[Wiley]

The Fed is only thinking about two things right now…

Raise rates and the economy crumbles

Lower rates and the dollar tanks

The ultimate catch 22.

PS. I second the book recomendation. Should be required reading in every high school.

[Wiley]

In India you are considered wealthy to own an elephant. There is also a saying there that if you want to burden someone give them an elephant.

There is much truth in both.

[Wiley]

Hey PS,

Can you give me the symbol for the inverse fund. I’d like to look at it. Thx.

[Wiley]

I read somewhere that the Fed Governors are immune from prosecution anywhere in the world. Pretty interesting.

[Wiley]

In a free and Capatilistic world (full disclosure I’m a big fan of) you can’t have a private company with the ability to print money from nothing. It cheats and robs the people who are required by law to use that money. Applies to Gov’t as well but we currently have the Fed. According to the Fed if you had $1,000 in 1974 and saved it until today it will only buy you 25% of what it would then. I think they’re optomistic. Who needs a depression. Thats depressing enough.

In a controlled monetary world if private business creates too much credit and receives bad consequences then it will learn from it so it can profit better in the future. That is capitilism and why it works so well. The market is always the best arbiture of things.

Excess credit creation is the result of excess money creation. It’s looking for someplace to go to work. I saw it happen in my industry in the 90’s. In 10 years the capacity was quadrupled and within 6 months the lending dried up (when the realization hit the loans weren’t going to perform). Within following two years capacity was cut down two thirds. You will witness this in housing I assure you.

[Wiley]

Hipmatt your right on the money. Crowds have throughout history shown a high propensity to delude themselves.

We are witnessing a massive amount of money in circulation running around looking for yield. All else is noise. It’s an illusion of wealth.

[Wiley]

Without a means of controlling monetary infalation you always have corrupt system, as we do now. You cannot protect private property rights, and as such lack freedom. You can argue that all day long but thats reality.

Lack of some sort of standard also creates longer and more extreme cycles. Not the other way around.

The arguement that you have to have equal amounts of gold to back whatever value your giving the dollar is simple minded imho. All you need is some form of gold standard that controls the amount of increase monetary bases.

To argue that you don’t want a gold standard because gov’t can go off the standard and print madly is like saying why have an acoholic give up drinking because some of them go back to drinking.

So barring a gold standard what is the solution?

It’s not the gold that bugs are so fanatic about gold, it’s about how well it preforms the role of a standard.

Please give me the paper where a modern economist says a gold standard creates deflation. I think most austrian economists would insist it is the excess monetary creation which create the environment for deflation.

[Wiley]

Why does gold as a monetary standard seem idealistic when its been the most affective or maybe better said popular, monetary standard for the last 4000 years? As far as our short history (US) we’ve only not had some sort of gold standard for 35 years and look what the value of the thing we call money (frn’s) has done.

[Wiley]

Ok I think I agree if the Treasury is able to sell its notes to someone else (in this case BOJ), and we we have no trade deficit, then its just a trading of assets and liabilities on eathothers books. However I think the chink in the armor here is your assuming the BOJ’s money was not created into existence and also that treasuries sold on the open market can and are purchased by our Fed (money creation).

Tell me if I’m wrong here (as per my initial disclosure that I’m no expert on this)

There is also this non-traditional method which has been reportedly used recently…

The following is what the Electronic Money Printing Press is:

Japan experiences a demand for the yen which is not welcomed by the Bank of Japan.
In order to stave off an appreciation in the yen, the Bank of Japan needs to create yen in order to sell it to buyers who offer US dollars in return.
The Bank of Japan borrows yen in the same manner as the example below, whereby the US or any other nation can create money in their insular systems.
The difference here is there is no time for a natural creation of money via the many steps. The Bank of Japan needs dollars and they need them now.
The Bank of Japan enters the yen/dollar 24 hour market selling the borrowed yen, receiving dollars in return.
The bank of Japan is now drowning in US dollars, but only for a very short time.
The Bank of Japan electronically transmits dollar money wires to the Federal Reserve Bank of New York.
The Federal Reserve Bank of New York many times with a 24 hour day receives these wires and deposits them in the Japanese Float Account at that bank.
The Federal Reserve Bank of New York is the investment manager of the Japanese Float Account.
With the knowledge of the Bank of Japan, the Federal Reserve Bank of New York utilizes 100% of each bank wire as it arrives to enter into the international market for US Treasury instruments, buying US Treasury bonds all across the maturity curve from the shortest out to 30 years.
This fuels a bull market in the US Treasury market.
This bloats the US TIC report on inflows of capital into the US.
The New York Federal Reserve Bank, by buying the bonds for the Japanese Float Account at that bank in the open market, places dollars in the hands of worldwide sellers of Treasury instruments.
Because the international US Treasury market is a private market the increase in liquidity is huge, quiet and everywhere.
The reason this transaction cannot be unwound is because the method would be selling all those bonds that have been accumulated for the Japanese Float Account at the Federal Reserve Bank of New York into the open market. That is a practical impossibility as even the huge international market in US Treasury items cannot absorb such a supply.

This transaction is totally different in its manner and impact than subscribing to an issue of US Treasuries at auction on behalf of a non US buyer, which is customary.

This is the non-traditional method Professor Bernanke utilized that liquefied the world in a short period of time. This attempt to support an international economic recovery is now hitting home with its inflationary impact. This is beyond huge and happened over a short period of time compared to traditional methods. The results cannot be stopped because the liquidity cannot be drained. Regardless of the games played to break the psychology of inflation, real inflation will be delivered in an unprecedented proportion and non traditional manner.

[Wiley]

1 oz coins go a long way at $650ea.

If your thinking 100oz bars it gets tricky. May as well just trade futures. You could take delivery at expiration but then if you don’t have it stored at a certified wharehouse (forget all the details) then it is considered out of circulation and hard to sell back w/o re-certification. Something along those lines.

[Wiley]

One oz coins. Exept for kuggerands all the majors are pretty much the same in purity. austrian phil’s, canadian maples, etc.

This company is very reputable. Inc 500 co. I buy in person but would have no qualms about order over phone.

under $10,000 in cash requires no identification. You get a cash and carry receipt.

[Wiley]

http://www.golddealer.com/bullionpage.html

Buy it yourself. Keep it private.

[Wiley]

JG,

To be honest I don’t know enough about the mechanics of the Treasury but wouldn’t they be using those funds to pay for gov’t expenditures, war, etc. Otherwise why would a treasury agree to pay interest for dollars their not using?

Also, dollars recieved by individuals, companies, etc that get deposited would have an affect in that the banks don’t lend out the same as they have on deposit. We have a fractional reserve banking system so the amount lent is multiples of the deposit.

[Wiley]

Very good. Greenspan 1999

[Wiley]

I second what rseiser said.

and add a quote…“Gold still represents the ultimate form of payment in the world… Fiat money in extremes is accepted by nobody. Gold is always accepted.”

Any guesses on who said it. No googling.

[Author]

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