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Inflation or Deflation?

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Inflation or Deflation? - Page 11 Empty Antal, I have linked to two of your older seminal papers

Post  Shelby on Mon Aug 24, 2009 12:37 am

(email I sent follows below, also read my prior post on the previous page of this thread)

Dr. Fekete,

(1) In the "Knee-deep Warm Manure Huddle" section of my new paper:

http://www.coolpage.com/commentary/economic/shelby/Bell%20Curve%20Economics.html

I have linked to your "ECONOMIC ENTROPY" paper from 2005:

http://www.professorfekete.com/articles%5CAEFEconomicEntropy.pdf

Interesting that is first time I read your old paper and we had independently arrived at the same conclusion that a reduction of economic Entropy (information = knowledge) is what is occuring.



(2) In 3rd paragraph of my paper, I linked "all money is debt!" to your "Whither Gold?" paper from 1996:

http://www.professorfekete.com/articles%5CAEFWhitherGold.pdf


Also With Compliments,
Shelby Moore III

Shelby
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Inflation or Deflation? - Page 11 Empty Fly in my prediction ointment

Post  Shelby on Mon Aug 24, 2009 6:44 am

Short-term only, this indicates the "green shoots" might last longer then we expect:

http://financialsense.com/Market/pretti/2009/0821.html
Inflation or Deflation? - Page 11 0821_c10

This is not a long-trend change indicator.


Last edited by Shelby on Fri Aug 28, 2009 7:03 am; edited 1 time in total

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Inflation or Deflation? - Page 11 Empty Throwing Rope to the Hyper-inflationalists

Post  Shelby on Wed Aug 26, 2009 5:00 am


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Inflation or Deflation? - Page 11 Empty Rope to the Hyper-Inflationalists

Post  Shelby on Thu Aug 27, 2009 1:50 am

The prior post has been made much nicer as a publish quality article:

Rope to the Hyper-Inflationalists
=================================

http://www.coolpage.com/commentary/economic/shelby/Rope%20to%20the%20Hyper-Inflationalists.html (original)

Published at numerous sites:

http://financialsense.com/fsu/editorials/2009/0826c.html

Butchered:

http://www.gold-eagle.com/editorials_08/moore082609.html
http://www.marketoracle.co.uk/Article13025.html (you can post comments)

Jon Nadler liked my article and he forwarded to the editor at Kitco, so it may get published there (along with a different photo of me than you see at my blog/forum, yikes!).

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Inflation or Deflation? - Page 11 Empty Fekete responds to my new article in prior post

Post  Shelby on Fri Aug 28, 2009 5:05 am

Fekete emailed me a pre-release copy of his new article:

“GOLD IS PALE BECAUSE IT HAS SO MANY THIEVES PLOTTING AGAINST IT”

He emailed me this in reply to an email from me, where I pointed out that I had linked to his prior article in my new article "Rope to the Hyper-Inflationalists" (see prior post). Fekete mentions "musical chairs" twice in the above new article, so I think he was responding to what I wrote in my article, where I mentioned "musical chairs" next to the link to Fekete's article.

In Fekete's new article, he provides the email address for the person who will be running the new Masters Gold Fund, a fund designed to earn gold from gold, without giving up your control of the physical gold. I am awaiting the details. Here are videos on the fund:

https://www.youtube.com/watch?v=WBgjCoxEJq4
https://www.youtube.com/watch?v=-aqTLEBqfEQ

Sandeep has a masters in math:

http://www.linkedin.com/pub/sandeep-jaitly/6/304/952
http://www.soditic-cbip.co.uk/the-team/#sandeep_jaitly (Company bio)

Apparently Sandeep became Fekete's student as early as Dec 2008, when this was written:

http://www.professorfekete.com/articles%5CFORWARDTHINKING.pdf

Fekete wrote:...I have asked my student, Mr. Sandeep Jaitly of Soditic, Ltd., London, U.K., who is tracking the gold
basis for me, to explain. Here is what he had to say...

If you read the rest of that article above, you see Sandeep has a deep understanding of the math of the basis relative to interest rates.



===============
ADD: I emailed Fekete again:

Subject: Shouldn't the discount also include the change in the expectation of the change in price of gold?

I am trying to figure out the math of how one could earn a risk-free profit in physical gold in the future's market on the short side. First I am trying to understand the long side "risk-free" paper profits that you (Fekete) criticizes in your new article. I think I may have noticed a flaw or improvement in your understanding of the basis. (probably not, but here it goes...)

You have explained that instead of holding physical gold (which pays no interest), the future's market bribes one to put 95% of the value into Treasuries and 5% to hold a future's contract on margin, then the discount is interest earned on the Tbond during the period future's contract period, minues the basis (contract price - spot price), ALSO MINUS THE MARGIN INTEREST COST. Btw, I think the above explanation is easier for novice to understand, than the way you explained it.

But the basis is very volatile depending on where the expectation of where spot price goes during the contract period:

Inflation or Deflation? - Page 11 Basis10http://silveraxis.com/basis.html

thus doesn't the discount include the actual change in the spot price (added if positive, subtracted if negative)? Actually instead of change in spot price, I think change in basis is more correct (change in expectation from purchase to end of contract period)

I think by viewing the discount this way, you would be able to remove the noise of the spot price, and get a reliable trend on the direction of the discount. Moreover, I suppose what I am saying is the basis should be measured retrospectively as basis at time of purchase minus it's change at time of end of contract period. I suspect would show the more clear trend of the basis and remove the noise of the casino house's manipulation of the spot price volatility.

Am I mistaken?


========
Emailed Fekete again:

Subject: Withdraw my prior suggestion

I realize that the return on the spot price was "opportunity cost" that was not foregone when trading gold for Tbond+gold contract, thus the change in spot price is not part of bribe offered. Thus, I suppose the volatility of the basis could be used to earn additional profit from any scheme in the future's markets. One could find the mean trend statistically, then sell/buy when basis gets outside of say 1 sigma from it's mean trend. If you were playing this on the short-side, you would still hold your physical gold. Maybe that is what the Masters Gold Fund will do. I await the prospectus and math on that fund.



=================
ADD: to earn an income on gold without relinquishing it, I can think of two possible strategies, one which Fekete mentioned specifically in his past article:

http://www.professorfekete.com/articles%5CAEFGoldInterestBasis.pdf

Fekete mentions trading between your own physical silver and gold, depending on which metal one has the larger basis percentage relative to the carrying cost of the nearest month's contract. So that is one way to earn a profit on your metal without relinquishing it. You have to factor in the spread and shipping cost of the physical metal trade as well, which would I think in most cases be prohibitive for small bullion. BullionVault.com appears to have a spread of about 0.3% for gold + 0.2% commission ($250,000+).

The other way is to sell short in the futures market-- let me explain how it pays to go long on your physical and short on the paper futures market, as the two will diverge (have been but accelerating). Realize that the basis-risk is limited on the upside to the carrying cost of the commodity, which in case of compact (high value per volume) monetary metals, is basically equal to the prevailing interest rate which is foregone by holding metal instead of bonds. But on the downside, basis-risk is unlimited at negative infinity, when the market loses confidence in the shorts ability to deliver the metal. For a short-seller the price-risk is infinity, the basis-risk is limited at the carrying cost, and the price profit potential is limited at price = 0, but the basis profit potential is unlimited at negative infinity. For the long-buyer of futures contract, the price-risk is limited to 0 on downside, the profit potential is unlimited at infinity, but the long buyer has the basis-risk at negative infinity which means he can't get the metal delivered. When I say the short seller has a profit potential on declining basis, realize that basis should be divided by the number of days remaining in the contract to get a "basis per day"-- that is the "basis" I am referring to. So when when the the basis (normalized to per day) is declining then it means the short contract is gaining value (faster than it is losing value in time), the short seller has a gain. If we expect spiraling down negative backwardation, then we need only sell short to earn a profit on our metal without ever relinquishing it, because someone will be offering to buy our contract from us at a higher price-- we do not need to actually deliver our metal. We must assume that someone is always willing to buy our short contract, otherwise it means the futures market has ceased to exist, in which case we do not have to deliver either. We can not see the Comex forcing all shorts to deliver, because JP Morgan is one of the big shorts. Could we see the Comex close, then force certain shorts to deliver, and not the big shorts? I do see that as a potential risk in this strategy.

To improve the above strategy, one needs a method that will work when the basis is volatile and not clearly always trending to backwardation within the timeframe of our short contracts. I have suggested that one could determine the statistical trend mean of the basis, then sell short when ever the basis is above that mean by some statistical margin, or sell longer contract months as the basis fall below.

I am not sure if I am correct in what I wrote above. I await to learn more about this.


============================
ADD: replied to an email regarding my "Rope to the Hyper-Inflationalists":

> I enjoyed your article, and have been noticing how all of the markets seem
> to be tied at the hip, take today for example. To summarize your theory,
> would it be fair to say you expect some short term strength(in gold and
> stocks) followed by a large plunge, followed by a large hyperinflationary
> rally?

Correct I see that as most likely (and breakout might be significant), next most likely is stock market rolls over now and metals down with, and least likely scenario is we go into hyper-inflation (bank holidays, etc) now.

>
> I have been long resources for several years, and an ideal scenario would
> be to exit near what would be percieved as a high, and buy back twice as
> much on the plunge, but I have not been too sure if the dollar would rally
> or plunge on the stock market crash. Fundamentally it seems as it should
> weaken, sending gold higher, but that has not been the case lately.


The thesis of my article is that has not been the case since 2003, except for a few counter-trend thursts which revert to the trend.

>
> My thought is that initially the dollar would rally on a stock crash and
> thus gold would break down, but gold would be the first thing to bottom
> and quickly make new highs, making it dangerous to try to exit and buy
> back on the plunge.


Yes I see that risk also. As well bullion premiums may skyrocket again.

I am rather looking at a strategy from Dr. Fekete to make money on my metal without ever having to relinquish it. I summarized it today in a new post, where I will also place a copy of this reply I made to you (anonymously of course):

https://goldwetrust.forumotion.com/economics-f4/inflation-or-deflation-t9-240.htm#1873

>
> Thanks for your time


Thank you also for sharing your thoughts.

Shelby
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Inflation or Deflation? - Page 11 Empty What goes up parabolically must come down parabolically (eventually)

Post  Shelby on Sun Aug 30, 2009 1:46 am

http://market-ticker.denninger.net/archives/1387-The-Problem-With-Hucksters.html

...Bah. Willie is great at putting forward what others have said, but of course he has a newsletter to sell. I don't.

Oh, and what is Willie's prescription for investors? Here we are again with the same old tired song:

But real money emerges triumphant after the inevitable crisis that ensues. THAT REAL MONEY IS GOLD, ALONG WITH SILVER, EVEN PLATINUM.

Of course he's been calling for this "huge move" for a while. I know, I know, gold is "screamingly undervalued" even at $1,000. Ok. So when will the big move come, and what's the target? Willie, like most of these clowns, plays coy - he doesn't want to be caught having to "revise his calendar" when the end of the world does not materialize (or worse, hand you a cup of grape KoolAid) so he merely says this:

The gold breakout will come suddenly, without warning. In my view it could easily come from ENEMIES AT THE GATE, foreign creditors responding to their own stress.

Emphasis his, of course. But this lack of a means to discern when (or if) the event is coming means that he can never have to say "I blew it"; unlike those of us who put forth an annual forecast with material and objective targets that we can grade a year later, he doesn't. I wonder why not?

The "rush to junk" is one that I and many other commentators have pointed out on multiple occasions. This isn't some conspiracy - it is how these sorts of parabolic blow-off movements come. If you think this isn't a parabolic move, chart the S&P 500's price .vs. P/E over the last six months and tell me if your opinion changes.

As of July 31st we stand at 143.95 for that ratio, with a new update out in a few days. By any measurement you care to use this is a parabolic move and those always follow the same pattern coming off the base (or bottom):

*
First, the strongest firms have a nice, measured, volume-backed move.
*
Then their volume and strength on a relative basis starts to weaken. The middle-tier companies get it next, with their volume supporting their advance, dragging the strong firms along (but on flat to declining volume.)
*
Finally, the used dogfood firms like Citibank, AIG, Fannie and Freddie "catch the fever" and their volumes spike to three, four, five, ten, even 100 times their normal volume and they take off like a rocket. The "drag along" effect gets weaker and weaker as people start to look at the charts and go "heh, wait a second - that's a company that's doubled in three days, represents 10% of the entire NYSE volume, and on any reasonable valuation basis is a zero?

Not long thereafter the move collapses.

The foundational error that Willie and most other so-called analysts (AND "degreed economists") make is that they fail to properly recognize what the monetary base is in a debt-based monetary system. Most will cite M1, M' or some other similar stupidity. This is false and a bit of cogitation will lead you to the right answer, if you think about it for a while. Consider the facts of all such modern systems: Your $100 bill spends identically to your VISA card. What is the "monetary base" of your VISA card? Now consider what, on a population-wide basis, this means for the monetary base of a nation's currency and credit system and the light should come on. If it doesn't please check your cranium for the presence of a functioning set of neurons and if you have an economics degree make sure you turn it in to the university that issued it as it should clearly be revoked.

PS: At least the "bio" on FSN says this about Jim's intentions - in tiny, small print at the bottom, of course:

Articles in this series are promotional, an unabashed gesture to induce readers to subscribe...

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Inflation or Deflation? - Page 11 Empty Willie and Sinclair bashing

Post  Shelby on Mon Aug 31, 2009 6:57 pm

Prior post had Derringer discrediting Willie (which I used to do in private debates before he became a star), and now Mish tears apart Sinclair. I had recently discredited both of these guys too as being too sensational and often wrong:

http://globaleconomicanalysis.blogspot.com/2009/08/countdown-to-dollar-implosion-madness.html

Mish also has a nice word for what I wrote recently:

http://globaleconomicanalysis.blogspot.com/2009/08/spending-collapses-in-all-generation.html

...Distortionary vs. Inflationary...

http://financialsense.com/fsu/editorials/2009/0826c.html

Shelby wrote:...Governments can ... shift supply and demand so relatively higher prices in some things at the cost of much lower prices in other things, but this is not the same as inflation...

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Inflation or Deflation? - Page 11 Empty As I said, PTB are purposely expanding NPLs in developing countries as the final stage of the hyper-deflationary global collapse

Post  Shelby on Wed Sep 02, 2009 6:14 am

I had written recently:

http://financialsense.com/fsu/editorials/2009/0826c.html

Shelby wrote:...So that the world will eat from their hand after the wipe-out, the "banksters" want to first maximize the globalization of NPLs (non-performing loans). The formerly less-indebted, developing world is being forced to offset the hyper-deflation with massive mis-allocated debt ("stimulost"). Globalization is a process of spreading the banksters debt system into the hinterlands of every nook of the earth. For as long as the masses are not running to Gold, the banksters gain by continuing the hyper-deflation...

Now read Mish saying many of the same things I have been saying about China since 2006, and make sure you watch the video:

http://www.marketoracle.co.uk/Article13151.html

...The reason China is buying fewer US treasuries recently is that the US deficit with China is shrinking. Again this is a simple mathematical equation, not some massive conspiracy to dump the dollar...

...In spite of record worldwide stimulus, a global recession is everywhere you look except perhaps in China. The reason is simple. When the Chinese government "suggests" banks should lend, banks lend. This is how command economies "work", using the word "work" loosely. Yes, the US has massive problems, but let's have an honest assessment of problems elsewhere.

Bottom line, China is busy ramping up production for consumers that don't exist: Not here, not in the EU, and not in China (not yet). This love affair with China, a country that will not float its currency or offer freedom of speech, and hides bank solvency issues even more so than the US, is way overdone.

Ironically, over the years, I have been a staunch defender of China, on average. Remind me to reconsider decoupling when China allows freedom of speech and floats the RMB instead of pegging it...

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Inflation or Deflation? - Page 11 Empty China

Post  Guest on Wed Sep 02, 2009 7:30 am

Thanks once again for the sober evaluation Shelby.

Looks like the China story, at least in the short term, is a re-run of the "invincible Japan" story of the 1980s. I was directly involved in the property boom during that period and had big doubts about the over-bullishness of Japanese investors.

Having said that, right up to the point when the wheels fell off, the belief that Japan would be the No.1 force in International investment was an indisputable article of faith for a lot of players.

Plus ca change ..........

Guest
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Inflation or Deflation? - Page 11 Empty Evolution of the IMF Special Drawing Rights

Post  Guest on Sat Sep 05, 2009 6:34 am

Hi Shelby,

Q1. Do you think this change in the process and rationale for the issue of SDRs is as significant as this writer thinks it is?

Q2. If not, given the timing of the latest run-up in the PMs, do you think the perception that it could be an inflationary tool is a factor in the run-up?

http://www.kitco.com/ind/Nathan/aug312009.html

"The SDR has been around since 1967, but never as a convertible asset. That changed Friday, August 28th, 2009. The SDR has quietly mutated."

.................... "The ability to inflate has now been augmented. It has transcended national boundaries from national central banks to a world central bank. This "new" bank now has the power to create money. Inflation is no longer limited to one currency but will affect all paper currencies in the world. We now have the prospect of a synchronized international inflation."

Cheers!

Guest
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Inflation or Deflation? - Page 11 Empty Terminology

Post  Shelby on Mon Sep 07, 2009 6:10 pm

When I talk of hyper-deflation, I am referring to the credit destruction of capital asset value (this is most relevant in the capital assets that were inflated in value by the paper economy, i.e. real estate, stocks, factories).

Except for the significant short-term gyrations, the global exchange rates are more or less meaningless (because they are locked together as all countries compete to inflate), except for the possible hyper-inflation end where the dollar becomes inconvertible for anything of value.

Meanwhile there is ongoing a perpetual inflation, i.e. what less the dollar will buy relative to the real economy that is unaffected or even potentially amplified by the credit destruction process (farms can't get cheap loans, price volatility in input costs such as energy/fertilizer destroys production), i.e. food prices continue to rise here where I am.

I do not really care if silver & gold are rising in price relative to some real or perceived threat of inflation (or future inconvertability of the dollar). What I have learned recently is that it is pointless to try to figure these things out. The bottom line is if you buy gold & silver at regular intervals, then you will be protected with low potential average downside (dollar cost averaging). Gold & silver are not investments. They are money. If you think the money system may run into trouble, then it is wise to have some real money. There is little or nothing that can be gained by trying to understand how to turn gold & silver into something they are not (i.e. speculations or investments).

Will gold & silver blast off now and never come back? Anything is possible. If you don't own any gold & silver, or if you have nearly all your money in dollars, this could be worry. More likely than not, this is not the big final hyper-inflation. More likely than not, the markets need to crash more, and the battle against gold & silver as a threat to the dollar will continue. However, I think the SDR was proposed to contain a basket of currencies including gold-- but I do not think that is yet a reality. So I say the "powers that be" are not yet ready to let gold run free. But timing gold & silver is not wise. And buying all your gold & silver at one time and burying your capital in the ground is also not wise. They are not investment, and you need to continue to create productive business in the meantime.

Speaking of that, I had a long discussion (including mathematical analysis and detailed options discussions) with Dr. Fekete and Sandeep about the Masters Gold Fund in private email. Suffice it to say, they were not able to rebutt my analysis and I think they are merely gambling that the futures market is not rigged. I think they can not succeed, there is no way to make "gold beget gold", unless you are the elephant controlling the market.

And also this week, I became aware of a real business opportunity in Asia that I may generate up to 1000% return on my capital per year, with nearly 0 risk. It is something you have to be here on the ground to do. And I don't need capital (right now at least). I will expend considerable effort investing say $100,000 - $200,000 in this over the next year and hope to turn it into $1 - 2 million per year in ongoing revenue, with $billions upside since it creates massive (huge population involved) market synergies in my core capacity as a computer programmer. And I am not saying this to boast, but it exemplifies just how shocked I was at how I have been wasting my talents for the past 3 years. And I am not saying this investment (and work!) will work out, but it certainly opens my eyes about the smaller (in dollar terms, but larger in terms of hours of the population's time involved) real economy in Asia which is probably unaffected by the larger economy. The point is that the paper economy is a large mirage hanging off the end of what people are really doing on daily basis. There is massive underemployment here (or at least employed doing things that don't get counted, e.g. house work), that is not part of that paper economy.

We will see if gold & silver can beat that. Just remember the Biblical story where God was so angry at the man who buried his talents in the ground.

Shelby
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Inflation or Deflation? - Page 11 Empty Political Economics 101

Post  Shelby on Tue Sep 08, 2009 3:08 pm


Shelby
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Inflation or Deflation? - Page 11 Empty Thanks for the ESR link

Post  Guest on Wed Sep 09, 2009 5:31 am

Thank you for the the link to the esr.ibiblio.org link....

Hearing the suffering that is going in Iran has me bow down in tears...

Send then encouragement that WE will attack soon...

Guest
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Inflation or Deflation? - Page 11 Empty Sorry to say, I may have killed Fekete and Sandeep's proposed Masters Gold Fund

Post  Shelby on Wed Sep 09, 2009 8:11 pm

I guess I convinced them mathematically that is wasn't going to work, as I received this in email today, which was apparently sent to 100s of people that had contacted Sandeep after see that video interview that is floating around the internet about the Masters Gold Fund:

Contrary to any impression that might have been given by various recent
publications on the Internet referring to a Masters Fund or Masters Gold
Fund and Soditic, no such funds or products exist. Neither Soditic CBIP
LLP nor Soditic Ltd (nor any associated company of the group) have been
or are promoting, managing or intending to promote or manage such a
product at this time.

I have explained the details to some others in private, and so far no one has rebutted my points.

Fekete promoted the new fund here:

http://www.professorfekete.com/articles%5CAEFGoldIsPale.pdf (see page 5)
http://www.professorfekete.com/articles%5CAEFMoreDressRehearsalForTheLastContango.pdf (see page 2):

Fekete wrote:...(4) The gold in the Fund is never put out on lease or on loan, nor can it be
pledged as collateral, but stays on the premises at all times under the full
control of the Fund...

Specifically I disputed the above statement mathematically by showing that due to the rigged nature of the COMEX that their planned strategy of trading Options could risk the entire physical gold pledged as a hedge, because although the basis may indicate a long-trend, it can not prevent JP Morgan from cornering your options and thus taking your pledged physical hedge with some short-term price (and basis) volatility. In short, options strategies either have unlimited risk, or a guaranteed loss. I reviewed dozens of option scenarios to convince myself mathematically of this fact. I also convinced myself to never play with options, as you can not win over time statistically (unless you know where the price will go exactly in a few days time).

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Inflation or Deflation? - Page 11 Empty Why gold can't become money until the bitter end

Post  Shelby on Thu Sep 10, 2009 3:12 pm

Excellent Saville analysis:

http://www.gold-eagle.com/editorials_08/saville090809.html

Note, this won't stop the gold price from rising in general against all currencies though:

http://www.gold-eagle.com/editorials_08/salinas090909.html

However, note that gold has been falling in price relative to all currencies other than the dollar since the dollar peaked (and the markets bottomed) in March 2009. Even this current rise is no where near a breakout for gold's falling trend against all currences other than dollar. So this is not a good omen for the future prices of gold (and silver), because it means the world is not prepared to attack monetarily the hyper-deflation that is occurring.

Think about how hyper-deflation is consistent with rising prices. If the government pumps a lot of stimulus into the economy driving prices up without increase (in non-wasteful or non-redundant) production (and thus wages), this causes more people to go bankrupt which then results in more bankruptcies (deflation).

When we speak about deflation and inflation, we have to specific about which items we are referring to.

I think it is more useful to understand that govts distortionary effects will be disproportionately noticed in the lowest priced things, because that is where inflationary money policy gravitates to in a deflationary environment. In mathematical aggregate terms, the nominal GDP increases (or decreases much less than real does) but the real GDP shrinks (because price inflation is higher, or price deflation is lower, than it would be otherwise).

That is essentially a way of rebalancing the west and developing world, while wiping out anyone who can not capitalize on that disproportionate distortionary price effect. So the wisdom is, go invest in low price regions and venues (e.g. notice how the low priced regions of USA are outperforming), you will see outsized gains.

So gold will capture some of that action, but not with nearly has high of gains as if go direct to the source venues for investment. This is why the billionaires are not that interested in gold.

If at any time the stimulus and hyper-deflationary debt expansion is turned off, we will see hyper-inflation because the MadMax result will drive people to chaos and gold. I think PTB will plan to offer a transistion of some kind, but it will necessarily involve sacrifice, so war is likely, which can also be positive for gold.

Note that many of those developing (low price) regions are actually still seeing positive real GDP (marginal utility of new debt/stimulus/distortion is still positive), thus they are seeing inflation instead of hyper-deflation. But if we were on a gold standard, they would be seeing price deflation along with rising living standards, due to massive increases in real GDP. I suspect the Chinese are lying about the true level of real GDP, it is probably not near 8 - 10%. It makes sense to hide just how much the world is giving up to the PTB at this time.

So to re-iterate, the big weakness of the PTB plan is that while they do this theft system model described above, they are giving up disproportionate opportunity for people who can capture the price inflation in the cheapest venues. This is why they try so hard to block most people from these opportunities. They would much rather we small timers go buy gold bullion instead (only a billionaire could rock the silver market and threaten the PTB). You must have an investment that captures consistent price rise in cheap things, without an offsetting rise in input costs.

I THINK I HAVE FOUND SUCH AN INVESTMENT.

Shelby
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Inflation or Deflation? - Page 11 Empty Re: Inflation or Deflation?

Post  skylick on Thu Sep 10, 2009 9:07 pm

Shelby Wrote:"So to re-iterate, the big weakness of the PTB plan is that while they do this theft system model described above, they are giving up disproportionate opportunity for people who can capture the price inflation in the cheapest venues. This is why they try so hard to block most people from these opportunities. They would much rather we small timers go buy gold bullion instead (only a billionaire could rock the silver market and threaten the PTB). You must have an investment that captures consistent price rise in cheap things, without an offsetting rise in input costs.

I THINK I HAVE FOUND SUCH AN INVESTMENT."

I think I have also found such an investment. Shelby, would you be willing to exchange the ideas we have, in private, or in this forum?

Thanks,
Len

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Inflation or Deflation? - Page 11 Empty Re: Inflation or Deflation?

Post  Guest on Fri Sep 11, 2009 4:29 am

skylick wrote:[b]They would much rather we small timers go buy gold bullion instead (only a billionaire could rock the silver market and threaten the PTB).



I think I have also found such an investment. Shelby, would you be willing to exchange the ideas we have, in private, or in this forum?

Thanks,
Len

LIKE THE "BRIC"? Or just China could rock the world and use USD long gold the comex.... NO?

Shelby has my email add and it's pivt.... I could sent you some investment stocks that are going to heaven but do I want to?

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Inflation or Deflation? - Page 11 Empty Re: Inflation or Deflation?

Post  Guest on Fri Sep 11, 2009 4:35 am

Dkylick... Don't get me wrong but sometimes I wish this forum was privet! This way I could show the people the great investments that are out there.. Grrrrrrrrrrrrrrrrrrrrrrrrrrr

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Inflation or Deflation? - Page 11 Empty Re: Inflation or Deflation?

Post  skylick on Fri Sep 11, 2009 5:25 pm

RobRoy wrote:
skylick wrote:[b]They would much rather we small timers go buy gold bullion instead (only a billionaire could rock the silver market and threaten the PTB). .

--------------------------------------------------------------------------------------------

I think I have also found such an investment.

Shelby, would you be willing to exchange the ideas we have, in private, or in this forum?

Thanks,
Len

LIKE THE "BRIC"? Or just China could rock the world and use USD long gold the comex.... NO?

Shelby has my email add and it's pivt.... I could sent you some investment stocks that are going to heaven but do I want to?

RobRoy, you misquoted me. Shelby wrote the words in red, not me. If you have something to say to me, say it straight-up.

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Inflation or Deflation? - Page 11 Empty Great Investments???

Post  RandyH on Fri Sep 11, 2009 8:47 pm

RobRoy wrote:Dkylick... Don't get me wrong but sometimes I wish this forum was privet! This way I could show the people the great investments that are out there.. Grrrrrrrrrrrrrrrrrrrrrrrrrrr

What is your concern? This forum is almost private. There are only a small number of members with few of those actively reading or posting.

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Inflation or Deflation? - Page 11 Empty investments in this period of asset deflation and basic needs inflation

Post  Shelby on Tue Sep 15, 2009 7:51 am

Today I have again made all the forums private, so they can not be seen by anyone who has not registered.

Btw, all the markets are rigged:

http://financialsense.com/fsu/editorials/kirby/2009/0911.html

The investment I am going into are small internet cafes in the developing world. I have competitive advantage due to some software technology that will enable me to undercut the competition and do due to my knowledge of how to set up businesses in developing world. The market is very price sensitive here (20 cents per hour of use), and I hope to drive prices even lower, potentially gaining synergies to my ability to program widescale websites (i.e. displace friendster in Asia I hope), as well potentially driving a stake in Microsoft's strategy to segment the market to implant their monopoly in developing world. This ties more into my ability to thwart the plans of the PTB than any other I have thought of. It is direct to the point in terms of earning probably realistically north of 300% per annum on my capital invested and it is very recession resistant business. Target multiple markets (communication, surfing, games, and education on line). Even as times get worse, people will get more from than internet than the cost. They've got to keep reaching out, researching, learning, etc... Besides I can continue to drive the cost lower for them. In the last recession in 2001, many in silicon valley took time to surf more, which is what spawned new big sites such as Facebook. The key is minimizing power consumption, rents, and the Microsoft tax.

If you are thinking about competing with me, you better be very good. I have some very paradigm shifting ideas. Any way, the markets are huge, I will be Philippines initially, so that gives other of you time to go into other markets, or even in Philippines, because I doubt I can put up 100 cafes in a year, and there are already 10,000 in Philippines alone. Rather you might want to partner with me and piggyback on my technologies. Email me if you are extremely serious and competent (do not email me to give you a bunch of details if you don't already have a well thought out plan yourself with all your details ready):

shelby at coolpage dot com

Please do not email me about other things. I am overloaded.

Shelby
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Inflation or Deflation? - Page 11 Empty Do we need more inflation (debt)?

Post  Shelby on Fri Sep 18, 2009 4:56 am

One of the best comments I have ever seen:

http://finance.yahoo.com/tech-ticker/article/334648/Too-Much-Debt--Please.--We-Need-MORE-Debt-Says-Ken-Fisher?tickers=tlt,tbt,spy,dia,^gspc,udn,uup&sec=topStories&pos=8&asset=&ccode=

Yahoo! Finance User - Thursday September 17, 2009 09:26AM EDT

This guy is an idiot . . . it blows my mind that a professional money manager fails to understand the difference between macro/microeconomics. If one person (or business) has a high return on assets then they can increase profits by borrowing cheaply and levering up. If everyone does this, it just creates artificial demand (a bubble). Then the economy crashes because the economic capacity is greater than the intrinsic demand . . . too many houses, lots full of cars, warehouses full of crap that nobody wants or needs.

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Inflation or Deflation? - Page 11 Empty Timing of PTB End Game

Post  Guest on Sat Sep 19, 2009 12:37 am

Hi Shelby,

Interesting and thoughtful article by Frank Shostak from the Mises Institute web site. Shostak discusses the assertion by New York Fed President William Dudley that Bernanke's strategy of paying interest on the Commercial banks "excess" reserves prevents the "liquidity" injections from causing inflation and allows them to counterattack inflation if it appears in the future.

http://mises.org/story/3709

Dudley:
"Policymakers now had the capacity to expand the size of the Fed's liquidity facilities and other programs without the threat of compromising the control of monetary policy."

An indicator of severe deflation?
"Despite the improvement in some key economic data, one important indicator — commercial bank lending — displays a massive decline. Data for August shows that, year-on-year, lending fell by 3.8% after declining by 2.6% in July. (In early September, the rate of growth stood at minus 4.9%).

Consumer credit also had a big fall in July — falling year-on-year by 4.2% after declining by 3.1% in June."

Shostak:
"If the Fed's pumping is not inflationary, as Dudley and other commentators argue, why is the growth momentum of the money supply exploding? The yearly rate of growth of our monetary measure AMS jumped from 0.8% in August last year to above 14% in August this year. After a time lag, this explosive growth is going to manifest in the prices of goods and services."

Shostak:
"Despite the increase in excess bank reserves, Dudley and other proponents are of the view that there is no need to be alarmed. In fact, they argue that the textbook economics model, wherein the Fed injects reserves into the banking system and banks then amplify the injection through lending, doesn't apply in reality."

Dudley:
"If banks want to expand credit and that drives up the demand for reserves, the Fed automatically meets that demand in its conduct of monetary policy. In terms of the ability to expand credit rapidly, it makes no difference whether the banks have lots of excess reserves or not."

Shostak:
"So the conceptual outcome as depicted by the textbook model remains intact. The only difference is that banks initiate the lending process, which is then accommodated by the central bank, rather than vice versa." (This is also the contention of Assoc Professor Steve Keen and Mish Shedlock.)

Shelby, as I understand your thinking the PTB continue to increase their war chest, force asset deflation in the near term and then hoover up the remaining assets of US citizens through a hyperinflation (in US$ terms) that manifests as painful price increases in essential goods eg. the people sell anything they can to survive.

If this is the scenario:
1. How big would the banks war chest need to be in order to fund the final stage of the heist? eg. $Reserves x 30-40:1 = US$15 trillion in remaining US private citizens' assets.

2. Would bank reserves approaching critical mass be a tip-off that the PTB's change in tack from deflation to hyperinlfation is imminent?

I realize you are busy with your new project so if you cannot respond I will understand. Perhaps other posters might like to comment.

All the best,

Angophera

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Inflation or Deflation? - Page 11 Empty re: Timing PTB's end game

Post  Shelby on Sun Sep 20, 2009 1:52 am

angophera wrote:Hi Shelby,

Interesting and thoughtful article by Frank Shostak from the Mises Institute web site. Shostak discusses the assertion by New York Fed President William Dudley that Bernanke's strategy of paying interest on the Commercial banks "excess" reserves prevents the "liquidity" injections from causing inflation and allows them to counterattack inflation if it appears in the future.

http://mises.org/story/3709

...Dudley:
"If banks want to expand credit and that drives up the demand for reserves, the Fed automatically meets that demand in its conduct of monetary policy. In terms of the ability to expand credit rapidly, it makes no difference whether the banks have lots of excess reserves or not."...

My understanding is the Fed is taking imaginary worthless assets (i.e. derivatives), exchanging them for treasury bills/bonds, then paying interest on those Tbills that the banks keep deposited at the Fed.

So the banks are encouraged to go create as much worthless derivatives as possible, then the taxpayer bails them out by converting these worthless assets to federal bonds, which are then not only paying interest from the government but also paying interest by being held at Fed. Why would banks bother to lend when this economic policy is deflationary suicide??

This isn't some wonderful new monetary science, it is a pure theft and transfer of all wealth to the banks. The Fed is stealing from all of us, without having to reach in our pocket or steal our bank accounts. It is simply diluting the future value of our fiat.

The genius of this bankster plan is that the inflationary effects are near 0 until the very end, when the Tbills will be converted to Ameros and the dollar will be devalued by perhaps 99%. The PTB will continue this plan for as long as the masses do not revolt. The longer this controlled deflation and transfer of wealth occurs, then the higher % of national wealth they will have transfered. If the net worth of the nation is $12 trillion, then they already diluted us by 50%. We don't have the 50% inflation yet, because that comes at the end, when the Tbills held by the banks are converted at par to the new currency.

The genius of the scheme is that while the *FUTURE* inflation is being accumulated, it will be deflationary and thus snowball, until the time PTB decides to monetize those Tbills. Will they reach 99%? They are already at 50%. Greenspan is correct, but the inflation won't occur until PTB is ready to drop the Amero gauntlet. I bet Greenspan knows this.

As I explained in my Bell Curve Economics essay, the money supply is a meaningless metric:

http://www.coolpage.com/commentary/economic/shelby/Bell%20Curve%20Economics.html

Now here is the big kicker. If you didn't increase your net worth by 50% from 2008, then you've been diluted. If you are holding precious metals, hoping these will capture that final hyper-inflation, when I bet PTB has a surprise for you.

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Inflation or Deflation? - Page 11 Empty I do not yet know what to make of this

Post  Shelby on Tue Sep 22, 2009 7:11 pm


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