Replies to post #34841 on GOLDBUGS AMEX Goldbugs Index (GOLD)

[ArtieB]

Great conversation here today- thanks, guys.

My inflation vs. raising rates theory- Our govt. hasn't the ability to say "NO". So, if that is the case (and I believe it is), then we won't see rates rise until after an election. Mid-term? Presidential? Who knows. But the real question is, "Why do we allow the govt. to choose the winners and losers in the first place?" Answer? Because too few highly educated members of the American electorate remain. And, for this reason, the govt. fills the void (like it has in previous generations for various reasons).

Ultimately, the one element that is different is our DEBT, not the deficit, per say. Why the debt? Because of COMPOUND INTEREST. Compound interest is an amazing concept, but only if you're on the receiving end. Our country/govt. is on the other end. The losing end with no end or remedy in sight. Sad. Tragic. Death.

VC

[starboy]

dollarcollapse.com has many pertinent articles. This one preaches to the choir of those believing that things aren't as rosy as portrayed. The stock market's action of the last three days may confirm some of what is specified within this article.

Are You Ready For Round Two Of The Financial Crisis?

The next round of the financial crisis is at our doorstep.

The primary driver of the stock market, since 2009, has been the expansion of the Fed’s balance sheet. Remove this expansion and the S&P 500 would have effectively flat-lined.

Now the Fed is ending QE and “surprise” stocks are cratering.

Is this really a surprise?

After all… we know that…

Stocks are expensive by just about every conceivable metric.
Global GDP growth is overstated dramatically with China at most growing 3.5% per year, the US in recession, and Europe in a full-scale DE-pression.
QE is completely useless at generating growth with Japan in a triple dip recession after launching a QE program equal to 25% of its GDP and the US in recession despite having spent over $3 trillion.
Central Bankers don’t care in the slightest about how their policies affect the rest of us.
Even investing legends who have made their billions off of stocks admit the market is a complete farce and that a Crash is coming.
Billionaires moving their money out of stocks and into ANYTHING else at a record pace.
And finally..
None of initial problems which lead to the 2008 crisis (excessive leverage, rampant fraud, etc.) have been addressed.

Let’s face the facts. The very same problems that lead to 2008 remain in place today. The people who created this mess have gone unpunished. No one went to jail. No rule of law was upheld. Instead trillions of US taxpayer dollars were funneled to a bunch of crooks and liars.

And the Fed and friends actually thought growth might come out of this?

I’ve written before that the Fed’s policies were cancerous and would kill the system. This has proven to be the case…(Note: Economist Ronald McKinnon, who passed away October 1st, also opposed the FED asset buys, and said in a letter to Bernanke,(paraphrased) "rates near zero will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.")

The bond market is illiquid and extraordinarily dangerous thanks to the Fed screwing up the yield curve and soaking up Treasuries from QE.

The stock market has no bearing on reality, with accounting standards thrown out the window and investors fleeing in droves.

The economy is in shambles with almost all job growth post 2008 based on phony accounting or crappy part time jobs… again thanks to policies employed by the Fed.

The middle class has been destroyed thanks to Dollar devaluation and rising costs of living that have wiped out savings and made it impossible for the average American to get by.

Retirees and those close to retirement have lost valuable interest income courtesy of the Fed’s zero interest rate policy.

At the end of the day, the Fed with its misguided theories has demolished capitalism: the single most powerful form of wealth generation in the history of mankind. All the Fed has really accomplished is leverage the entire financial by an even greater amount… which has set the stage for a collapse that will make 2008 look like a picnic.
http://www.gold-eagle.com/article/are-you-ready-round-two-financial-crisis

[starboy]

http://drsircus.com/world-news/end-life-know-ready
There are substantial and profound changes developing around the world today that eventually will affect just about everyone. The human race is starting to feel the natural consequences of every sinister thing we as a race have been about. Last week really shook markets, especially in Europe—things are destabilizing across the board—oil prices are plunging hurting Russia and other producers right where it hurts. We are headed toward the greatest financial disaster in history. Nobody and nothing will stop it. Signs of it are everywhere and in the open in the mainstream.

At the same time we have viral plagues facing the world’s populations and war increasing to the extent that even the Pope thinks we are already fighting WWIII. There will be plenty of cover fire for governments to declare national emergencies or martial law to cover the coming collapse of the world as we know it. The day the earth will stand still as panic overtakes the herd when markets crash is still not upon us but you should be able to smell that eventuality even if you only read the mainstream news.

World economic leaders are being urged to rally around a plan to let government do what it does best – spend money – in an effort to buoy a global economy that remains slack and slowing. What they are saying is starting to sound desperate. International Monetary Fund Managing Director Christine Lagarde issued a blunt warning last Thursday for the United States and Germany to open the taps and spend more on infrastructure, a stark reversal from the Fund’s recent fixation on holding down government debt and lifting economies through "structural reforms" that have proved politically difficult to implement.

The aim now is to use an old-fashioned tool – the public purse – to step in where households, the private sector, banks and others have not. That’s code red meaning all sectors are in a depression, the ship is going down and for governments to save the day with debt. Praise be to the Lord what a brilliant idea!

"There has been a big drop in aggregate demand. Someone has to fill that gap," IMF Deputy Managing Director Min Zhu said. Most people are too drunk on propaganda to walk and think on their own two feet. Those five words are the trumpet you see in the picture above. It is a soundless noise announcing with a shout that the Titanic world economy is sinking quickly.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/10/20141010_Fear_0.jpg

This last week we are seeing extreme fear manifesting in the marketplace. “You can print all of the money that you want, but if people are not borrowing it, if they’re not spending it, then you’re economy is collapsing even with money printing,” writes Jim Rickards. We are in global depression which started in 2007 and is going to continue indefinitely concludes Rickards in his book “Currency Wars: The Making of the Next Global Crisis. In an interview with RT News Rickard said, “So far people say: “Where is the inflation?…We printed trillions of dollars, there is no inflation.” That is because we would have had deflation, extreme deflation, but for the money printing. It did produce inflation to the extent that it offset the deflation… The world is in depression, we are not getting out of it.”

Rickards, who has been an advisor to the Pentagon in an interview said, “Very interestingly BIS (Bank of International Settlements) about a month ago issued a warning of systemic risk. They said that the system is getting dangerously close to collapse. A few weeks later the IMF issued a similar one. And then last week G-20 finance ministers meeting at Australia issued a warning. What was the last time you saw the three most powerful multilateral financial bodies BIS, IMF and G-20 issued warnings. I have never seen it before. They are telling you it is going to collapse. They see what I say and they are warning you. People would ignore it but when it happens they would be able to say we have told you. I think I have never seen anything like this. I have been in international finance since 1974 and I have never seen a situation like this.”

This is not to say that the market will crash tomorrow. However, there are considerable signs that the market is in trouble but the unsustainable status quo is ending. The good times, that are dependent on robbing our children of their future, are just about to come to an end. Don’t get blindsided by what is coming down the pike. Evidence of the coming catastrophic breakdown is all around us.

The rich at least do not intend to get caught with their pants down. The “smart money” knows that something bad is looming on the horizon. They are rapidly moving out of paper assets and into real assets. What smart rich person wants to be holding paper assets when the digital/paper (financial) fire burns the economy to the ground?

It is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts. “We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it." “We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.”

Doug Noland writes, “At this point, I’ve seen sufficient market evidence to posit that the global financial Bubble has serious fissures. Emerging market currencies, bonds and equities are in trouble. Commodities are in trouble. The global leveraged speculating community appears close to, if not already in, trouble. Geopolitics is full of trouble. Global “risk off” liquidity issues are becoming a bigger issue – and are now being transmitted to U.S. securities markets through liquidity-challenged sectors such as small cap equities, corporate Credit and surging prices for risk protection. Corporate credit default swap (CDS) prices this week surged to multi-month highs. The VIX stock market volatility index jumped to an eight-month high. Moreover, this week’s bludgeoning in the over-loved and over-owned technology sector could have pushed some to the edge. Examining it all, the unfolding backdrop has me pondering previous vulnerable Bubbles along with the soundness of global derivatives markets.”

Nolan’s essay is about the invisible danger hanging over the world system with derivatives, a little understood financial product that are actually big bets on things like interest rates that banks make. According to the Bank for International Settlements, today the total notional value of derivatives contracts around the world has ballooned to a staggering 710 trillion dollars ($710,000,000,000,000). That is a lot of paper and digital code to burn.

The collective debt of the developed economies has surpassed the $100 trillion mark — which is a colossal bet that the future economy and populations will be larger than it is currently but this is simply not going to happen for a number of reasons like water, food and energy limitations. We have reached the zenith and passed it going down as our collective debt strangles the world economy.

On a global level, growth is being steadily drowned under a rising tide of debt, threatening renewed financial crisis, a continued squeeze to living standards, and eventual mass default is in the offering on a scale never seen before in the history of the world. What is happening is a global depression with no bottom in sight. It’s going to be carnage out there—actually it already is for uncountable millions of people. The global world economy is a huge jumbo jet on its way down. The crushing effect of debt in a deflationary world will snuff the life out of the entire digital and paper world of finance.

The bottom line—the present older generations have ruined the world for the next and in fact for all that will come because we have also destroyed the earth. Fukushima is a life extinction event and that is only one of hundreds of nuclear threats facing humanity. The Automatic Earth writes:

“Would you like to know how bankrupt our societies are? Financially AND morally? Before you say yes, please do acknowledge that you too are party to the bankruptcy. Even if you have means, or you have no debt, or you’re under 25, you’re still letting it happen. And you may have tons of reasons or excuses for that, but you’re still letting it happen.

Our financial and moral bankruptcy shows – arguably – nowhere better than in the way we treat our children. A favorite theme of mine is that any parent you ask will swear to God and cross and hope to die that they love their kids to death, but the facts say otherwise. We only love them as far as the tips of our noses, or as far as the curb. That means you too.

While we swear on our mother’s graves that we love them so much, we leave them with a world that lost half of its wildlife species in 40 years, that can expect to make coastal areas around the globe uninhabitable during their lifetimes, and a world that is so mired in debt just so we can hang on to our dreams of oversized homes and cars and gadgets that all there will be left for them are nightmares.”

The Burning Platform writes, “A century of central banking and heavy taxation of the people by bought off politician puppets has coincided with a century of war, depressions, currency debasement, overconsumption, obscene levels of consumer debt, trillions of excessive debt financed government spending, hundreds of trillions in unfunded entitlement liabilities, and a persistent decline in standard of living for the masses due to Federal Reserve manufactured inflation. We have failed to heed the lessons of history. We have repeated the blunders committed by the Romans. The American Empire will not be murdered by an external force because it is too busy committing suicide.”

Ted Bitts writes, “The financial system and governments would collapse if credit could not expand and steal from the future. It is their lifeblood. They have created a world where they always can borrow, but have made no provision for the repayment. It is a Ponzi scheme. The math can no longer work anywhere you look. Since the math can’t be made to work it is obvious that covert techniques of money printing are fully engaged and no one within the system dares yell, “Fire!” and call them out on their betrayals.”

We have the bad habit of not only denying reality but work overly hard as a race to shape reality in the most negative ways as long as money can be made in doing so. The majority of Americans are totally deluded by the euphoria in the U.S. Treasury and Stock Markets thinking quite nonsensically that this will go on forever.

Derivative and gold expert Rob Kirby says, “What’s at the heart of all the trouble in the world right now? The world’s reserve currency has been debased to the point that it is going to go supernova. This is the whole illusion behind the strength of the dollar. The dollar isn’t getting stronger, just like stars aren’t going to have longevity when they go supernova. They get brighter and you might think the star is getting more viable when, in reality, the notion of it getting really bright before it goes supernova is exactly the opposite of the illusion of it getting brighter. It’s what happens just before it goes black and dies.”