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Inflation or Deflation?

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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).

Shelby
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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.

skylick

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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.

RandyH

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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.

Shelby
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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


Shelby
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Inflation or Deflation? - Page 11 Empty ECRI and Cycle Theory

Post  Guest on Wed Sep 23, 2009 12:53 am

Hi Shelby,

In the same vein I've been following the essays of Martin Armstrong arising from his Economic Confidence Model predictions posted on Nathan Martin's economicedge.blogspot.com. This work is all about cycle theory. In case you haven't come across this stuff you might like to take a look at a couple of the essays linked below. The "Dow 30,000" (due to hyperinflation) essay fits with the ECRI prediction.

Armstrong has been eerily accurate with his timing of major turns and capital flows as far back as the 1980's. Jim Sinclair is a long time fan and often says "Armstrong's timing and Alf's numbers" (Alf Fields is an Elliot Wave chartist).

Nathan Martin:
"A short forecasting piece by Armstrong, the key is found in the last three paragraphs. According to him and his confidence model, key resistance is at 11,000 on the DOW Industrials. If we fail to break above that level then a retest of the lows is likely or even to make new lows into the first half of next year (2010). THEN, he is predicting a rally to (choke) 30,000 plus."
http://economicedge.blogspot.com/2009/08/martin-armstrong-will-dow-reach-30000.html

Nathan Martin:
"In the end, Armstrong explains that, “The DOW will become the hedge against the inflation created by the decline in real purchasing power of the currencies.” And there you have HIS explanation on why his previous article raises the possibility of one more huge up cycle by the year 2015…"
http://economicedge.blogspot.com/2009/08/martin-armstrong-correlation-of-cycle.html

While we are at it how about "Will Gold Reach $5,000":
http://economicedge.blogspot.com/2009/08/martin-armstrong-will-gold-reach-5000.html

Economicedge also provided an outline of a Financial Sense interview with the author of the "Unified Cycle Theory" which broadly agrees with Armstrong's methodology and overall predictions.

http://economicedge.blogspot.com/2009/08/puetz-financialsense-interview.html

Armstrongs collected essays are linked from the Economicedge blog if you are interested in further reading.

Cheers!

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

Post  Jim on Wed Sep 23, 2009 3:22 am


Everything is going up and everybody is happy. Just like the Weimar period.

Jim

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Inflation or Deflation? - Page 11 Empty re: deflation morphing into hyper-inflation

Post  Shelby on Thu Sep 24, 2009 12:44 pm

angophera and Jim, excellent and much appreciated posts-- you are helping me (probably others as well) see new (or nuances on my) perspectives.

Stock market went up in Zimbabwe also. Did it entirely hedge the devaluation of the currency? I doubt it and I bet gold was a better investment? I suspect DOW to gold needs to go to 1 or below again. Didn't Armstrong insinuate that $5000 gold was not the limit he expected?

Jim, that is very astute that not everybody can go up and be happy forever, especially in face of ALL TIME IN HUMAN HISTORY record debt levels in the high-valued western markets.

But let's not forget that the debt level of the developing world is still very low relative to their GDP and savings, but the problem is their GDP and savings is relatively small compared to the total $quadrillion value of western derivative paper financial economy. This recent announcement that China would default on commodity derivatives may be important. Let's try to think not (mostly) about individual events, but on the large cycle scale of what must happen due to undeniable natural forces? The bottom line is the world must rebalance, because all the high productivity relative to consumption is in the developing world. The question is for how much longer and in what ways can the current unbalanced system steal this productivity away to (and mostly to the rich/PTB in) developed world. And what form of transistion will the rebalancing take?

Yes I am very aware of Armstrong (have posted about his articles), but he writes so much that you can help me to interpret, because I am sure I am missing some of his points. I remember he wrote recently that he expected likely top at 9,700 - 9,800 by December, but with an outside chance for 12,000 top as late as July, 2010. Now you point me to his latest article where his model predicts another rise after that.

I read Martin Armstrong at other sites:

http://www.martinarmstrong.org/economic_projections.htm (has his photo in prison)
http://www.contrahour.com/contrahour/2009/08/martin-armstrong-market-outlook.html (has his handwritten note)

I now think I know what to make of tbis:


Doesn't the stock market rise in advance of an actual recovery? Thus the stock market should rise with the leading indicator and reach it's peak before the recovery does? Can someone confirm that is true on the prior cycles of that leading indicator in chart in above chart? And thus that a peak in stock market later this year or early next year would be consistent.

Armstrong sees higher interest rates driving the 30,000 DOW:

http://www.martinarmstrong.org/files/Will-the-Dow-Reach-30000-by-2015-0809.pdf

Page 5 wrote:...In other words, the flight to quality now will be the flight from government debt back to private sector equity rather than debt. This should then materialize a major high in the Dow that will therefore be followed by a rise in interest rates setting the stage thereafter for the next new dawn of a cyclical trend...

But higher interest rates means the western economies are dying and would also typically concide with an inflationary period. So how can interest rates rise without killing the stock market in a depression due to the thus very high debt defaults? Seems to me this means an entire gutting of western economies and letting Asia go into an blowoff top with very high interest rates on debt. The higher the interest rate, then the faster the debt has to grow. It will be a currency devaluation straggle hold blowoff to suck China in, before tossing it over the cliff when it's demographic bubble peaks around 2022. That is the scenario like 1980 where I see gold, and especially silver, head to the moon which pretty much agrees with Hommel's other stated position that silver would see it's long big rise in the latter half of next decade.

So the bottom line here is that you won't win with the stock market unless you are insider (Buffet), but you will hedge some (lose less), than staying in cash or bonds. Gold will give you the most freedom and balanced hedge, but governments will try to control how you can redeem it for real things (beyond local barter, for which you can neve spend all your gold and silver any way if you buy even $50K now).

So where do you put the lions share of your capital if you are worth more than $50K, and you want to outperform this wealth theft transistion (deflation + inflation + dying national govts and central banks)? This is why the equity market will go up, because there is no other place to put money. This will not be a flight to gold like in Weimer germany, it will be a high sustained inflation I bet, not a hyper one. Given 10 years at 20% inflation, then the dollar will be worth 15% of what it is now. Thus gold stocks make sense, but the problem is which ones, because some will cave in due to hidden corruption in the mgmt, sovereign risk, gold hedge books, failed projects, etc..

That is why I say you have to invest in something that captures this shift. The PTB will drastically increase debt in the developing world to offset the rising interest rates and imploding debt in the west. The developing world will be milked of it's productivity to keep the west supported in an increasing socialistic (non productive, dying) paradigm. Then when that peaks, the developing world rolls over as USA did by 1929. See we are not at 1930 now, rather we are like at 1919. The USA is dying, but China has one more push up before saturating itself with debt and then imploding. That is why I say we have to get out there an invest in the coming boom in developing world. However, we will get one more liquidity take down first due to the commercial real estate 2nd wave and the failing state govts.

Then again, I really can't be sure about the timing and order of these events, thus keep accumulating gold, maybe 15 - 30% of your annual income, and reinvest the rest. Try to keep investments in things that can be easily liquidated in any economy, or in investments which depreciate so fast, that you return you capital in < 1 year, so you are nimble to react to changing interpretations of where we are headed. This is why I sort of like the concept of putting my capital into computer equipment for rent. The equipment depreciates by 50% to 75% within about 18 to 36 months, due to Moore's law.

However, I am still working on my competitive advantages:

https://goldwetrust.forumotion.com/technology-f8/computers-t112.htm#1963

Is gold going to capture the $12 trillion 50% debasement? Gold was about $800 before 2007, so a move to $1200 now would mean Gold does understand & telegraph the future inflation, even it is not yet in prices, but I think volatility will remain high and so I don't think $1200 will become support if we get there during this upward push.

Could we head now into a multi-year rise of all markets due to massive reflation? I think again look at what Armstrong says about capital flows. Unless the govt provides more stimulus, we will top out and fall again. Each reflation will not re-capture all the delution, because precisely the rich are making sure they are getting richer.

Also I can not wrap my (too busy) mind around whether the US will go into perpetual QE with 0% interest and carry trade, or to the high interest rate scenario. And at what stages and timings. I think Armstrong is correct that the world is too dynamic and there are much more than 8 dimensions (competing waves) and so many outcomes are possible.

Look we are on a yoyo. The PTB can play us either way or play us both ways with volatility. We can not win by betting on macro shifts between all these variables. We can buy gold and silver to be able to hide some personal wealth in case of really crazy outcomes, and silver gives you a bit of speculation for 1000% gains over gold in certain scenarios, but don't throw all your money in silver especially you can't even carry it yourself.

I am coming to realization that we are not supposed to win that way. You win that way by becoming an insider and aligning yourself with that Bell Curve Economics model of statism (i.e. you corrupt yourself as Buffet has done).

Or you continue to be as productive as you can be under the Lord, and you will be rewarded relative to your productivity level in terms of how many people it helps the most. I tell you Americans by and large do not need help accumulating more wealth, they need help on dishoarding their wealth to those people who need it more. The key imho is whether the dishoarding will be in a free market style of investment or in a socialism re-distribution paradigm that concentrates more wealth to the PTB parasites. That should give something to chew on and some hints of where I am headed strategically (hopefully). I want to be productive and enable methods for individuals to trade between themselves and bypass the monolith of PTB financial system. I can not do that directly as a gold money currency, but it must be an indirect and technology based paradigm that has a natural exponential demand.

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Inflation or Deflation? - Page 11 Empty Julian Robertson

Post  Jim on Thu Sep 24, 2009 11:48 pm

Julian Robertson of Tiger Management was on CNBC this morning. Eventually he sees 20% inflation and 20% interest rates as a possibility. He likes Norway, and the Norwegian krone.

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Inflation or Deflation? - Page 11 Empty 1930s was not a depression for the EMPLOYED-- the real reason the govt confiscated gold

Post  Shelby on Fri Sep 25, 2009 9:18 am

Katz had written about this several months ago, and he repeats this week:

http://www.kitco.com/ind/katz/sep212009.html

Katz wrote:...Of course, you have heard a lot of propaganda about unemployment in the 1930s. Here are the facts. As prices came down, wages came down also, but they did not drop as fast. Thus the buying power of wages rose. In other words, you got less pay in money terms but more wealth (food, clothing, shelter) in real terms...In 1933, prices were brought down to their 1914 level. Everyone’s retirement savings doubled in value. The banks and the big corporations were hurt, but the common person was better off...

...Even though nominal wages were lower, real wages were higher. Now these higher wages caused unemployment. Business couldn’t afford to pay them...

...fast forward a decade to the early 1940s, then we do find a depression. In the early 1940s, one could not buy a new house. They were not being built. One could not buy a new car. They also were not being built. And if you wanted to go somewhere in your old car, gasoline was rationed to 3 gallons a week. Further, many food items were also rationed. This was, of course, due to the war. One would think that the economists of the country would have no trouble saying that the war made the country poorer. After all, what is war but the destruction of human lives and wealth? Would it hurt an economist to admit that?

And yet you can’t get an economist to admit that 1942-1945 was a depression in this country even if you put him on a torture wrack and turn the screw. You see, the early ‘40s were a period where massive amounts of money were created, and the paper aristocracy made a bundle of money (war profiteers)...

You see the bankers had to confiscate gold, because when gold is money it retires debt and the people win. The unemployment gave them political cover for confiscation. And the bankers had been strategically preparing for this with the 1913 Federal Reserve Act which they sneaked in without a quorum in Congress, and they probably did this because they were afraid of what the Republican congress wanted to do:

Katz wrote:...You see, during WWI both the money supply and the price level had doubled. Most Americans in that day had saved for retirement. Their retirement savings fell in half in 5 years (1914-1919). So the Republicans, in 1920, promised to bring prices back down to their 1914 level. Since cigars had gone from 5¢ to 10¢ between 1914 and 1919, this was expressed by the slogan, “What this country needs is a good 5¢ cigar.”

And this is what happened. In 1933, prices were brought down to their 1914 level. Everyone’s retirement savings doubled in value. The banks and the big corporations were hurt, but the common person was better off...

This period of time is MUCH DIFFERENT because the entire world is untethered from a gold standard. For one thing, most westerns are now invested in stocks and bonds, thus they are affected by paper markets volatility. Since the 1934 confiscation, the paper financial world has stolen 98% from the people (gold is 50 times greater in value, but the people do not have gold). And gold is not even priced correctly for inflation-- should be about $5000+ right now, so the people have already lost 99.8%. Those who have been invested in stocks or bonds had kept up with this inflation to some degree, but not entirely hedged it:

https://goldwetrust.forumotion.com/economics-f4/stocks-vs-precious-metals-vs-bonds-vs-real-estate-t11.htm#17

Shelby wrote:...So all the price gains in Coca-Cola stock since 1962 have been due to inflation. No stockholder has made a real inflation-adjusted penny in equity in Coca-Cola in 46 years. I have read that Coca-Cola pays a dividend of about 2 - 4% per year, which I bet just about has kept up with world population growth since 1920. The point being that the investment would take about 25 years to double, adjusted to inflation...

What is happening now is theft of that remaining hedged paper equity and bond wealth. To accomplish that, the PTB need to keep people from converting their paper wealth to gold and silver, FASTER THAN the PTB can debase that paper wealth (i.e. $12 trillion or approximately 50% debasement since 2007, and not 50% of western net worth has moved into gold).

Drastically increasing debt in the developing world to offset loss of exports to west, while propping up the west with stimulus (govt debt) financed by the extra productivity of the developing world, is possibly a key strategy for keeping the western world from running too fast to gold.

Volatility (in gold, all markets, and between proclamations of inflation and deflation) is another key strategy.

The real bottom line is we have consistent and increasing inflation always, and will have until the current fiat system dies and is morphed into some new system with a (pseudo-)gold backing. At that time, very few of people of world will have their net worth in gold (1% of world net worth is enough to drive purchasing power price of gold very high).

But we will also have NOMINAL economic growth (or at least not severe contraction) in developing countries (albeit with volatility perhaps) due to the strategy mentioned above.

So my strategy remains the same, invest on the ground in the developing world in nimble way. Turn around capital as fast as possible, annually dumping 15 - 30% in gold (and silver), dollar cost averaging in but try to buy on dips. In terms of what to buy gold or silver, look at the average ratio on a chart and buy the more favorable one, but in my case I must keep in mind that silver is much less liquid (entirely illiquid at times when fiat price is rising) outside of USA and especially in developing countries, and I already own more than I can carry in the event of need to make bodily flight.

For those of you who no longer have productive businesses and do not want to relocate to a developing country, your remaining options are limited to speculation, trading the gold and silver ratio, and simply buy and hold. You may also be able to find some business growth opportunities in the west that fit with the above macro economic paradigm.

Shelby
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Inflation or Deflation? - Page 11 Empty Pretcher says the big stock market and gold declines have begun

Post  Shelby on Sat Sep 26, 2009 12:21 am

See my prior post on prior page also.

He is saying forcefully that they will drop fast now. He says silver did not confirm (< $21) Gold's run at a new peak, as well gold in non-dollar currencies did not confirm.

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Inflation or Deflation? - Page 11 Empty PTB Next Move - Money Market Funds

Post  Guest on Sat Sep 26, 2009 1:46 am

Hi Shelby, Jim et al,

Rumored Source Of Reverse Repo Liquidity: Not Bank Reserves But Money Market Funds

"And the Fed finds a way to screw everyone over yet again." Yep! The expiry of the MM fund guarrantee on September 18 is an opportunity that is too good to miss for the banksters. Do you think the Fed/Treasury is unaware of the implications arising from their decision not to renew it?

http://www.zerohedge.com/article/rumored-source-reverse-repo-liquidity-not-bank-reserves-money-market-funds

My take on this is that they will steal this $1-$2trillion in two ways. By 1. scaring MM investors out of commercial paper into Treasuries and (guarranteed) bank deposits and/or 2. prompt the MM funds to liquidate commercial paper by bringing them "inside the tent" with the big Banks by offering them a return on the Fed's "secured" borrowings from them.

Think about the position of the MM funds. By playing along they can continue to offer investors a "safe" return and the appearance of liquidity (provided by the Fed). If the MM funds refuse to play they get killed in the "flight to safety" or a slow death from margin erosion.

What do the PTB get out of this?

1. The Fed engineers another credit crunch in the real economy to intimidate the Congress (think HR1207). Remember in the weeks prior to Paulson's financial blackmail of Congress the Fed drained $185 billion in cash out of the economy. (As reported by Gary North on the Mises Institute website when he advised his subscribers to sell gold and silver at the top. BTW This prompted a slanging match with Jason Hommel. With the benefit of hindsight Hommel was clearly on the wrong side of this argument.)

2. More assets are shaken loose in the real US economy as businesses find another source of funding (commercial paper) drying up.

3. This sets the stage for the next takedown of the Stockmarket to steal most of Americans remaining holdings in pensions and mutual funds.

4. They don't have to reveal the theft of bank deposits for a while longer. Even their greed will take a while to digest the MM funds.

5. T Bonds get supported for a while longer and the Asians and Middle Easterners are placated again.

6. In regard to the US$, the reduction in the rate of debt monetization takes some of the pressure off the dollar. So the pace of the debasement of the US$ and its fall against other currencies remains under their control. This also helps to placate the Asians and Middle Easterners.

Brilliant! Pure EVIL but Brilliant.

Guest
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Inflation or Deflation? - Page 11 Empty The Bottom Line

Post  Guest on Sat Sep 26, 2009 2:03 am

Hi Shelby,

Thank you for your kind remarks in the earlier post. I think what you said below is absolutely correct:

"Or you continue to be as productive as you can be under the Lord, and you will be rewarded relative to your productivity level in terms of how many people it helps the most."

My overall strategy is to preserve capital eg. in gold, speculate in silver when I think I can succeed, continue to reduce my needs to the minimum, enhance my sustainability (food etc), work against the PTB or at least try to avoid assisting them through unconscious co-operation and look for an opportunity to deploy capital down the track to create real value at a family and community level.

Guest
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Inflation or Deflation? - Page 11 Empty re: PTB next's move and the worry about carry trade driving dollar lower

Post  Shelby on Sat Sep 26, 2009 8:02 am

I agree with your reasoning.

Derringer thinks the carry trade dooms the dollar:

http://market-ticker.denninger.net/archives/1467-The-Horrible-Conundrum-Facing-The-Fed.html

But I think he is missing the point that the dollar masters are in control, because they control whether the entire global economy is having a liquidity crisis or not. So the PTB can force those carry trader borrowers to have liquidity crisis and thus the dollar will rise again. Japan's Yen did not have this power and Japan needed a lower Yen for exports. From an ignorant political sense and in the sense of what the PTB need next, we need a strong dollar (exports are never coming back any way).

In short, the dollar can't go down in a straight line, there will be massive reversals along the way. And the dollar can't go down too much too fast without the world economy imploding. Also realize the world is responding to this by adding more unproductive (misallocated) debt.

This is destructive whirlwind of deflation of the private sector in many cases, and inflation due to waste (increasing debt and it's misallocation, especially in developing world) and dilution of fiat value. The private sector will grow in some sectors, i.e. those that capture this increasing debt stimulus globally. The most private sector opportunities are probably in the developing world.

I think you want to be long in dollars right now, I am about 80% of my net worth in dollars since about the 78 level (I sold my silver just a little bit too early so I missed about 15-20% of the peak and about 5-10% of the dollar low). Go against what most of the world is doing right now, which is shorting dollars. However, I can not be sure if we seen the peak already in this cycle.

Shelby
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Inflation or Deflation? - Page 11 Empty The reason we can not make logical sense of this era

Post  Shelby on Sat Sep 26, 2009 10:49 am

MUST READ: God's Plan to Protect His People in the Coming Depression

https://goldwetrust.forumotion.com/health-f5/preparing-for-coming-crisis-t41-30.htm#1982

Also:

https://goldwetrust.forumotion.com/precious-metals-f6/silver-as-an-investment-t33-180.htm#1981

Shelby wrote:...The Great Harlot system is futile. That is why I think the Bible tells us in so many ways to come out of man's system:

We can make long-term investments in hard money, and we can try to find and invest and work in the exponential growth sectors in this current macroeconomic paradigm...

But as warned in that first link, we should not be hoarding or trusting anything but God to protect and guide us.

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

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