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Inflation or Deflation?

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Inflation or Deflation? - Page 7 Empty Re: Inflation or Deflation?

Post  Guest on Mon May 18, 2009 11:24 pm

Shelby wrote:
I was often lonely in USA, because I couldn't find "my people" there. I drove all over the southern part of USA searching for "my people" and I didn't find. I mean people you can sit and talk with for hours, who is root crops and pay no mind to worldly events. People with good heart, who understand and tolerate imperfection, but who are strung out on medications, etc... I just really don't like Western culture, I don't even like apple pie (or anything with refined sugar in it).

No matter were I go it's like that... Proverbs 18:24
Just like Lucky said, are we part of this world? Even if I tried I can no lounger be a part of it. Outcast ring a bell? I've come to understand that being a outcast is being set apart for the Lord. I would not change this for the world and I count it ALL lost. I think I should post stuff in "Biblical".

NOW! Back to bullishness...
Shelby, when you say and I quote "Seems to me TPTB are trying to create a situation where the masses will not want the dollar, because it will have been so corrupted and debased."

I have been seeing companies for example like Tumi and others removing themselves from the OTCBB.
http://www.tumiresources.com/en/Releases/tumiprMay0709.pdf

I have heard people like Peter Grandich among others informing investors to move their money out of the US dollar. On Friday my financial adviser (remember I'm Canadian) advised on having less money in US currency and a higher % in CDN dollars. I couldn't agree more! There seems to be a move of the mass towards a safe haven and it looks like the Americans are sending their money north. I'm really not into currency trading maybe we should keep a close eye on this subject.

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Inflation or Deflation? - Page 7 Empty The illusion that we are not speculating

Post  Shelby on Tue May 19, 2009 2:24 am

Shelby wrote:...I tend to think the silver story is true, and there will be a huge spikes in price, as all that 18 billion oz of scrap can't come to market at any low prices. But I have my concerns about whether the silver will be able to help us evade the obstacles going to put in our way by TPTB over the coming years....

This guy is brilliant, as he explains in detail what I was alluding to above:

http://www.soyouthinkyoucanrant.com/RequestHandler?requestName=GenerateSingleCommentaries&CID=84

I had also devoted an entire thread to it, even all my waking hours of the last 6 months of 2008 (and a couple months of 2009):

https://goldwetrust.forumotion.com/precious-metals-f6/how-will-we-physically-trade-gold-silver-at-5000-500-t61.htm

As I said, you will need to sell your silver back for fiat in future, and that is where the govt will confiscate from (ahem, I mean tax) you. We are speculating, because we don't what rules and fiat will be in place when we need to sell our gold&silver. Do you really think the govt is going to let us PMs bugs walk away with 100x gain in hyperinflation? Of course not! There will be a windfall capital gains tax in that hyperinflation scenario. Just look at Zimbabwe. So then you can try to smuggle your gold out of USA, but you will still have to sell it for fiat in order to use it. There will be paperwork. Where did the gold come from? Etc...

Another possible way of looking at it is we are only a very small % of the world's millionaires, and thus TPTB won't even bother and will let us cash out our gains.

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Inflation or Deflation? - Page 7 Empty EUREKA! inflation or deflation?

Post  Shelby on Sun May 24, 2009 2:25 am

It finally dawned on me (although I have probably stated this before intermixed with other discussion), that we will have deflation in West for as long as developing world will continue to use the dollar which steals their wealth and gives it to the Westerners. The instant the developing world fights to stop being slaves, then we will have a toasted dollar and massive hyperinflation in the West.

So there finally is the answer.

The reason we have markets which don't make sense, is because the dollar is a jail which prevents correct value. It enables Westerners to consume the production of the developing world.

When the dollar goes toasted, people are going to uprooting anything of value (even pulling toilets out of abandoned homes), and thus the masses are going to be scared and agree TPTB's idea that we must stop people from being free to move things of value out of the toasted country.

The reason you get world wars, is because the pain is so severe. You don't get a world war if TPTB can manage to continue to keep the masses in West propped up by redistributing (stealing) production value from the developing world. The socialist experiment will work only if China plays along (which they just might do). If China plays along (assuming their own people won't riot), then just maybe we move directly into a greater socialized hell, instead of having a world war first. In this latter scenario, the dollar wouldn't die, just morph into a global socialized fiat.

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Post  dz20854 on Sun May 24, 2009 6:19 am

we move directly into a greater socialized hell, instead of having a world war first. In this latter scenario, the dollar wouldn't die, just morph into a global socialized fiat.
Shelby, this is spot on. The greater (global) socialized hell will be selected as being preferable to a global technological (doomsday) hell. Another all-out world war would most likely wipe out mankind.

So it is the exponential ramp in technology that will make the exponential debasement of fiat currency end differently this time. Here is some of the socialistic "hell" that might be enacted to protect fiat currency:

(1) Elimination of paper money and coins as legal tender.
(2) A global all-electronic fiat money, with private accounts held only within a single global government-owned internet bank.
(3) A 50% sales tax on all bullion and coin sales that are not made to industry. Purchases paid for using bullion or coins would be considered barter transactions.
(4) A progressive tax on an individual's global net worth that exceeds a threshold level. This tax together with sales and/or VAT taxes would replace income taxes.
(5) Contracts involving barter would be unenforceable under the law.
(6) All barter transactions over a threshold level would be treated as sales paid for with money at their fair market value, and taxed accordingly. If not registered they would be subject to government confiscation (see below).
(7) Global registration of all asset items (except items classed as trivial). Sales would automatically trigger re-registration in the buyer’s name..
(8) All asset items (not classed as trivial) that are not registered would be considered property of the government. A property “auditor” making inspections would seize any unregistered property found. Anyone holding unregistered property would have no legal claims to that property. People would voluntarily make sure all their property was registered, to insure that they had legally enforceable property rights to it.
(9) No government debt. Government would not own any money. Any government expenditure would instantly create money. Any payment of taxes would instantly retire money.
(10) All debt and stock ownership would be registered in the global registration system.

Of these, it is the net worth tax that would have the biggest effect in keeping fiat money afloat.

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Post  Shelby on Mon May 25, 2009 5:15 am

dz20854 wrote:...
(4) A progressive tax on an individual's global net worth that exceeds a threshold level. This tax together with sales and/or VAT taxes would replace income taxes.
(5) Contracts involving barter would be unenforceable under the law.
(6) All barter transactions over a threshold level would be treated as sales paid for with money at their fair market value, and taxed accordingly. If not registered they would be subject to government confiscation (see below)...

I agree we are headed there, but not clear to me if we can get there without some reversion to the mean of fiat intrinsic value first (zero!).

Interestingly the income tax is favored where it would be hard to tax all trasactions, but the VAT (sales/capital gains taxes) is/are preferred when the society has good registration of all transactions/assets.

For example, in Belgium you must be registered to work at a specific location, and can not work a side job at another location or employer. They call violations "black work". You need to register all your animals (even pets), and I think even each new egg your hen lays has to be registered with a serial number.

I notice there has a been a push to interbreed (or exterminate) all self-sufficient native races with whites who prefer the Harlot system. Blacks/browns were taught that their color is ugly. Filipinos hate their own skin, yet they are so lucky they can go in sun daily without developing skin cancer. Africa has not been as compliant, which is why I think TPTB have not yet developed it. They have a long ways to go with Africa, I think they are trying to just exterminate as many of them as they can.

Most charity work is really just an a destruction of native culture. I am not saying the pagans had the truth, but you know what the Bible says that the false preachers will receive worse hell.

Every white person I meet in Philippines is nearly same. They all want to live isolated from their filipino families, they want to have a high degree of control over everything, they want to avoid spontaneous things (such as videoke playing loudly at 3am), they want their food to be ultra-clean, etc.. I am a mix of white culture, but I am trying to fight it. It hard for me to kill certain habits. It is a decades process of unlearning/unadjusting to much of what I was indoctrinated with in West.

Notice how everything in the Harlot system revolves around enforceable contracts. And this morphs into personal judgements, which is why Western people can not even speak to each other any more. The Harlot system is a self-sow/reaping jail culture.

I am not saying there still aren't some whites who hate contracts and love to live for today and are self-sufficient (or productive without contracts and Harlot system). I don't know the entire world. Balkans, Arabs, Argentina, rural Russians, Appalachian people in USA, etc... come to mind... And I not equating Biblical truth with a reversal of technology and productivity. I am not just noting the interplay of the contracts and the push to eliminate (by many means...conquest, mass media, false religion, bribes, debt, etc) those cultures that dont use contracts.

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Post  Shelby on Mon May 25, 2009 4:14 pm

See my prior post reply also.

dz20854 wrote:...Here is some of the socialistic "hell" that might be enacted to protect fiat currency:

(1) Elimination of paper money and coins as legal tender.
(2) A global all-electronic fiat money, with private accounts held only within a single global government-owned internet bank.
(3) A 50% sales tax on all bullion and coin sales that are not made to industry. Purchases paid for using bullion or coins would be considered barter transactions.
(4) A progressive tax on an individual's global net worth that exceeds a threshold level. This tax together with sales and/or VAT taxes would replace income taxes.
...

...
(7) Global registration of all asset items (except items classed as trivial). Sales would automatically trigger re-registration in the buyer’s name..
(8) All asset items (not classed as trivial) that are not registered would be considered property of the government. A property “auditor” making inspections would seize any unregistered property found. Anyone holding unregistered property would have no legal claims to that property. People would voluntarily make sure all their property was registered, to insure that they had legally enforceable property rights to it.
(9) No government debt. Government would not own any money. Any government expenditure would instantly create money. Any payment of taxes would instantly retire money.
(10) All debt and stock ownership would be registered in the global registration system.

Of these, it is the net worth tax that would have the biggest effect in keeping fiat money afloat.

Did this fool below ever consider that the fiat currency is the problem?

http://money.cnn.com/2009/05/18/pf/Robert_frank.moneymag/index.htm

...But if you really want to blunt the incentive for investors to squeeze out ever higher returns, scrap the income tax and shift to a much more steeply progressive consumption tax. You would report people's income and savings to the IRS each year. The difference between those numbers is how much they consume.

Tax that instead of taxing people's income, and the government would strengthen the incentive to save and invest, and weaken the incentive to build bigger houses...

...You need [salary] bidding wars to help identify the best people and steer them to the right places. What's not true is that they need big salaries to be willing to work hard. There's no evidence for that. If the differences in their post-tax pay were just a tiny fraction of what we see pretax, everything would work just about as well. So the simplest remedy would be to raise the tax on those high salaries...

...Anytime it looks as if individuals are generating huge profits for a financial firm, I think the presumption should be that there's some market failure they're exploiting. Regulation can eliminate those failures and therefore those profits...


======
I forgot where I wrote it exactly, but we were discussing whether TPTB could plant a pandemic:

https://goldwetrust.forumotion.com/economics-f4/inflation-or-deflation-t9-135.htm#1339

And I had said, they had been trying but kept failing because the world is too well interconnected now and much higher group immunity. Well I got confirmation of that now:

http://www.time.com/time/specials/packages/article/0,28804,1900559_1900558_1900540,00.html

...The good news, at least for older people, is that they may have greater natural immunity to the new flu, possibly because they have been exposed to more flu viruses in the past — some of which were similar to swine flu. In an early lab test conducted by the CDC, scientists injected the H1N1 virus into blood samples that were taken from healthy adults before swine flu emerged. Antibodies to the flu were found in at least 30% of the samples from adults 60 and older, suggesting some amount of protection against the virus; the same immunity was seen in fewer than one in 10 samples from younger people...

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Post  dz20854 on Tue May 26, 2009 1:17 am

...The good news, at least for older people, is that they may have greater natural immunity to the new flu...
Flu is not the virus that will be weaponized. Likely candidates are smallpox (kills 25%* of those exposed) or Ebola (kills 50% to 90%** of those exposed). Imagine the kill rate for a hybrid of the two:
Russian scientists have reportedly successfully merged the Ebola and smallpox viruses, using the small pox as a delivery system for the deadly Ebola virus. This would allow for Ebola's killer effect without its hindrance in requiring blood for transmission.**
Elsewhere, I wrote about a 2002 article*** about polio being re-created easily in a lab JUST BASED ON WRITTEN INFORMATION**** and substances cheaply available through mail order:
I would not say I created life in a test tube," Wimmer said. "We created a chemical in a test tube that, when put into cells, begins to behave a little bit like something alive. Some people say viruses are chemicals and I belong to that group." Wimmer said once the right genetic parts were in place, the virus virtually self-assembled in a lab dish.
* http://library.thinkquest.org/23054/military/page3.html

** http://www.dhpe.org/infect/ebola.html

***Dangerous Virus made from mail-order kits, CellNEWS, July 11,2002

****The genetic code for polio and many other viruses was (is still?) readily available on the internet. A New York Times article, however, indicated that most viruses are more complex than polio and more difficult to re-create using that technique. http://www.nytimes.com/2002/07/12/us/traces-of-terror-the-science-scientists-create-a-live-polio-virus.html?n=Top/Reference/Times%20Topics/Subjects/T/Terrorism&pagewanted=all

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Post  Shelby on Tue May 26, 2009 2:42 pm

dz20854 wrote:...Flu is not the virus that will be weaponized. Likely candidates are smallpox (kills 25%* of those exposed) or Ebola (kills 50% to 90%** of those exposed). Imagine the kill rate for a hybrid of the two:
Russian scientists have reportedly successfully merged the Ebola and smallpox viruses, using the small pox as a delivery system for the deadly Ebola virus. This would allow for Ebola's killer effect without its hindrance in requiring blood for transmission.**
...

If TPTB set off something that overt (assuming they even could from a practical standpoint), they would be better off nuking the planet, because the masses will turn on the establishment and cut off their heads.

There is a serious problem with delivery of that. It would quickly be choked off, because the authority would quickly turn on on itself, and if necessary all trade would stop, etc... See Ebola kills way too quickly. It limits its' own spread.

This would essentially drive mankind back towards small self-contained communities, blockaded from others. Would be opposite the direction TPTB want to go.

Rather I think it is much likely TPTB will continue to cull the herd only of those who refuse to interbreed with whites and take on the Harlot culture, i.e. famine in rural Africa, etc.. TPTB wants a selective culling mechanism that reduces those who want God, self-determination, liberty, simple life, etc.

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Post  dz20854 on Wed May 27, 2009 6:30 am

A system that simulates a gold standard, to eliminate inflation and deflation:

At the end of each day, the following are calculated:

1. Total global government spending that day.

2. Divide that total by the world population to find that day’s government spending per individual. This would be tentatively taxed to each individual.

3. Adjust each individual's daily tax liability according to a zero- sum formula to allow for a progressive allocation of tax based on each individual’s net worth. (Net worth would only be recalculated periodically).

4. Deduct that tax from each individual’s running total of sales tax, VAT, and payroll withholdings that have been escrowed. The tax based on net worth is the only actual tax. The others (sales, VAT, and withholding) are only amounts escrowed to be used to pay the net worth tax.

5. Any net worth tax exceeding an individual’s escrow would be deducted from their bank account that evening. This could only happen to high net worth individuals, and they would be required to keep at least a certain percentage of their net worth as cash in the bank at all times.

6. Individuals with lower net worth would see their escrow grow over time, and eventually be paid out as a retirement annuity. High net worth individuals would have no escrow left over and would need to fund their own retirement.

NOTES:

This system is logically equivalent to a gold standard, but without singling out one commodity for favoritism. There could be no inflation or deflation (other than due to changes in productivity*).

An added bonus to this system is that it includes a sustainable social security system based on need.

We now have the computer technology to make this system work. See my earlier post as to other required conditions: Global currency. No paper money or coins as legal tender. Registration of all (non-trivial) property. A single government- owned bank. No government debt. Government would not own any money. Government spending would instantly create money and collection of taxes would automatically retire money.

There would not need to be a special sales tax on bullion and coins. Since there could be no inflation with this system, there would be no advantage to hoarding these items.

*There would still be booms and busts, causing some temporary inflation and deflation, but because the money supply is constant prices would eventualy revert back to the mean. No matter how much the government spends, it is only the reallocation of money between people.

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Post  Shelby on Wed May 27, 2009 12:22 pm

dz20854 wrote:A system that simulates a gold standard, to eliminate inflation and deflation...


...2. Divide that total by the world population to find that day’s government spending per individual. This would be tentatively taxed to each individual....

...This system is logically equivalent to a gold standard, but without singling out one commodity for favoritism. There could be no inflation or deflation (other than due to changes in productivity*)...

This would be nothing like a gold standard, because on a gold standard, tax can be completely avoided, because gold is money. Gold is untraceable. Gold standard encourage people to work hard. What you have described is socialism/communism and encourages people to do stop working.

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Post  dz20854 on Wed May 27, 2009 6:37 pm

What you have described is socialism/communism
The system described is supposed to make people angry- very angry.

If the President decides to fight another expensive war of choice, people will see war spending come out of their bank accounts on the very day that spending starts. Do you think that the elite will put up with this when because of their high net worth their accounts get drained the most? More likely government spending would be cut to the bone.

How about voting for trillions in stumulus? Wait a minute… there would never be a need for stimulus under this financial system. I don't know whether it is called communism or fascism when trillions can be stolen from the public without there being rioting in the streets.

Look how many distortions and mis-allocations would be eliminated: No treasury securities to crowd out the credit markets. No foreign exchange spreads and losses. No more spending now and sending the tab to the grandchildren.

Look at the transparency: The effect of government spending would be known EACH EVENING by looking at your bank account. This might be accompanied by an evening report reconciling that day’s government spending with that day’s tax. Then there could be a breakdown of tax by net worth bracket, and tax by region.
on a gold standard, tax can be completely avoided
When there was a gold standard, the King and his army would come and collect his share of one's property, ie: tax payable in gold.
Gold is untraceable
Tax evasion has always been around, even under the gold standard, except that then it could get one’s head chopped off.
encourages people to stop working.
Here you are referring to the progressive net worth tax structure. (This type of tax could be enacted whether or not there is a gold standard.) I don’t think it would create any less incentive than our current progressive income tax structure. The tax burden would generally be less, since many inefficiencies and mis-allocations of capital would be eliminated from the system.
Gold standard encourage people to work hard… gold is money
Ideally, gold should be able to be hidden and retain 100% of its value no matter what the political and economic situation. But they are going to come after the gold—always have and always will. I wish I could recall which Treasury Secretary or Federal Reserve official said something like: “We’ll make sure that people who try to hoard gold get their hands burned up to their elbows”. I discussed previously how PsyOps could be employed to get the vast majority of people to voluntarily register their property, including gold.

Look at how few people today look at gold as money, even though there has never been a more compelling case as now that gold is money. But under a system where inflation becomes impossible, only the most nostalgic will continue to look at gold as money. They won’t find price appreciation, especially with all the dishoarding that will occur and its few industrial uses.

That said, we still have the old system, and I am close to 100% invested in silver and gold.

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Inflation or Deflation? - Page 7 Empty Any centralized system is the antithesis of Gold

Post  Shelby on Thu May 28, 2009 5:03 am

I will repeat, you have just restated Communism, with a more efficient mechanism for stealing capital. Your system pays to work less and become more fat. The fewer high net worth individuals have no political power against these lazy, fat masses, and if they did, they would never allow your system any way.

Your proposal is the antithesis of gold standard, because gold is not efficiently stolen by govt when everyone is using physical gold as money. However, when everyone is not using gold as money (as is the case now), then those who try to buy and sell gold, stand out from the crowd.

Here is a simple rule:

Any centralized system is the antithesis of Gold

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Inflation or Deflation? - Page 7 Empty Those in charge enjoy the advantages of hidden gold...

Post  dz20854 on Thu May 28, 2009 3:56 pm

...all the while discouraging others from doing the same:

Looted war gold funding illegal covert activities?

…from Family of Secrets, by Russ Baker:
P. 347 The idea for a global political action fund based on war loot actually originated during the Roosevelt administration… Much of this war prize was in the form of gold looted by the Nazis from conquered countries and civilian victims.

P.346 …a great fortune in gold booty was rumored to be buried in the Philippines, seized by the Japanese as they plundered one East Asian country after another. Several journalists, who have spent combined decades on the Philippines gold story, assert that the cache was actually seized by American forces under MacArthur and that its very existence is a sensitive secret. Estimates of the cache vary from forty-five billion dollars to hundreds of billions. This may help to explain why so many of the [Bush owned] companies mentioned in this book seem able to function in apparent defiance of economic logic. Entities such as Zapata Offshore, Stratford, Arbusto, and Harken appear to persist without profits for great stretches. To the trained eye, they look like classic money-laundering ventures, raising the question of where all that money originates. And that leads in turn to another explanation proffered about the Philippine gold: that it has been used- and perhaps is still being used- to fund unauthorized covert operations.

P.348 In the postwar period,… Marcos would play a role in the international money machine through which vast undocumented sums sloshed, ostensibly to pay for covert operations. Implicit in this was a wink when he looted his own country.

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Inflation or Deflation? - Page 7 Empty Inflation vs. Deflation is the wrong question

Post  Shelby on Tue Jun 02, 2009 8:39 am

I posted a comment:

http://silveraxis.com/todayinsilver/2009/05/29/dollar-bond-bottom/#comment-7603

All dollar debt creates a demand for dollars (interest payments). You can go through multiple scenarios that such dollar demand ultimately affects Forex. Bottom line is demand and supply of dollars. Thus dollar debt is short position on the dollar. It is a fallacy to believe that debt can be inflated away (it can only be defaulted)...

And the indebted are going deeper into debt, in order to service their existing debt, as their *REAL* income falls (and is deflated by inflation).

Higher long interest rates enriches the bankers who borrow short, lend long. This supports the continual depression, and continual transfer of wealth from masses (debtors) to bankers (lenders). But this can't go too far, too fast, as the bankers want just the right mix of chaos and control.

We can have inflation in low income sectors simultaneously.

There is a massive transfer of wealth completing now, where the bankers are cashing in the loans on western middle class, feeding the world basic goods to keep them appeased, and transistioning to prepared for a new debt bubble in the developing world.

The bankers will turn off the dollar (causing hyperinflation in USA) only when the global system is becoming too unstable. They may try to manage a gradual devaluation of dollar to manage this transistion, but they will also use some degree of rapid chaos in order to create the pressure they need to get certain players to fall in line.

TPTB are attempting to manage these levers (which they can do because they control the issue of all fiat money). You have compare all the movements to their overall strategy and try to understand when they will pull a lever. Appears in their interest to let the dollar run lower, long interest rates higher, precious metals and stocks higher. Then they can reverse it a bit, but keep the interest rates a bit higher. Remember Bernanke said they would find ways to suck back in the $13 trillion in liquidity. The announcement to buy $300 billion of long Treasuries was probably just a publicity ploy, to get the levers moving in unison as they are in the current set up. Understand the bankers want the long rates higher. They want the crash of the western debtors into indentured servants.

Higher interest rates also motivate the bankers make news loans, to restore growth to the world economy, but this won't stop the rebalancing of high income and low income economies (deflation of high real incomes, inflation of basic goods), which the bankers are trying to manage as a transfer of wealth via debt to themselves.

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Inflation or Deflation? - Page 7 Empty Emailed the creator of the 1929 vs 2007 stock decline comparison chart

Post  Shelby on Mon Jun 08, 2009 12:10 am

Subject: BEV Chart would track 1929 if you adjust for dollar

Your BEV chart shows current crisis diverging from 1929:

http://www.gold-eagle.com/editorials_08/lundeen060609.html

But if you adjust the blue line by the change in the value of the dollar since Oct 15, 2007 (current crisis start):

http://stockcharts.com/h-sc/ui?s=$USD

Then you would see blue and red lines must more closely tracking. This is because the dollar before 1933 was gold and did not have a rapidly changing value.

The current manipulation upwards of the stock market is being offset by a decline in the value of dollar (and dollar Treasury debt which is much larger relative asset than in 1929).


==============
Add:

An excellent comparison of Great Depression policies and now, you will surprised:

http://www.netcastdaily.com/broadcast/fsn2009-0606-2.mp3

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Inflation or Deflation? - Page 7 Empty re: Emailed the creator of the 1929 vs 2007 stock decline comparison chart

Post  Shelby on Mon Jun 08, 2009 11:13 am

Shelby wrote:Subject: BEV Chart would track 1929 if you adjust for dollar

Your BEV chart shows current crisis diverging from 1929:

http://www.gold-eagle.com/editorials_08/lundeen060609.html

But if you adjust the blue line by the change in the value of the dollar since Oct 15, 2007 (current crisis start):

http://stockcharts.com/h-sc/ui?s=$USD

Then you would see blue and red lines must more closely tracking. This is because the dollar before 1933 was gold and did not have a rapidly changing value...

Inflation measures are too slow to capture the multi-month manipulations in the value of the dollar, which affect capital flows between asset classes and nations. I think you will find that the dollar forex index will capture much of the change in the performance of asset values as compared to when dollar was gold. I think you will find that by adjusting the blue line in your BEV chart by the percentage change in the forex, then your BEV chart will show a higher correlation to the 1929+ period.

> Hi Shelby
>
> It is hard to compare any financial series like the DJIA from beginning to
> end. Inflation over the decades distorts dollar values. I deflated the
> DJIA in Wk69 (06 Feb 2009) using CinC and CPI. That is the best I can do.
>
> I frequently note that the dollar is not what it once was, but chart it as
> Dow Jones publishes the data, or use a BEV chart.
>
> Mark

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Inflation or Deflation? - Page 7 Empty How bad is it? (we already have hyperinflation of P/E ratio!)

Post  Shelby on Sun Jun 14, 2009 3:48 am

http://www.gold-eagle.com/editorials_08/summers061209.html

...A lot of folks have made a big deal about the US running a $1 trillion deficit this year. Well, if you included the net value of those unfunded Social Security and Medicare expenses we cleared a $1 trillion deficit in 2007, a $5 TRILLION deficit in 2008 and are on course to clear a $9 TRILLION deficit this year.

To give you an idea of how big a problem these deficits are, consider that the US government could tax its citizens 100% of their earnings and NOT have a balanced budget.

In light of these issues, the government's $787 billion stimulus package doesn't exactly breed confidence in an economic turnaround. Incomes have lagged inflation in this country for 30+ years. Creating a bunch of temporary positions related to construction and the like is NOT going to alter this in any significant way.

Moreover, most of the job growth in the last 10 years has come from Bubbles: two out of five jobs created between 2002 and 2007 came from the housing industry. The irony here, of course, is that the Stimulus Plan is merely following this trend, creating jobs from our latest (relatively unreported) Bubble: the bubble in government spending and employment...


...Ok, so where is the US economy REALLY at right now?

Year over year real employment, real industrial orders, real housing starts, and real retail sales are all posting their largest drops since the production shutdown following WWII. Put another way, the last time the US economy fell this hard this fast, we were intentionally shutting down the monster than was the US war machine in WWII.

This is no recession. We are already on our way to a Depression (a GDP contraction of 10%) possibly even another Great Depression...

I think this will reach a head in 2010, right about when the next phase of the crisis is getting worse:

http://financialsense.com/fsu/editorials/willie/2009/0611.html (interest rate derivatives failures much larger than the subprime derivatives mess)
http://www.financialsense.com/editorials/casey/2009/0528.html (next phase of residential real estate loan failures)

And don't forget also commercial real estate (2nd wave of domino effect from subprime crash) is crashing this year.

http://www.gold-eagle.com/gold_digest_08/daughty061109.html

...The really eye-popping result is that with the S&P 500 selling at 940, this means that the index has an astonishing price-to-earnings ratio of 130! Hahaha! Insane!

If you are not laughing in total disbelief, then an instructive way of looking at a P/E ratio of 130 is that if the company pays you all of the money it earns for the next 130 years, you will break even! Hahaha! 130 years to break even! Hahaha! Now you know why the laughter!...

Folks that is sign that we are already in hyperinflation. The hyperinflation is being sucked away from consumer price (by the derivative and debt load) and into the stock market valuations (now we know where the criminals put the $12 trillion they stole). Also see this:

https://goldwetrust.forumotion.com/economics-f4/stocks-vs-precious-metals-vs-bonds-vs-real-estate-t11-15.htm#1496

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Inflation or Deflation? - Page 7 Empty Fed is lying about the growth in M1, should be 70% not 16%!!

Post  Shelby on Mon Jun 15, 2009 6:38 pm

http://www.kitco.com/ind/katz/jun152009.html

I have emailed John Williams at ShadowStats.com, to get his opinion about this.

If this is true, and if John spreads the word, we could be in for a major shift in attitude about coming hyperinflation. This could in turn lead to rapid shift in attitudes about gold vs. Tbonds. But is any one listening? Will be interesting to see if anything develops from this.

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Inflation or Deflation? - Page 7 Empty Re: Inflation or Deflation?

Post  silberruecken on Tue Jun 16, 2009 2:04 pm

thanks for this link, shelby. Please let us know what John Williams answers. Thank you.

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Inflation or Deflation? - Page 7 Empty Consumer debt increasing in Asia

Post  Shelby on Tue Jun 16, 2009 8:03 pm


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Inflation or Deflation? - Page 7 Empty Precious metals have never protected during long periods of inflation

Post  Shelby on Wed Jun 17, 2009 11:27 pm

See the "Silver: The Restless Metal, Roy Jastram (Wiley, 1981)" chart on this page:

http://financialsense.com/fsu/editorials/ash/2009/0617.html

Notice that when ever Commodity prices are rising (inflation), then silver & gold do not keep pace. But when ever they are falling (deflation), silver & gold actually gained in purchasing power.

Note this says nothing about short-term parabolic changes in gold & silver purchasing power due to monetary dislocations (e.g. hyperinflation).

FACT: the world can not move to a gold/silver monetary standard without MASSIVE deflation (there will some winners and some losers as mal-invested debt is retired). Gold/silver is the only monetary system that can retire debt.

So we can thus conclude that the world is going to resist gold/silver monetary system, because there is no place on earth right now that would not suffer massive DEFLATION trying to move to such a system. The BRIC nations are to suffer less from debt retirement, because they have less debt, but their current production depends so heavily on debt-based consumption from West. The BRICs are trying to transistion, but in the process are building debt in order to accelerate the transistion (from western consumption to domestic consumption). They are not building a deflation based economy on gold/silver monetary system (as USA did in 1800s), rather a new domestically based consumer debt bubble, because they are unwilling to endure the initial deflation from giving up the consumer based debt consumption.

However, the fledgling consumer debt bubble in BRICs could in theory run for a long time, because it is not yet saturated.

However, can BRICs get to a point SOON ENOUGH where the saturated Western consumption is such a small % of their economy, that they can discard it without social disintegration?? In other words, the BRICs are now carrying the western debt on their backs (because the west refuses to allow gold & silver and retire debt).

Because if they can't get there soon enough, then they are going to see vicious commodity inflation and social disintegration from that. The western is accelerating the rate of non-productivity (mal-investment, dependence on BRICs to eat) as govt takes on more debt (and stifling regulations) in order to prevent retirement of existing debt.

The bottom line is that the western debt has to be retired. The longer the BRICs try to have "both worlds", the more debt builds globally. Their leaders know this, but their hands are tied, because social disintegration would occur if decoupled now.

How is this going to end? War.

That is the only way it can end, because a lot of people need to be losers in order to reset this failed system. Gold will be at premium at some point due to chaos. Silver will be at premiums during reflation efforts, possibly even blowoff peaks, but I have hard time visualizing how people are going to resort to silver as money in this chaos. You would think they would if nothing else, but the govt may become very heavy-handed during this time. Silver may fetch an industrial premium in war, but again the govt's fascism stands as a risk. Why will govts be fascist? Because there is no competing paradigm for this chaos. You see we are headed for abject failure, because no one wants to lose right now. No one wants to retire their bad debt and walk away humiliated and broke. Everybody wants their MTV! Even in the BRICs. Me, me, me, no God. (I wrote that same sentence 2 years ago in Hommel forum).

Where does the govt get this power during chaos? Because it can control access to food. It can pit one group of masses against the other, using philosophical propaganda (a la Hilter, Stalin, etc), but the real underlying driving force is to eat.

One could try to argue that silver is so depleted now, that it will simply be forced to very high value, and then take on the attributes of Gold, being equally transportable (per unit value), etc.. However, if it is the case that silver is so depleted (and I have my doubts as supposedly 18 Boz in private silverware/jewelry), then all the more the market will be so small that it will not be able to serve as money on a wide scale, and all the more reason for the govt to intervene and declare silver a strategic industrial metal. Silver may make someone a fortune, but the risk is consumerately higher as well. However, what if people holding 18 Boz decide to spontaneously start using it as money during chaos? But you see in order for that to happen, the whole dollar charade has to crash down, people have to allow industries to build about silver use as money etc.. Silver can not become money, until gold does first (just as happened in Dark Ages after Rome fall, gold was first buried, then silver became money when the world reached rock bottom). First we have to have the massive deflation. Pretcher's call for silver bottom in 2012 does not seem completely ludicrous:

https://goldwetrust.forumotion.com/precious-metals-f6/silver-as-an-investment-t33-75.htm#1500

But first the world is going to try to reflate out of this mess. So we could see a very high blowoff peak in silver ($50+) before that final capitulation deflation. And that is how I read the repeating pattern on Pretcher's page 32 chart.

And does the world some how make it past 2012 before succumbing to gold retiring the global debt? Can BRICs race fast enough for longer? The vicious commodity inflation is what is going to bring the whole house of cards down. Given the 2007 collapse from 2002 reflation, and give the accelerated global scale now, a 2012 chaotic implosion from the 2008 reflation does not seem out-of-line... and I think the chaos will be much worse than 2007.

People really do prefer war over honest weights & measures:

https://goldwetrust.forumotion.com/biblical-f3/how-to-come-out-of-the-great-harlot-t97.htm#1532

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Inflation or Deflation? - Page 7 Empty re: Precious metals have never protected during long periods of inflation

Post  Shelby on Thu Jun 18, 2009 8:28 pm

> Projectsions beyond a few months are impossible. I think you accept the
> literal truth of the bible and the apocalypse, and so this taints your
> projections.
> You require that an ultimate worldwide collapse must occur, so you devote
> great mental energy to working that into the scenarios you come up with.
>
> I don't believe in god or the literal truth ofthe bible.


Any influence on me from Bible does not require a end of Revelations now. I actually tend to think it is at least 30 years from now. I am not basing my logic about the inability of BRICs to decouple on the need for an apocalypse, because I don't think this is the final apocalypse coming. I think it will be a very rough time, that eventually transistions us to a new world order, and time of relative peace and prosperity, but I don't think we will get there in a few years and without great global dislocations first. My logic follows...


> I don't believe a
> worldwide
> collapse will occur, or the apocalypse. I believe the USA will suffer
> mostly
> alone. The rest of the world will shrug off the USA empire an will be
> relatively
> smiling.



The USA was not able to shrug off Europe's similar collapse in from early
1900s through 1920s. Actually the USA did shrug it off before 1913, but
not after. Why? What happened in 1913?

There is no place on Earth now, that hasn't been invaded by the fiat
banker poison.

If developing world walks away from the dollar, they will lose a huge
chunk of their economy and have a massive depression. If they continue
forward to use stimulus to create a runaway economy, they will be copying
what USA did in 1920s.



>
> The USA can't get past the fact that it has to issue some 4+ trillion in
> US
> treasuries this year, and there are no buyers.


Yes but the dollar is the world's problem, not just the nation of USA in
isolation. Globalization and fiat pervasiveness have made that so.



> 2 trillion is from Obama's
> budget
> deficit, and 2.5 trillion is from rolling over US treasuries already
> outstanding that
> are coming due. This staggering amount of debt will not be bought except
> by
> monetization by the Fed. Taxation won't cut it. So the options are print
> it
> or
> cut back on the empire. I hope for printing and hyperinflation and the
> utter
> collapse of the US government.


But you don't get hyperinflation if this money is merely helping people
stay afloat (pay existing debt loads), and the debt loads increase on the
govt. Rather this will lead to global chronic high levels of inflation.
Inflation robs the poor and middle class, and enrichs the wealthy. This
is not a prescription for developing nations to decouple and get more
wealthy. It is a presciption for draining them like a parasite.



> But I expect instead the US government will
> drastically scale back its expenditures until it can support itself.


Why? There is no popular support for that. The rich want inflation.
Buffet is betting on inflation.


>
> As regards your belief fiat currencies are not going away, I expect what
> will
> emerge are sovereign nations trading with each other, settling acounts
> with
> gold.


How do you get from here to there politically? You first crash global
trade with this. I think the BRICs are hoping some kind of subtle
transistion to this, but ignite any fire under gold and this can't be
subtle. Then we will get war. That is why I said, this only gets
resolved by war, at the point where enough people break away from the fist
system to cause gold to go ballastic.

The host (world) is not going to kill the cancer (dollar fiat) without
killing itself. The cancer is too widespread.



> Internal to each country it is their business how they handle their
> currency. Some will be fiat not backed by anything, some will be backed by
> gold. I don't expect a replacement world reserve currency to arise that is
> equivalent to the dollar.


This will have to come out of the ashes of war, as Bretton Woods did.

I will read your logic on reply and probably leave at that. Maybe you can
sway me with some logic. Thanks and hope our exchange helps both of our
throught processes.

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Inflation or Deflation? - Page 7 Empty Repeat of 2002 - 2007 reflation, until the world breaks?

Post  Shelby on Sat Jun 20, 2009 3:04 am

I wrote the following as rebuttal to someone arguing that BRICs will walk away from dollar like flicking a fly off their shoulder:

Shelby wrote:The USA debt can never be made whole (for rest of world) without war,
because it will mean enslavement of the USA people. You have described
one possible scenario towards war.

You don't seem to understand mainstream Asia at all. There is no margin
to write any thing off. People here survive on crap food, because they
want to keep their food budget below $1 per day. Factories\businesses
operate at razor thin profit margins.

You seem to forget that USA + UK + Spain + other overly indebted European
nations are a very significant portion of the global economy. You suck
that out, then Asian govts get overthrown, you will have disintegration
and chaos.

The hyperinflation of the dollar will continue to exported to BRICs
countries. 2007 - 2012 will be a repeat of 2002 - 2007, except more
extreme and more volatility. This will go on until the world economy
breaks into war.

Let's talk later after we see what happens.

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Inflation or Deflation? - Page 7 Empty Can developing world decouple from dollar fiat?

Post  Shelby on Sun Jun 21, 2009 12:15 am

I agree the developing world could decouple, if they simply would embrace real money and their strong inherent capital, e.g. humble productive lifestyles, hard work, etc (and lack of accumulated debt). But the problem is that the fiat credit hungry middle class is driving the BRICs' aspirations (and domestic consumption that can replace the slumping exports, which employ the masses at < $5 per day). That is reason I come to the conclusions that I stated in the immediately prior posts.

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Inflation or Deflation? - Page 7 Empty Mis-allocation of capital

Post  Shelby on Mon Jun 22, 2009 12:25 pm


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