Monday, February 09, 2009

It's squeaky bum time for Bernanke

Are the global bond markets, particularly for US Treasuries, about to go bust?

Ambrose thinks they might be:

=> Bond market calls Fed's bluff as global economy falls apart

As Voltaire once said:

"Paper money eventually returns to its intrinsic value - zero."
All of the rest is merely detail. Yes, it has been a 75 year detail, since the world came off a particularly weak version of the gold standard in the early 1930s, and a 35 year detail since the last vestige of gold was destroyed by Richard Nixon in 1971, but details they remain, nevertheless; Voltaire was right.

The only question now, is how can we get to a strong 100% gold reserve standard as quickly as possible, and with as little pain as possible?

No doubt our regal politicians will make this process as slow and as painful as they are able, because the more money is gold, the less power they have; but in the end game they will be unable to prevent its emergence.

Let's hope they don't blow us all up first, though, in WWIII, before this move back to real money can finally come to pass, a few hundred years after we left it.

UPDATE: Uncle Gary North has written a great article on how the Fed has dug itself into the world's biggest ever fiscal hole:

=> The Federal Reserve's Self-Imposed Dilemma

(I think when the French Mississippi Bubble collapsed, its inflationary instigator, John Law, was kicked out of France and died penniless in Italy. One wonders whether a similar fate is in store for Bernanke and his mentor Greenspan!)

UPDATEII: Lew Rockwell has been sent a hilarious Marc Faber video in which the Good Doctor tells it like it is:

"The US Government should be [rated as] junk [bonds]".
Check it out. The CNBC presenter winces as if punched, when the Good Doctor delivers the accurate news. Key quote at 1 minute and 47 seconds:


not an economist said...

Forgive me for being vagaue but I read on a wesbite (or heard on a podcast) yesterday that some Sth American countries now won't trade in dollars if they can avoid it, prefferring the Euro instead. So much for its Reserve Currency status coming to the dollars rescue (which is the usual counter argument if you talk about the dollar's likely collapse).

In a You Tube video Rogers was asked which currency he favoured at the minute. I think his answer was the Yen in the short term. Longterm - he frankly didn't know. Indeed he said he expected that in the long term a currency would pop up which previously was little thought off and lead the way forward. What that was likely to be he didn't know.

Gerald Celente has done a podcast on Lew Rockswell discussing whats-a-coming and the social discontent that is likely to be a by-product. He basically says go buy a gun and truckloads of dried fruit and be prepared to shoot to kill if necessary.

... and may I wish all of you out there a belated Happy New Year ....

Jack Maturin said...

Thanks, 'not an economist'. Do you recommend your fancy sultanas or your basic currants? :)

Mark Herpel said...

The Farber video is a real classic, I loved it however, Ambrose and North aren't always right. If the gov bonds turn to mush, it won't happen overnight that is years away. During that time I think it's everyone's personal responsibility to protect their own wealth with private gold holdings (and silver) Get some coins, bars and digital gold currency. You can't wait on gov to do everything for everyone but I see Indiana and Colorado are trying with their new Sound Money-Honest Money legislation. Perhaps if one or both of those pass, the rest of gov. will fall in line but again, that's years out, get your gold now.
DGC Magazine

Jack Maturin said...

Yes, even the redoubtable Mr Schiff has had to endure flak for the Dollar's failure in collapsing on schedule.

But it will. Eventually.

In the meantime, like you say, get everything into gold. What's best about this, is that most people will still believe governments are working for them, and follow their diktats, plus the central banks will keep releasing gold to keep the price down.

So it will only be a small minority of us protecting ourselves, at (for the moment) artificially cheap prices. No doubt, when the gold runs out, we will then get blamed for 'causing' the next set of problems, whatever they happen to be.

The trick will be holding and spending gold in such a way that it can't be stolen back off you, once the central banks have run out.

not an economist said...

But even holding gold is no guarantee as the govt can just take it off you. To quote a "Time" article from 1933 (courtesy of Bob Murphy):

"On March 9 Congress passed the Emergency Banking Act which empowered the President to call all gold into the Treasury, with heavy penalties for those who disobeyed his orders. At that time $1,400,000,000 in gold was in circulation, most of it hoarded. In the next 30 days more than one-third of this was turned in to the Treasury.

"On April 5 President Roosevelt issued an executive order requiring holders of gold to turn it into the Treasury in exchange for paper currency under penalty of ten years imprisonment and $10,000 fine. Department of Justice agents began visiting known hoarders who, to date, have surrendered $38,901,009 in gold. During the same period unknown hoarders have given up more than $300,000,000. Attorney General Cummings issued threat of prosecution against recalcitrants who still held $560,201,000.

"On Aug. 28 President Roosevelt issued another order requiring every possessor of gold to register his holdings with the Treasury before Sept. 18. Those who failed to do so were also to be punished by ten years imprisonment, $10,000 fine.

Link here (to Murhphy's blog):

See the post headed as follows -

"TIME Announces President's New Policy to Confiscate Gold".

Jack Maturin said...

And some Americans still labour under the delusion that they live in the land of the free.

Possible solutions:

-> Hold gold outside of the UK, eg. in a vault in Switzerland, Australia, wherever you think won't confiscate it

-> Take physical delivery and then do what Roman empire citizens did to avoid the taxman. Bury it! (Just make sure someone knows where it is, if you should fall under a bus, to stop it becoming a buried treasure find in 2,000 years time)

-> Go Asian - Buy physical gold, turn it all into jewellry, and cover yourself in bangles! (Or replace all of your mercury teeth fillings with gold!)

On no account store it in a 'safe' deposit box. It won't be so 'safe' when HMRC start taking crow-bars to everyone's boxes

On no account buy paper contracts based on gold - you must avoid counter-party risk by taking some form of physical delivery.

The 'Maturin Towers' Austrian Investments agency will be starting, real soon, to help. Pay us a measly 1% annual managemet fee, and we'll sort it all out for you! $-)