curtain. So unfortunately, the Occupy Wall Street crowd is upset and there is enough blame to go around but like wild conspiracy theories, as long as they lack a focused and articulated objective, it will be portrayed as a group of nuts. They lack the understanding to target the right people – not stock brokers of people who are rich. How about the people taking your rights and are too corrupt to tell the truth? I just called a doctor for my mother and was told they are no longer taking Medicare patients. Thanks Washington for throwing the elderly to the curb so you can keep your credit lines open. This is NOT Wall Street – it is the debt game!

It is even debatable if the Occupy Wall Street movement has the staying power to continue or is it only fun when the weather is nice? If they just did the math and could see if they CONFISCATED all the wealth of that 1%, would that solve any problem? Would government suddenly find religion, release Manning, tell the truth, go to church for reasons other than being seen, and end the corruption, or give us back our civil liberties taken by the Patriot Act (Anti-Liberty Act)? I doubt that very much! Who will they tax then? Will they bring back fiscal management and stop the cycle of debt? No way! That is their power to hold office!

Then there is the Gold Standard nonsense to further distract people from the truth. There is NOTHING that the Gold Standard can offer. That is just gibberish. The problem is so far greater than what is MONEY. This is the Sovereign Debt Crisis that is exploding because we do not have the means to pay everything that was promised. Making gold MONEY will accomplish absolutely zilch! Those who preach MONEY is a “fiat” and we have to return to gold to cure the evils of the world have not thought this through! Just how do you pay the outstanding debt in gold? The banking system, credit cards, mortgages, everything related to debt would collapse if there is no fiat system. If you deposited a $20 gold piece in a bank, they lend it to another and now we both have $20 in our accounts, but there is still ONE $20 gold coin. The entire financial system is constructed on a fiat system. Forget it! The Gold Standard on a real one-to-one basis with no fiat will destroy society, and solve not a single problem.

Trying to understand a Sovereign Debt Crisis is not easy, no less one mixed with a private sector debt collapse. Very few people have ever grasped the nature of the beast. To a large extent this is caused by the same misconceptions which also lurk behind the Gold Standard. Some people think that MONEY is a store of value. Because of that misconception, they cannot see a debt crisis if it smacks them in the face. If a bank lends $100,000 for a home and now real estate collapses as the house falls in terms of MONEY to $50,000, the bank still demands the $100,000. That $100,000 has risen in purchasing power value and can acquire two homes instead of one. MONEY fluctuates in value like everything else. It is NOT a store of value, for it is simply just another commodity. These charts on the economy still show booms and busts during a Gold Standard. This clearly proves whatever you call MONEY, there is no change in the Business Cycle. Booms and busts took place even in a Gold Standard.

The value of MONEY rises and falls according to the same rules of supply and demand. During a boom, there is excess MONEY that concentrates and the assets rise in purchasing power value on a balanced supply v demand basis. LEVERAGE enters the equation because people now borrow believing they can make more than the interest they have to pay. The available MONEY SUPPLY then increases (too much MONEY chasing too few goods). When the bubble then bursts, the LEVERAGING of the MONEY SUPPLY through borrowing now collapses. Hence, the MONEY SUPPLY contracts declining rapidly causing actual MONEY to now rise in terms of purchasing power as MONEY is now in demand rather than assets. Even during a Gold Standard when gold was MONEY, it was NOT a store of value! Gold rose and fell in value the same as MONEY does today always fluctuating between boom and bust as illustrated above. Those that constantly harp about the Gold Standard are preventing people from seeing the real driving mechanism blocking their view of the real culprit – government debt LEVERAGING the entire economy perpetually since government does not respond as a normal debtor curtailing its borrowing. It borrows even more when distressed.

Julius Caesar (100-44BC) was one of the very few who understood the true dynamics of the economy that are still the same today as they were in ancient Rome. When excess capital concentrates within a given sector, prices rise exponentially. At the point of maximum entropy, everyone who ever thought of buying has bought convinced profits will come based upon what they have witness in the few years prior. Then the bubble bursts. The LEVERAGE collapses because people have borrowed to buy even

more. As the LEVERAGE collapses, the MONEY SUPPLY created by borrowing implodes shrinking the supply and causing the purchasing power of MONEY to rise. This often leads to runs on banks and borrowers are left owing more than the assets are now worth.

This is the very same driving mechanism that existed in ancient times as it does today. NOTHING HAS CHANGED! The Civil War broke out because of the corruption among politicians. Caesar was truly a man of the people. When he crossed the Rubicon, he was cheered by the people and the corrupt politicians fled. They slander Caesar calling him a dictator and tried to portray him as a man seeking personal greed, much as Wall Street is portrayed today. But Caesar was an honorable man who forgave his enemies and they merely killed him in return. The people had enough of the corrupt Republic where the politicians were lining their pockets. They too were so corrupt that they borrow an enormous amount of fund to pay bribes for votes during the elections of 53BC that interest rates rose nearly 50% during the elections. The people were behind Caesar and the corrupt politicians thought they could bullshit the people as always. Their manipulation of history to paint Caesar as corrupt failed and they had to flee. The people were suffering as they are today. There are about 15 million people living in homes that the mortgage is greater than the value. Their mortgage payments are effectively transformed into rent for with every payment they make, they gain nothing in equity. This was the VERY SAME type of debt crisis Caesar faced. The people were expecting Caesar to abolish all debts and they would keep their homes for free. Caesar understood that the economy would NOT survive such an act. It would wipe out the capital formation and destroy the banks on a wholesale basis. The great historian Suetonius (ca. 69/75 – after 130) informs us on this subject that Caesar did not do what everyone had hoped. Even Marc Antony ran out and purchases the estate of Pompey believing he would never have to pay the mortgage. The crowds wanted him to cancel all debts. Caesar did not.

“He disappointed popular agitators by cancelling no debts, but in the end decreed that every debtor should have his property assessed according to pre-war valuation and, after deducting the interest already paid directly, or by way of a banker’s guarantee, should satisfy his creditors with whatever sum that might represent. Since prices has risen steeply, this left debtors with perhaps a fourth part of their property.” Id./Suetonius 42,2

Caesar understood that MONEY was by no means a store of value for it fluctuated in purchasing power even when MONEY was a gold coin known as the AUREUS pictured here in Roman times. It matters not what is actually MONEY for it does not matter what you designate to be MONEY officially, it simply fluctuates in value. There just has never been a Gold Standard for even when gold was circulating MONEY, when it was officially minted by government, they debased it to create more MONEY.

Why people tend to think that a return to the Gold Standard will force politicians to be responsible is beyond comprehension. You cannot find any such period in 6,000 years of recorded history where such a plan has EVER worked even just once! Surely those who took even just one semester of economics will recall Sir Thomas Gresham’s Law that bad money drives out good. In other words, debasing the currency when precious metals were MONEY caused people to hoard the old currency and spend the new debased coinage. When they stopped minting silver coins in 1964, most silver had disappeared from circulation within 2 years worldwide. Gresham was an advisor to Queen Elizabeth I, and he represented England in the Amsterdam exchange when England was borrowing MONEY. He developed his LAW when he encountered resistance to buying government debt that would be repaid in a currency that had been debased.

We can see from the above charts from 1922 to 1978, there were always booms and busts regardless of the monetary system at the time as we went on and off the Gold Standard changing nothing! Capital will always concentrate into a single sector causing prices to skyrocket attracting more capital to make MONEY. As the capital concentrates, then the slightest disturbance in confidence creates the collapse. This is what most economists and politicians do not understand. Once capital has concentrated in one sector, scare the longs and they panic like a herd of wild horses trying to all sell everything in a stampede. There are no bids and you get the gap down panic. People are now shocked because the market has collapsed in the blink of an eye as it did on May 6th, 2010

with the Flash Crash, and government promises an investigation to hang the party that caused the crash.

Because gold is NOT the legal MONEY in the system at this time, it is a free market and it now represents the Pulse of the World Economy. It is the hedge against government instability and that is its role at this time. It is fulfilling the same role in many respects as the Occupy Wall Street group insofar as it is the protest instrument against the economic instability of government. But make no mistake about it. Gold is not MONEY, nor is MONEY a store of value. Gold is reflecting the CONFIDENCE within the global economy and on that score; it is an international vote that should not be ignored. Because of the Gold Standard hype and this nonsense that MONEY isfiat when all systems are fiat once you introduce credit, there is an equal and opposite group that hate gold and see it as the anti-stock market instrument. This is simply wrong. When it is time to rally, we will see stocks and gold rise in harmony as they did after 1932. This will be because the value of MONEY will decline on a wholesale purchasing power basis for MONEY has become in many respects a vote of confidence in the political government in question. So for those who have stayed away from gold as if it were some underground protest movement cult, take a fresh look at gold for it has its place in the sun. It is the Sovereign Debt Crisis that is destroying everything on every front.

We will see, when what comes first, Manning gets a trial or kills himself or is confined forever and forgotten about.

A trial means all that Manning helped expose will have to be shown in open court, very embarrassing for the US to have to air their dirty laundry on the inter-workings of ‘diplomatic’ relationships.

“Why people tend to think that a return to the Gold Standard will force politicians to be responsible is beyond comprehension. You cannot find any such period in 6,000 years of recorded history where such a plan has EVER worked even just once!”

True a gold standard would not force them to be responsible, but as it stretches to the breaking point it should signal people that the time has come and maybe past to decimate the political ranks. An example would be the Bretton Woods agreement following WW II. While the conflict destroyed most economies of the world, the United States prospered. The only way to restart international economic activity was for the U.S. to take the lead, which it did. Every currency had a fixed value in relation to the dollar, and the U.S. kept everything functioning by buying and selling gold at $35 an ounce. Therefore, once again there was a U.S. (and worldwide) gold standard and the dollar became the world’s reserve currency. However, Americans could not take their Federal Reserve Notes to a Fed bank and trade them for gold.

The U.S. unilaterally abrogated the agreement in August 1971 when many countries lead by France were trading their dollars for gold causing the U.S. to allow the dollar to float in relation to the trading whims involving all paper currencies. That event should have signaled something was very badly wrong. The federal budget had and continues to grow astronomically, but defense which was 47% just before the Great Society programs continually decreased throughout the Vietnam War, dropped dramatically with the supposed end of the Cold War, and now spends 19% of the budget. We now have over $100 trillion of unfunded social spending obligations.

Armstrong writes and repeats himself about another Bretton Woods type of summit to come up with a new world financial system. I think he says a new agreement would work, of course, only if countries stick to it.

The US supposedly holds the most gold with Euroland (as a whole) next then Japan and so on. Even though gold is not technically in use as a currency support, everyone knows who has the most gold and who is acquiring, like Russia, India and China.

Jim Sinclair keeps saying an international currency backed by non redeemable gold certificates will be used in the future for international trade settlements and to keep that currency stable.

World/International banks are in no hurry to fix the system as they can still make money on collapsing economies with the stick and carrot routine of bailout offerings while collecting fees and interest. An agreement to stabilize banking would end unlimited printing and cause limited growth and profits, something the banksters want to avoid as long as possible.

It only fits under blog and personal opinion as the moderators don’t consider it to be anything else. Bet the amount of reads are high but there is no counter for that, just tracking the number of comments doesn’t really reflect the true interest.

If only a couple of people get what is being said, it is worth it to post.

“World/International banks are in no hurry to fix the system as they can still make money on collapsing economies with the stick and carrot routine of bailout offerings while collecting fees and interest.”

That reminds me of the derivatives market; traders in the investment department get to record current profits and receive bonuses based on making ever more exotic guarantees based on ever more detached estimates of underlying risk.

In opposition there is a finance officer who all alone is watching the balance sheet become ever more catastrophically unstable with unrecorded liabilities. In almost every case that individual gets castigated by management and the board, fired, and replaced by some Quisling who will parrot the words given by the traders.

It’s a scam because derivative contracts are unregulated and sold over the counter which means, any two parties that come to an agreement can entering into a binding contract, from that point forward the contracts don’t come under any scrutiny, don’t even have to be reported in most cases and because they don’t have to be reported, there is no accumulative accounting leading to the total value of derivatives, anywhere.

This is Congress’s fault as they are lobbied, then comply with the lobbying for exemptions. In the case of derivative contracts, they naturally fall under ‘insurance contracts’ as the vehicles (aka derivative contracts) are used to insure against losses (esp. when using SWAPS). Without oversight using insurance industry standards, these vehicles are not subject to being funded properly (lately the taxpayer has been picking up the bill through TARP), among other things. Congress exempted derivatives from insurance standards.

Simple really, legal no-loss betting, assisted directly by Congress. All the sub agencies like SEC are administered/created/ruled by Congress. Any potential losses are covered by taxpayer bailouts.

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