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Old 02-07-2012, 06:11 AM   #1
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Very intersting interview: Schiff/Rickards

Peter Shiff interviews JG Rickards, the author of the "Currency Wars". Definitely worth reading the whole interview, the guy can be hardly dismissed as a "non-mainstream economic extremist" - he was taking a major part in hostile currency manipulation exercises taken by Pentagon, for one.

http://campaign.r20.constantcontact....#LETTER.BLOCK4

few excerpts (emphasis mine, changed the order of paragraphs):
Quote :
Few Americans are aware of the International Economic Emergency Powers Act (IEEPA)... it gives any US president dictatorial powers to freeze accounts, seize assets, nationalize banks, and take other radical steps to fight economic collapse in the name of national security. Given these powers, one could see a set of actions including seizure of the 6,000 tons of foreign gold stored at the Federal Reserve Bank of New York which, when combined with Washington's existing hoard of 8,000 tons, would leave the US as a gold superpower in a position to dictate the shape of the international monetary system going forward, as it did at Bretton Woods in 1944.
Quote :
Conventional wisdom is that China has the US over a barrel because it holds more than $2 trillion of US dollar-denominated debt, which it could dump at any time. In fact, the US has China over a barrel because it can freeze Chinese accounts in the face of any attempted dumping and substantially devalue the worth of the money we owe the Chinese. The Chinese themselves have been slow to realize this.
...I would add to this, that China's economy is only about 30% of domestic consumption, which means that 70% of their economy depends on EXPORTS, with US being their largest partner, EU second. Now, anyone would bet a farm on China letting "too big to fail" economies to fail, without doing everything in their might to prevent it from happening?

Quote :
Peter: In your book, you lay out four possible results from the present currency war. Please briefly describe these and which one do you feel is most likely and why.

James: Yes, I lay out four scenarios, which I call "The Four Horsemen of the Dollar Apocalypse."
(...)
My final case is chaos and a resort to emergency economic powers. I consider this the most likely because of a combination of denial, delay, and wishful thinking on the part of the monetary elites.
Quote :
My forecast does not pertain specifically to President Obama, but to any president faced with economic catastrophe. I agree that a typically Keynesian administration will not go to the gold standard easily or willingly. I only suggest that they may have no choice but to go to a gold standard in the face of a complete collapse of confidence in the dollar. It would be a gold standard of last resort, at a much higher price - perhaps $7,000 per ounce or higher.
..I'll second this, from what I've seen from these spineless invertebrates of people, the politics, they will keep painting the house that is on fire, to keep it good looking, and keep them - far from the unpopular moves, and get them through the next elections. That is about as much as I have faith in our enlightened leaders -> thus the logical outcome that follows.

Quote :
James: The Fed will allow the inflation to grow in the US because it is the only way out of the non-payable debt.
Initially, American investors will be happy because the inflation will be accompanied by rising stock prices. However, over time, the capital-destroying nature of inflation will become apparent - and markets will collapse. This will look like a replay of the 1970s.
he must have been reading this one famous economic commentator/analyst
http://www.pmbug.com/forum/f13/empir...-439/#post3579
http://www.pmbug.com/forum/f2/centra....html#post3675

Quite interesting read and I agree with almost everything he said, I've heard bits and scraps about "Currency Wars" here & there, I think I must buy meself a copy.

cheers,
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Old 02-07-2012, 06:30 AM   #2
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Quote :
...
Peter: You write in your book that it's possible that President Obama may call for a return to a pseudo-gold standard. That seems far-fetched to me. Why would a bunch of pro-inflation Keynesians in Washington voluntarily restrict their ability to print new money? Wouldn't such a program require the government to default on its bonds?

James: My forecast does not pertain specifically to President Obama, but to any president faced with economic catastrophe. I agree that a typically Keynesian administration will not go to the gold standard easily or willingly. I only suggest that they may have no choice but to go to a gold standard in the face of a complete collapse of confidence in the dollar. ...

...

Peter: What, if any, silver lining do you see for us in the future?

James: I continue to have faith in the democratic process and the wisdom of the American people. Through elections, we might be able to change leadership and implement new policies before it's too late.

Failing that, the worst outcomes are all but unavoidable.
Hmm... What potential new leader is there who represents a true change from Keynesian monetary policy? I can only think of one right now.

I wish Rickards would address this subject (and HR 1098 more specifically) more directly. He has a large audience.

bushi, his book is easy to read, but I think that, at times, he glossed over some things for the sake of narrative brevity (and I would quibble a bit with some of the assertions he makes, but they aren't big things with respect to the overall point of the book). Rickards did an interview with Max Keiser a while back where he discussed it a bit as well. That was posted over here: http://www.pmbug.com/forum/f13/tin-f...ex-75/#post717
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Old 02-08-2012, 07:32 AM   #3
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...well, in the light of the recent revelations from govt agencies re gold standard supporters, Rickards IS an extremist, despite being a Pentagon economic-wargames consultant!!!!

What a nonsense, that is preposterous, what is going on in your once free & freedom-loving country, guys.

I hate stupidity in any form, that is why I despise big governments - they are riddled with stupidity at every step. People making themselves look busy, and inventing more & more ridiculous things every day. Getting paid from our taxes... Where shall I sign, to get out of that nonsense?
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Old 02-08-2012, 07:53 AM   #4
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"In fact, the US has China over a barrel because it can freeze Chinese accounts in the face of any attempted dumping and substantially devalue the worth of the money we owe the Chinese."

So US borrows money and only US can repay that amount at a time of our choosing? Sweet deal.

On the same page, there is an interesting article on US Petrodollars and the real motive for invading Iraq.
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Old 02-08-2012, 08:24 AM   #5
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Originally Posted by Shelby-villian View Post:
So US borrows money and only US can repay that amount at a time of our choosing? Sweet deal.
...not only this - US can also PRINT as much of these dollars, as Fed only wishes - which in current climate and under current chairman is, to quote the master, "as much as it takes".

Now THAT is some sweet deal! "Lemme a fiver, I'll give you back two, freshly-printed". Would you?

For as long as everyone else is accepting these dollars, which will probably last a little while longer, because no one is really interested in a global financial shakeup that would result in case of dollar collapse. But as you can see already, definitely, not forevah. People might be stupid all over the planet, but not THAT stupid, and catching up fast.
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Old 02-08-2012, 08:44 AM   #6
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Liking gold, and supporting a gold standard aren't the same thing, for one.

Governments fear a gold standard as it's a loss of some power they think they need to adjust the money supply to match goods and services - which if done right, is best of all. However, history proves that they never limit themselves to that alone, so we in turn propose a sledgehammer to prevent the abuses. However, the sledgehammer isn't actually that great a solution in all cases either. The problem is we have humans to work with here, not angels.

The real issue in my mind, is that those on the receiving end of bread and circuses are allowed to vote for more for themselves. Robert Heinlein covered that one in spades, it's the real problem and the reason all fiat has failed over all of history. The true fight is over some players making sure that *everyone* is somehow a recipient of same, so that no one will want to upset that system by denying votes to net recipients. In other words, it's already deep into double (or multi) think at the only level that matters - far beyond the average sheeple.
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Old 02-08-2012, 11:30 AM   #7
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Originally Posted by DCFusor View Post:
(...)they think they need to adjust the money supply to match goods and services - which if done right, is best of all. However, history proves that they never limit themselves to that alone(...)
...THIS!

However, do we really NEED to adjust (above) the money supply, to match goods & services? What happens if we CAN'T (re: gold standard)? The relative value of money will increase - we will have a deflation - but is it necessarily a BAD thing? I am not so sure, people would be much more cautious, what they spend their money (or invest it) in! Cannot see the .com bubble happening, if people were REALLY cautious and thoughtfull, in regards of doing their homework, before investing into any pipe-dream, one after another.
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Old 02-08-2012, 11:47 AM   #8
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I'm not going to disagree - slow deflation would be fine I think. But define "slow" in all the right contexts...hard one. Too fast and people hoard the money, and that's one of those self-reinforcing loops that takes economies down.

As far as that goes, a little more hoarding of money (some call that prudently saving) would be a good thing - but again, define "a little".

One way it's under people's control, another way it's under government control. Both have flaws...I'd guess probably the best is to have it not exclusively under either's control. There can be situations where if everyone just does what's best for them personally and right now, it's not the best for everyone (including the self) longer term. I'd guess the issue there is - who decides, and frankly, the governments track record isn't that great.

Look at the crap going on in Greece the last few days - politicians there against doing what's required to get the next batch of bail money to garner votes over what would be a place not worth living in, much less governing. Yet, pandering to the people to get re elected is obviously more important than even their own good!

An in my soapbox moment - did you ever notice that when the government wants something, they say that even if you don't, it's for the good of all, and we know best? Except around election time, when they say they're going to do what the majority seems to want, no matter how obviously stupid and unsustainable it is?



I'd guess that you could still adjust money supply on a gold standard, at least some, if people were agreeable. You could sort of change the size of an ounce as used for monetary gold....unless everyone is actually using gold itself daily as trade currency, you'd still have paper you could float the value of - but it would be harder to do and require much more agreement from the populace. I'd see that as a good thing, personally.

You'd then use paper for "daily needs" - or bits for that matter, but use gold for your store of value, in the bank or at home, converting as required - at that point, changes in the ratio wouldn't be large enough to devalue anything more than what you carry in your wallet - insignificant if it only happens to the lunch money you get out of an ATM. Wouldn't be all that hard to implement, actually.
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Old 02-09-2012, 03:29 PM   #9
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Originally Posted by DCFusor View Post:
You'd then use paper for "daily needs"
plenty of quailty paper in bugout 1

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Old 02-09-2012, 08:12 PM   #10
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My best puns and double entendres are the ones I don't realize I've made till too late.
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