Uh Oh..... Monetary Flat Spin

Originally posted by tjeffersonsghost
Interesting piece by my man Karl Denninger. Its a must read.

market-ticker.denninger.net...

Understanding monetary policy and fiat currencies one understands that with a dollar comes interest or debt attached. As you create more money more debt comes attached and eventually the interest or debt becomes more and more of a % of the money supply. Basically what Karl is saying is he feels that all the money in M1 is debt. Thats not good. And to top it off instead of letting the debt be liquidated via bankruptcies Bernenke is dropping loads of money which is not the answer. People... we are in scary times and I would consider buying Pms.

Forgive my ignorance but where exactly do you buy silver and gold and in what form does it come...bars, coins, etc?

it may be important to visit some history here..

how much do YOU trust the government this time around..????

The Gold Confiscation Of April 5, 1933
From: President of the United States Franklin Delano Roosevelt
To: The United States Congress
Dated: 5 April, 1933
Presidential Executive Order 6102
Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933, entitled

An Act to provide relief in the existing national emergency in banking, and for other purposes~',

in which amendatory Act Congress declared that a serious emergency exists,

I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section to do hereby prohibit the hoarding gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations and hereby prescribe the following regulations for carrying out the purposes of the order:

www.the-privateer.com...

another fleecing of the citizens under the guise of "emergency" where have i heard that before?

dont forget this as well..

"All safety deposit boxes have been sealed and can only be opened in the presence of an agent of the IRS"
-FDR 1933

IMO most of your physical Metal holding should be lead.

Originally posted by tjeffersonsghost

Originally posted by Rocketgirl
Ok what does Pms stand for?

Precious Metals Gold, Silver, etc.

I would invest in dried foods.

You cannot eat gold or silver and call it a good meal. Well, I cant. Maybe you like eating metals.

Also invest in farming equipment, seeds, and other "survivalist" goods.

Thats my advice.

The flatspin continues.

St Louis Fed
2008-11-19: 1.010
2008-12-03: 1.025
2008-12-17: 0.951
2008-12-31: 0.944
2009-01-14: 0.915

reply to post by tjeffersonsghost

Originally posted by tjeffersonsghost
Yes I do understand the difference between M, M1, M2, and M3.

Recent expansion of the most liquid measure; MO:

Originally posted by tjeffersonsghost
Listen to me the dollar is not going to exist.

I've been studying J. Sinclair's work on this issue TJG....the dollar will endure, and Gold will play a central role in it's ultimate rescue. The rescue: US Gold reserves revalued at the open market price...and tied to the broadest monetary aggregate (M3 equivalent). Every per annum expansion/contraction in the broad monetary measure, beyond a stipulated band (say 3% - 5%), will require a corresponding adjustment in the market value of Treasury Gold...ie, the market price of Gold. Sinclair speculates that Gold will reach a market value minimum of $1650oz before this control mechanism can be effectively introduced. Not a return to the "Gold Standard", but a method for re-establishing confidence in the dollar by reintroducing a modernized version of the Gold Cover Clause. This fix would essentially build a floor under the POG, and confine price volatility within a stable trading range.

****

From Adam Hamilton...another journeyman effort dispelling some "popular" misconceptions.

"Deflationists argue these price drops are proof of deflation, and most people today believe this. But they are only deflationary if they were driven by a contraction in the money supply."

"....deflation is not just falling prices, but falling prices driven by a contraction in the money supply. It is true that most modern economists would add contracting credit to this definition as well, but money is very different from credit."

"The bottom line is inflation and deflation are and always have been purely monetary in nature. Supply and demand can drive prices all over the place, but it is only a changing money supply that can truly spawn inflation or deflation. And the money-supply data is crystal clear. The Fed is growing the fiat-dollar supply by frightening rates, all the way from double-digit broad-money growth down to a scary doubling of the monetary base!"

Full Text

Edit: Double Post.









[edit on 25-1-2009 by OBE1]

I'm trying to wrap my head around this...so MULT went to below a ratio of 1...



And, looks like the monetary base (M0) is what changed the most (up by $1Trillion).



From Wikipedia: M0: currency (notes and coins) in circulation and in bank vaults, plus reserves which commercial banks hold in their accounts with the central bank (minimum reserves and excess reserves). M0 is usually called the monetary base - the base from which other forms of money (like checking deposits, listed below) are created - and is traditionally the most liquid measure of the money supply. [7]



From Wikipedia: M1: currency in circulation + checkable deposits (checking deposits, officially called demand deposits, and other deposits that work like checking deposits) + traveler's checks. M1 represents the assets that strictly conform to the definition of money: assets that can be used to pay for a good or service or to repay debt. Although checks linked to checking deposits are gradually becoming less popular, debit cards linked to these deposits are becoming more popular. Like checks, debit cards, as a means to complete a transaction through their links to checkable deposits, can also be considered as a form of money.[8]

Now a graph I keep looking at, since it had gone from a pretty consistent $50B in US deposits to -$388B in 2008, has gone to $167B is BOGNONBR. However looks like BASE went up about $1Trillion, and deposits changed $556Billion. Hmm.

In early 08, we were advised by MSM that the precipitous decline in BOGNONBR was simply a reflection of banks sidestepping the [more transparent] discount window, in favor of the newly created [less transparent - dodgy collateral] TAF....no systemic issues...nothing to be concerned about we were told.

According to the Fed...TAF = Borrowed Reserves.

The dramatic reversal in BOGNONBR is the result of a decline in TAF borrowing, and the creation of the TSLF...the ABCP MMMF...the CPFF...the MMIFF...and the TALF. Reserves from these dubious credit facilities (all created since Fall 08) are considered Non-Borrowed Reserves, and the collateral requirements for these 'loans' get even dodgier than TAF. In this respect, the increase of almost 600BB in NBR since Oct, represents a corresponding increase in threat to the integrity of the Fed balance sheet.

I'll just skitter-around the inflationary implications of these reserve build-ups.

Here's another pip; BORROW