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"The Johnny Rotten [seed] of Economics. Keep it up."

http://www.kirbyanalytics.com/

6/18
Rob Kirby
Some Thing[s] That Need To Be Said

Articles like the following have begun surfacing in recent days:

RBS issues global stock and credit crash alert

By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 1:23pm BST 18/06/2008

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.

"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets….

Interestingly, these dire market pronouncements coming from "establishment sources" - if we took them at face value - would be consistent with fiat cash [and bonds] being "king".

This is, no doubt, EXACTLY what Central Banks - the reckless creators of endless amounts of fiat money - would like us to believe.

These claims are completely at odds with the following glaring examples of currency debasement:

Money Supply Growth [China and U.S.]:

Thomson Financial News
China end-May M2 money supply up 18.07 pct - central bank
06.12.08, 3:58 AM ET

BEIJING (XFN-ASIA) - China's broad money supply, or M2, was up 18.07 pct year-on-year at 43.62 trln yuan at the end of May, the central bank said.

In April, M2 was up 16.94 pct year-on-year at 42.92 trln yuan.

In a statement on its website, the central bank said M1 rose 17.93 pct year-on-year to 15.33 trln yuan at the end of May. M1 was up 19.05 pct in April….

U.S. Money Supply chart compliments: www.nowandfutures.com

The CRB Index provides further evidence that fiat money is being debased at a parabolic rate:

Let us also not forget the latest assessment of the Global Derivatives Market:

The Bank for International Settlements [BIS] recently reported that that outstanding derivatives now exceed one quadrillion in notional:

$1.14 Quadrillion In Derivatives--

What Goes Up…

Kevin DeMeritt
President, Lear Financial

Quadrillion? That's a number only astronomers use, right? You know…as in the North Star is "just" a couple of quadrillion miles away.
But, ominously enough, Earth's economists are actually starting to use it, too. No, not to discuss the amount of dollars out there (though it might feel like the Fed just pumped a quadrillion greenbacks into the economy). The Bank of International Settlements recently reported that the amount of outstanding derivatives has now reached the $1.14 quadrillion mark ($548 Trillion in listed credit derivatives plus $596 trillion in notional [or face value] OTC derivatives).

Ladies and gentlemen, these derivatives referenced above are virtually ALL PROXIES for fiat U.S. dollars. Using one ounce of common sense, anyone should be able to see that when ANY GOOD is produced in quantities such as this - their relative value CANNOT AND WILLNOT GO UP - long term.

What is outlined above is a RECIPE for HYPERINFLATION. Typically, at the leading edge of a hyperinflation, shortages of staple goods begin to appear - like this:

Forget oil, the new global crisis is food,

BMO strategist Donald Coxe warns credit crunch and soaring oil prices will pale in comparison to looming catastrophe

Alia McMullen, Financial Post Published: Monday, January 07, 2008

I would submit that the price of crude oil is in fact BEING FORCED HIGHER for the expressed purpose of DESTROYING DEMAND because "it must be" - due to shortage. As oil maverick T Boone Pickens says,

"Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87 million," he said. "It's just that simple. It doesn't have anything to do with the value of the dollar."

I would suggest that Pickens is "off the mark" when he says it does not have anything to do with the dollar. On the contrary, IT HAS EVERYTHING TO DO WITH THE DOLLAR!

Incremental inelastic global oil demand is coming from China [China subsidizes the price of oil which explains its price inelasticity]:

Subsidized oil product prices led to diesel shortages last fall because small independent Chinese refiners (called "teapots") were unable to pass on higher oil feedstock costs. State-owned refineries, which operate at a loss, were also pinched by higher crude prices. Although the Chinese are now expanding their refining capacity, they have taken a "measured approach" to meeting subsidized internal demand. China set for 400,000-bpd oil refinery output rise (Reuters, January 9, 2008) tells the story --

Lest we forget, China's robust ECONOMIC MIRACLE was indeed "seeded" by WESTERN FIAT MONEY - so it really "IS" all about the dollar:

Western markets have been at least subconsciously aware of this for a decade. More than half of the $1.1 trillion in foreign direct investment that has flowed into China since 1995 has not been foreign at all, but money recirculated through tax havens by various local businessmen and governing officials looking to avoid taxation. Of the remainder, Western investment into China has remained startlingly constant at about $7 billion annually. Only Asian investors whose systems are often plagued (like Japan's) by similar problems of profitability or (like Indonesia's) outright collapse have been increasing their exposure in China.

Ladies and gentlemen, it always "HAS BEEN" about the dollar - and how many of them that are being created!

Of course we should not be surprised when Central Bank shills have the audacity to tell us that fiat money is "going up in value" - in light of what they've done to OUR MONEY - it's a Central Banker's wet dream.