Written by Jim Capo

Friday, 24 October 2008 14:51
The debate over whether we will have inflation or deflation has been answered: First deflation, then inflation - and both may be on a massive scale.

Debt-based money is being destroyed by credit contraction led defaults. On the real accounting books, not the ones used to produce government statements for public consumption, the amount of dollars being destroyed currently exceeds the amounts of new fiat dollars coming into the system. Basket cases for the last few years, the US dollar, and to an even greater extent the Japanese Yen, are zooming up against all other fiat currencies, oil and gold.

In an environment of both de-leveraging and deflation, rather than launching a new wave of money creation to free up frozen credit markets, the FED and its co-conspirators are currently buying up distressed companies and properties with their new bailout bill credits.

The endgame looks like this: After they have acquired full ownership and title from the weak hands of leveraged debtors who built their portfolios on margin and cheap credit, the serious new money creation will commence.

Those who will have just completed scooping up ownership and control for pennies on the dollar, will turn around and pay off their own new debts they took on in the process with inflated or even hyper-inflated dollars. It's good to be king.

One monkey wrench in the system could be the Arab dictators we have been propping up and the communist Chinese central bank made rich from all the manufacturing companies we helped create under its control. Together, this team, if they are not totally in league with the criminals who set this mess up in the first place, might decided to create a new monetary system sans the USD.

There is no honor among thieves.

Could a world reserve currency like a gold backed Dinar be in the works?

Not sure as of what to say to this.

Experts, what say you?

As much as i read about the economy and what is "going on" I am still a lost little girl in the dense dense forest.

i have read and listened to soooo much jibberish about the economy it is nausiating.

So I post this with a 'shrug of the shoulders' approach.

Stock market yoyos, brokers, economists and world politic dudes, have you anything to say about this? Or is it not worth mentioning?

Is it b.s.? Or is there something to what his guy is saying?

Looking forward to hearing what you have to say. Maybe just maybe I will understand.


...But probably not.

This actually makes some sense of the whole thing and could be exactly what's happening. Deflation so rapid that nobody's quite sure it's even happening, but look at commodity prices, oil and precious metals all down hugely in the last few weeks. The back room Wall Street bankers are leveraged to the hilt and taking on huge additional debt from the Federal Reserve and Treasury, but instead of using that money to unwind their debt and build capital reserves they're sitting on it and waiting like vultures for the next bank to fail so they can buy up all their assets with government loans. There IS only one way they could possibly repay all that money and avoid bankruptcy themselves, and it's ALSO the only way the government can ever pay it's obligations to debtor nations. Intentional Hyper-inflation.

Makes perfect sense. This is why its best to sit on cash right now. Let gold deflate to around $400 or so then jump in and ride the inflation all the way up to $2000.00 oz.

Hmmm.... where are all those courtesy checks the credit companies keep sending me... time to go shopping.

Sarkozy's talk of a new Bretton woods is aluding to something of this nature. The rest of the world is looking for another currency besides the US Dollar with more stability in which to back oil transactions. Especially since the word on the street is that the US is Bankrupt.
The gold backed Dinar might be used instead of the Dollar to resolve oil purchases which would subsequently kill the Dollar. That would be the beginning of the hyper inflationary Dollar.

Gold Futures used by Hedge funds have been sold to offset their losses on the stock market. This has brought down the futures price of gold but there is very little physical gold available.
Its said by a leading commodities expert that in December we might see the owners of these contracts taking actual delivery of their gold futures contracts of which there isn't enough gold available to cover a fraction of the contracts that were sold. This would drive up the price of gold considerably.