austrian63

What's CNBC's Problem with Gold?

I concur. It's simple supply and demand. More dollars are being created than gold or anything else for that matter. Gold prices will run up as a result of the strategy of de-valuation being implemented.

On another related thought, think about the "output gap" we keep hearing about which is supposed to guarantee that prices will not rise for years. If fewer goods and services are being produced, due to the output gap/idle capacity, but more dollars are being produced, this will be inflationary since there will be more dollars in circulation eventully but fewer goods and services to purchase.

All resources are scarce, except currencies that can be printed or created digitally.


On Aug 04 09:21 AM jt wrote:

> Yes...it is disgustingly simple--the mainstream media (seekingalpha.com/symbo...),
> including CNBC et al, is bought and paid for and controlled through
> desks in DC and NY all belonging to the Bankster Elite family (actually
> it is controlled almost in toto by 6 persons). It is now for US citizens
> what Pravda was for our Russian peasant comrades in the last century...pure
> propaganda...pabulum for the masses..."gentle" brainwashing.
>
> And it's a no-brainer why their masters are anti-gold, as in "DOH!!"...they
> control the printing press. They control the money supply or are
> first on the food chain to receive "new money." (To call it printing
> is now an anachronism as we're essentially dealing with electrons
> in the ether, created with a few keystrokes and placed in the hands
> of the club members.) And as Nathaniel Mayer (Bauer) Rothschild quipped
> in the early 1800s: (and I probably paraphrase) "I care not a whit
> what puppet they put on the throne of England, on the throne of the
> kingdom on which the sun never sets, whoever controls the money supply
> controls the throne, and I control the money supply." He controlled
> the Bank of England, and the Fed is simply one of the demon spawn
> of the Bank of England.
>
> Gold is the canary in the coalmine that warns of the degradation,
> the devaluation, the inflating of the paper currency (note, I did
> not say "money"...gold and silver are money...the FRN "dollar" is
> simply currency...backed by...well, if you don't know what its backed
> by, you can't possibly understand this article or my comment)--the
> higher the price of gold, the more the devaluation of the paper currency
> becomes obvious. So suppression of the price of gold (and its poorer
> cousin silver) is necessary for TPTB to be able to continue to tout
> their "strong dollar" policy...which is simply a bold faced lie,
> nothing more, nothing less.
>
> And the ridiculously low price of gold (compared to new currency
> created, esp. FRNs) is what they have used to justify low interest
> rates (Gibson's Paradox--just ask Larry Summers about that) and the
> lies from the BLS (Bureau of Lying Statistics) about our rate of
> inflation (which of course for anyone with half a background in real
> economics is NOT about prices, but about expansion of the money supply,
> which will in the end bring about all kinds of price inflation while
> in the meantime leading to gross misappropriation of capital).<br/>
>
> And I could go on, but again, the bottom line is exactly as stated
> by our ManAboutDallas...he ain't really MAD at all...but right on
> the money...so to speak '-) jt

Congress to Approve IMF Gold Sale This Week

China is methodically replacing its U.S. Dollar exposure with gold. This is wise and will eventually make it more likely the dollar will devalue and interest rates will rise, significantly.

As History Repeats Itself, Time to Buy Gold and Silver

A better history of the Great Depression is Benjamin Anderson's "Economics and the Public Welfare" published in 1949. Anderson was the Chief Economist at Chase National Bank from 1921 - 1939. He saw the run up to the depression (awful monetary policy of low rates and easy money which created inflation in asset prices) and the inevitable cras that always occurs with a Fed induced boom; the bust. He provides a year by year description of the Fed's inflationary monetary policies in the 1920's and yes even in the 1930's. He also provides a detailed description of all of Hoover's New Deal programs and Roosevelt's that followed and how they actually prolonged unemployment and reduced growth.

Why do most economists believe that wealth can be created or re-created by printing (or electronically creating) more fiat currency. Money is merely a medium of exchange. It is not true wealth. True wealth in an economic system is created and increased by improvements in the capital infrastructure which requires real savings. Consumption, by spending newly created money from the Fed, will not increase wealth or raise the standard of living.

But alas, our wise rulers will go back to the same well that never works and keep pulling out more dollars to "pump into the system" so they can pay off their constituents and their special interests (banks, states, other politicians and government itself) with the money they are creating daily.

Look for this rally to fizzle out, then equity prices will slide once again. Also, look for the purchasing power of the dollar to begin to slip, not against other currencies but against real assets including food and energy. Gold is a good investment now as well as silver. Also, look for price controls in a few years on products that contain commodities as their inputs (energy and food especially). Price controls will then lead to shortages.

When this happens, we can depend on our wise rulers to have a plan D, E, or F that will surely work and magically put wealth, I mean money since that is how wealth is measured by them, into everyone's life. Silly me for thinking that our standard of living has improved over the past 200 years due to wonderful inventions, technology that created a much more effecient capital base in which labor produces much more today than it could in the past. The only way living standards are improved is because some one saves, defers consumption, so that production can occur and be improved upon.

I guess I had it all wrong. All we need are more and more Federal Reserve notes to spend and consume since according to our rulers a lack of money is the problem.

Bernanke Desperate, Fed Out of Ammo

Karl,

Sorry to burst your bubble re: free markets, but we don't have one. How do you know that unregulated markets lead to booms and busts when you have never lived in one?

Our market is highly regulated. In fact, the supply of money and the cost of money (interest rates) are controlled by the Fed not the free market. The Federal Reserve Bank, Fannie Mae, Freddie Mac, etc. are creatures of government not the free market. These wonderful government entities are the primary drivers behind our current boom bust cycle.

In fact, the artificially low interest rates actually contribuited to a decline in real savings while at the same time there was an increase the demand for loanable funds (debt). This created the mismatch and also created an unsustainable level of debt and misdirected resources to unprofitable (can you say "sub-prime" mortgages and new home consftruction) projects.

Good luck on curing the business cycle with more regulation. In fact, how does the government regulate the government?


On Mar 22 02:42 PM Karl Glazier wrote:

> This is a typical example of amateur economists (like Ron Paul) who
> have no idea how things work telling the experts what they are doing
> wrong.
> It's like laymen telling brain surgeons they are doing it all wrong.
>
>
> Bernanke is putting the most advanced theories into practice.
> With widespread overcapacity, increasing money supply will not lead
> to inflation, but to renewed economic growth.
> And the Fed is not out of ammunition, because they can create unlimited
> amounts of money, whatever is needed to get us growing again.
> Ron Paul's libertarianism (represented by Greenspan's refusal to
> regulate) is what got us into this mess.
> Unregulated markets lead to booms and busts.

The Economy on Dope: Investors Fear Inflation, Embrace Gold

I applaud you recognition of the "sham" economy mananged by the Federal Reserve Bank and its control of the fractional reserve banking system. Our system is truly "crony capitalism" in which the government's policies are intended to benefit the few at the expense of the many. This is the nature of interventionism no matter who (Left or Right) is intervening.

You stated the U.S. Ponzi scheme will continue for another 10 years without significant intervention. You need to realize the current system of zombie companies staying alive and asset prices remaining propped up only continues because of intervention. However, this intervention cannot and will not prevent the eventual collapse of the malinvestments that were funded because of the artificially low interest rates maintained by the Fed.

The biggest story now is the fact that last week we were all diverted, by the government, with the "populist" backlash against the AIG bonuses. This is in reality a non-story and most Americans should be smart enough to realize that $165 million does not have the same impact on the economy as $1 trillion. It's very interesting that Ed Liddy was being roasted on Capitol Hill on Wednesday when the Fed quitely decided to "monetize" up to $1.15 trillion of the U.S. debt. This was the real story but it was not covered as we too busy acting outraged over the AIG bonuses.

The U.S. has been partially off the gold standard since the 1930's and fully off since 1970. In the 4 to 5 thousand years of commerce with currency, only about 40 of these years has been conducted with fiat currencies. There is a reason for this and we will very likely see a currency crisis in the near future. And you can bet that Obama, Geithner, Benanke, Summers, Romer, Dodd, Frank, et.al. have foreign bank accounts, probably Swiss accounts denominated in Swiss francs and gold accounts. They will be just fine when the dollar collapses under the weight of their own stupid and selfish inflationay policies.

The Economy on Dope: Investors Fear Inflation, Embrace Gold

Your anti-semtism proves that you have no real clue. Your rubbish is a stain on this website. I have no problem with a person's right to spout their incorrect and racist garbage but I will not allow it to go unchallenged and to duvert attention from the real problems which eminate with the state.

The problem is not Jews it is government and the statist mentality that is now so readily accepted. If you had any knowlege and understanding of history you would know that business cycles, which have plagued the industrialized world for the past two centuries, are caused by the state's inetervention in monetary policy, via central banks, and the creation of money out of thin air through inflationary credit expansion. J.P. Morgan's men were prime movers of the Federal Reserve Act of 1913 and they were WASP's not Jews.

It's a shame that in an environment that needs real discussion of ideas all you can think of is Jew bashing. You should be happy with our current situation in that the public private partnerships of the government owning the banks and AIG is very similar to Germany in the 1930's. Fascism is more subtle than Communism in that the government makes it appear that the means of production are still private property but the government really controls all production decisions.

Please take a break from your religious and racial bigotry and spend some time reading and studying history, especially the past 300 years of Western economic and political history and you will be surprised what you will learn.


On Mar 22 03:17 PM MADE IN W.GERMANY wrote:

> I think jews are to blame for creating current economic depression,
> jews have too many important positions in the US government, from
> CIA to FED all are jews.
> Most investment banks ceo's are also jews, how can you explain it?
>
> In Germany there are also many jews who are allowed a top jobs, no
> problem, but they don't represent such a high proportion as in US.
>
> American people must wake up and look into the roots of the problem.

Gold: The Only Remaining Bubble?

Alan,

It was the "inflation" increase in the money supply, that caused the inflated prices in real estate, equities, etc. from 2002 - 2006. The Fed is inflating the money supply now at an even greater rate. All of this new money represents cash balances in some one's possession. The increase in the money supply debases the currency over time. As a result, assets with intrinsic value will increase in value as measured by inflated/debased currencies. Inflation does not impact all goods at the same rate or time. For example, the CPI, which is merely a measure of the general price level, as defined by the Fed, and does not measure monetary growth. The CPI is also a metric developed by the goverment which also grows/inflates the money supply. Like grading your own tests in high school.

Growth in the money supply is inflation and is the proximate cause of increases in the general price level over time.

Even though real estate prices are still falling due to their inflated levels, most other prices in dollar terms are not falling. Creating money out of thin air defies the economics of scarecity and devalues all existing dollars in circulation as they were not created from capital investment or labor but by government "fiat." This leads to another Keynesian myth of the nutrality of money. As the domestic and international markets begin to realize the debasement that is occurring and the increased credit risk of the U.S., interest rates and prices, in dollars, will rise. This is a natural economic law and cannot be prevented by Ben Bernancke, the President, Congress or any of the economically illiterate expert economists that most politicians listen to. Low growth does not preclude currency debasement and rising prices. Low growth and higher prices can and will exist together if our current monetary and fiscal policies are continued.


On Feb 18 05:26 PM Alan Brochstein wrote:

> You raise a good point. I wasn't trying to cite Japan as an example
> of deflation but rather that inflation never came despite years and
> years of stimulus, low interest rates and monetary expansion. I don't
> think that our situation is quite the same as Japan's, unfortunately,
> in that as many of the gold proponents point out, we are externally
> financed. Our consumption for years above and beyond our means at
> all levels (government, consumer and business) helped to keep the
> economy going and prices rising. We now have asset prices of all
> sorts (except gold) declining dramatically and credit constricting.
> These conditions will keep a lid on prices no matter what the Fed
> and the Treasury try to do in my opinion. The higher savings rate
> ahead for individuals and the conscious efforts of companies to constrain
> their own debt will lead to low levels of consumption. Additionally,
> as governments face pressure on their fiscal fronts, they will be
> forced to raise taxes, another impediment for growth.

Gold: The Only Remaining Bubble?

Gold is simply a safe haven. Your arguments against inflation are not correct. I challenge you to research and publish the actual year over year rate of deflation (reduction in the general price level) in Japan during the 1990's. In fact, you must strip out real estate, equities and fuel from your rate. Then see if actual daily costs, food, insurance, health care, wage rates, commodities, etc. actually were in a "deflationary spiral." I bet the rate of general price decline in the daily costs of living will surprise you by how small it was and that many costs actually increased.

General price level declines are not possible in fiat currency economies as the paper money is not backed by a tangible asset.

I also disagree with your asessment of the Treasury bubble or lkack thereof. This is the current bubble and when it pops, gold will probably become more of a safe haven. Treasuries, and the dollar, are only backed by the "full faith and credit" of the U.S. Government which has no ability or intention of paying off its debt. Here are the "assets" that back the dollar and Treasury Debt Securities:

The U.S. tax revenues, which are decreasing.
The U.S. budget deficit which is increasing-lack of fiscal discipline usually harms borrowers-it will eventually harm the U.S.
The U.S. trade deficit is large and will continue in perpetuity.
Unfunded Social Security and other entitlement liabilities
The now "unknown" assets on the Fed's expanding balance sheet.

Once holders of treasuries realize this, they will begin to liquidate their treasury holdings as their yields are not compensating them for their risk. Moody's created a new AAA rating for the U.S. and the U.K. that states these countries' securities are "AAA with a risk of default." The U.S.'s sovereign rating is now lower than Norway's.

In my college finance courses years ago, the Treasury rate was the "risk free" rate. I suppise things change when a nation goes on a 20 year deficit spending spree. The U.S. is broke and mathematically insovent. Treasury yields will eventually reflect this.

It will be interesting to see how our government addresses these issues as they begin to bubble up.

The Coming Dollar Deflation

David,

It's all about timing. You are correct re: the short-term uptrend in the dollar vs. other currencies, gold and other commodities. This caught me by surprise. The medium term 2 - 5 years, is hard for us to grasp. The tide will turn as the Fed and Treasury continue to create more currency. We already have massive inflation (growth in the money supply). This will be the proximate cause of higher prices in dollars for most things we purchase in the future.

Inflation Could Cure Our Economic Ills

Ozzy is correct. This is the end run of "free" fiat currency. Keep these things in mind:

The government will and is doing what Sean suggests. Expect deflation in the short-run and inflation in the long-run. Real assets, including real estate, will probably provide a hedge against the inflation from a falling dollar. Also, bank accounts with foreign banks in their currencies, be careful which currency you chose, may also be wise in the long-run as the U.S. dollar will lose value and its status as the reserve currency.

Paper money is just that. Paper.