Perspectives on the global economic meltdown- (Nov 28 2010)

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svinayak
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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 13 Jun 2013 04:42

Fantastic explanation!

Don't be fooled by the misdirection. QE, twist, whatever; it's not about interest rates or helping the economy recover. It's 100% about disguising and managing this uncontrollable, unstoppable mess.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 13 Jun 2013 04:47

I don't know when you expect this scenario to unfold but right now it ain't happening. In fact, the problem is that the mere prospect of the Fed stopping QE will further collapse demand. The Fed has to figure out a way how to do it. But do it, it will. Bill Gross say sthey are going to run out of Federal debt to buy at the current rate they are buying it. So it has to stop. That means interest rates are going to rise. Higher interest rates means fewer loans made which reduces the amount of money in the system. Count on it. one of the possiblity of outcomes is lower demand, higher interest rates and a scarcer US dollar. NOT hyperinflation but DEFLATION.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 13 Jun 2013 04:49

TSJones wrote:^^^^^^"And with this stage will come the hyperinflation in the prices of all other real goods as the US Fed frantically prints more dollars to pay the government's nominal obligations in addition to its hyperinflating daily expenses."



mission of the federal reserve

http://www.federalreserve.gov/aboutthefed/mission.htm



Only if I was not born as a son of Bharat mata, I would have trusted federal reserve.

Image

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 13 Jun 2013 05:00

The chart does not proves the following statement:

"And with this stage will come the hyperinflation in the prices of all other real goods as the US Fed frantically prints more dollars to pay the government's nominal obligations in addition to its hyperinflating daily expenses."

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 13 Jun 2013 05:05

^^ please do read this link viewtopic.php?p=1469872#p1469872

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 13 Jun 2013 09:59

http://www.shadowstats.com/article/no-4 ... eport-2012
Background

By 2004, fiscal malfeasance of successive U.S. Administrations and Congresses had pushed the federal government into effective long-term insolvency (likely to have triggered hyperinflation by 2018). GAAP-based (generally accepted accounting principles) accounting then showed total federal obligations at $50 trillion—more than four-times the level of U.S. GDP—that were increasing each year by GAAP-based annual deficits in the uncontainable four- to five-trillion dollar range. Those extreme operating shortfalls continue unabated, with total federal obligations at $81 trillion—more than five-times U.S. GDP—at the end of the 2011 fiscal year. Taxes cannot be raised enough to bring the GAAP-based deficit into balance, and the political will in Washington is lacking to cut government spending severely, particularly in terms of the necessary slashing of unfunded liabilities in government social programs such as Social Security and Medicare.

Bankrupt governments—unable to raise adequate cash to cover obligations—invariably crank up the currency printing presses to do so, creating a hyperinflation. The federal government and Federal Reserve’s actions in response to, and in conjunction with, the economic and financial crises of 2007, however, accelerated the ultimate process—both in terms of fiscal deterioration and global perception of the issues—moving the outside horizon for hyperinflation from 2018 to 2014. Even so, over the last several years, the government and Fed’s actions and policies, and economic and financial-market developments have continued to exacerbate the circumstance, such that there is significant chance of the early stages of the hyperinflation breaking at any time. Key to the near-term timing remains a sharp decline in the exchange rate value of the U.S. dollar, with the rest of the world effectively moving to dump the U.S. currency and dollar-denominated paper assets.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 13 Jun 2013 12:50

Acharya wrote:http://www.shadowstats.com/article/no-414-hyperinflation-special-report-2012
Background

By 2004, fiscal malfeasance of successive U.S. Administrations and Congresses had pushed the federal government into effective long-term insolvency (likely to have triggered hyperinflation by 2018). GAAP-based (generally accepted accounting principles) accounting then showed total federal obligations at $50 trillion—more than four-times the level of U.S. GDP—that were increasing each year by GAAP-based annual deficits in the uncontainable four- to five-trillion dollar range. Those extreme operating shortfalls continue unabated, with total federal obligations at $81 trillion—more than five-times U.S. GDP—at the end of the 2011 fiscal year. Taxes cannot be raised enough to bring the GAAP-based deficit into balance, and the political will in Washington is lacking to cut government spending severely, particularly in terms of the necessary slashing of unfunded liabilities in government social programs such as Social Security and Medicare.

Bankrupt governments—unable to raise adequate cash to cover obligations—invariably crank up the currency printing presses to do so, creating a hyperinflation. The federal government and Federal Reserve’s actions in response to, and in conjunction with, the economic and financial crises of 2007, however, accelerated the ultimate process—both in terms of fiscal deterioration and global perception of the issues—moving the outside horizon for hyperinflation from 2018 to 2014. Even so, over the last several years, the government and Fed’s actions and policies, and economic and financial-market developments have continued to exacerbate the circumstance, such that there is significant chance of the early stages of the hyperinflation breaking at any time. Key to the near-term timing remains a sharp decline in the exchange rate value of the U.S. dollar, with the rest of the world effectively moving to dump the U.S. currency and dollar-denominated paper assets.



Acharya ji,

That hyperinflation time horizon is pretty realistic. When US hyperinflates, the USG will keep shipping overseas gold in increased quantities. They will do that because they will be asked by the global creditors to pay. The Eurozone will also want increased price of gold because as I explained http://forums.bharat-rakshak.com/viewtopic.php?p=1469852#p1469852 euro has broken its link to gold and nation state.the Euro which was set up by Bank of International settlements (BIS)- the central bank of central banks, will ensure US will keep providing the gold or else they will stop the clearing of funds which permit US to exchange greenback for oil or anything produced overseas. They will force US to fall on its sword of debt. IT WILL HAPPEN. Because the third world has this chance to become productive and keep the prosperity rather than save it in a vehicle of Perpetually expanding valueless paper called USD.

To give you an idea of which country exports and imports what, this is a wonderful link.

http://www.worldsrichestcountries.com/t ... ports.html

The biggest US import is oil. The biggest Indian import is gold and gem stones. And we have idiots like Chidi who is imposing taxes on purchasing gold.

Rejigging what Tolkein wrote in the fellowship of the ring;

“From the ashes a fire shall be woken,
A light from the shadows shall spring;
Renewed shall be monetary system that was broken,
The physical gold again shall be king.”

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 13 Jun 2013 19:11

the Nikkei is crashing despite BoJ intervention:

http://finance.yahoo.com/blogs/breakout ... .html?vp=1

Theo_Fidel

Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Theo_Fidel » 13 Jun 2013 21:42

From agriculture to manufacturing the system is incredibly productive right now.
Hyper-inflation would indicate a complete collapse of supply. This is what happened in Zimbabwe when the farm production collapsed due to take overs.
Right now the fear is deflation as there is still a fearsome amount of production capacity waiting to come on-line.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 13 Jun 2013 21:50

panduranghari wrote:
DhruvP wrote:
Apparently, he thinks that people can continue to use fiat for exchange of goods and services but keep it pegged to gold or keep the savings in gold. Basically an armchair general, nothing to see here.

It is not him, me or you that is going to decide what the next monetary unit is going to be, like I said. Its going to be the bankers through their pet politicians.

It is pretty clear that there is a full-fledged race to the bottom though. Countries are trying to prepare for war either economically or militarily because they can't pay their debt and so they need their debt cancelled which means the whole geopolitical equation is going to change.


Arm chair general or whatever else you wish to call me makes no damn difference to the theory I have tried to elucidate.

World war is the imagination of Abrahamic leeches running wild. Until they find alternative to oil, they can kiss their chances of sustained global conflict good bye. Nuclear fusion until miniaturised is the only choice closely followed by a massive improvement in solar tech. Currently solar panels are 15% efficient. Getting them to even 50% would be massive. But that is for future. Battery tech in improving exponentially. But current game plan is based on oil. FULLSTOP.

Oil is priced in USD but for how long? After hyperinflation in the US who will accept a greenback for oil?

The world until 1999 had no choice but to stick with USD as reserve. Not any more. The game is up. The pin is out of the grenade. The clock has been ticking for an awfully long time.


Pandurang, you're not posting a radically new idea here. Hyperinflation as a possibility has been portrayed by gold bugs since 2008. It is now 2013. The difference between now and the weimar republic era is that debt is a part of every economy today except China which has a different problem of holding its surplus in US bonds. If hyperinflation does occur, it will take the whole world economy down. Gold does make sense if countries try to move away from USD but even then, there will be massive economic chaos if US economy collapses. Secondly, no one can force US to pay up, since their department of offense is still way stronger than many other countries combined. Third, they have allies that are also in debt who will team up with them to get rid of their own debt (Europe) and no one currently can stand up to them other than brandishing nukes, which brings up MAD. Also, Gold pegging limits the ability to lend and grow the economy which is why the gold standard was taken out in the first place.

The only solution that seems logical to me is a global currency, which can be SDR or a global version of Euro within which percentage stakes of a country can vary based on its current debt situation.


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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 13 Jun 2013 23:18

Gold bugs have always predicted hyperinflation. it is their systemic totem. I have met several old timers when i was young that yearned for the return of the great depression when they could buy a steak dinner for one dollar and the US had a 26% unemployment rate! Never mind the fact that it was illegal for US citizens to own gold during the great depression!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 14 Jun 2013 00:09

I have heard it all, Jones. Everyone has an agenda. Gold bugs want gold to rise meteorically so they can capitalize on it, The Fed (private banks) want to use the economic downturns to become more powerful and the middle class wants to preserve its wealth consistently trying to hedge one vs the other to grow their wealth at a higher rate than standard inflation. Its a funny situation really. If all this thinking were applied to improve the world, everyone would have clothing, food and shelter. But everyone is here to one-up the 'other guy'.

Anyway, it looks like the Fed has given up. They just mentioned that they won't let the interest rates go down but they also don't see it going up either. Its a stagflation scenario that will be in a holding pattern until some other disrupting technology comes along to stimulate the economy.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby vishvak » 14 Jun 2013 00:15

The global financial crisis is because of greed. Even with enough resources and efficient manufacturing the crisis still is around. Even now not much is done to weed out root problems of financial crisis. So the problems and greed will remain anyways, just as it is now.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 14 Jun 2013 00:21

DhruvP wrote:
Pandurang, you're not posting a radically new idea here. Hyperinflation as a possibility has been portrayed by gold bugs since 2008. It is now 2013. The difference between now and the weimar republic era is that debt is a part of every economy today except China which has a different problem of holding its surplus in US bonds. If hyperinflation does occur, it will take the whole world economy down. Gold does make sense if countries try to move away from USD but even then, there will be massive economic chaos if US economy collapses. Secondly, no one can force US to pay up, since their department of offense is still way stronger than many other countries combined. Third, they have allies that are also in debt who will team up with them to get rid of their own debt (Europe) and no one currently can stand up to them other than brandishing nukes, which brings up MAD. Also, Gold pegging limits the ability to lend and grow the economy which is why the gold standard was taken out in the first place.

The only solution that seems logical to me is a global currency, which can be SDR or a global version of Euro within which percentage stakes of a country can vary based on its current debt situation.


How long can it take to implement a global currency? And why do you recommend a global currency? What is the logic? Who administers it? Who ensures that the organisations like IMF/WB do not keep screwing the world like they have for the past 70 years? What if the power alignment prevents the consensus? When the consensus could not be reached in 1945 what makes you believe it will be achieved this time- after all in 1945 about 10 countries really had the financial muscle to drive through the agendas and they were overwhelmingly Anglo-Saxons and Europeans. Now we have many others who are not white. Do you honestly believe India will allow china to dictate an economic policy? Or will china be happy with Japan dictating the agenda? Or how about Australia taking orders from Philippines?

Too many uncertainties and we won't see any Bancor or SDR or whatnot.

Give me a plan and perhaps I will show you how it won't work.

Yes the global economy will collapse and it should collapse. It's a debt based system which has a massive flaw.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 14 Jun 2013 00:29

TSJones wrote:Gold bugs have always predicted hyperinflation. it is their systemic totem. I have met several old timers when i was young that yearned for the return of the great depression when they could buy a steak dinner for one dollar and the US had a 26% unemployment rate! Never mind the fact that it was illegal for US citizens to own gold during the great depression!


TSJones are you a paper bug?

I am a gold bug alright but my understanding of paper market lead me to here. I used to loose money in stock market. I was competent enough to trade in warrants as well. The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?

There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 14 Jun 2013 01:38

panduranghari wrote:TSJones are you a paper bug?

I am a gold bug alright but my understanding of paper market lead me to here. I used to loose money in stock market. I was competent enough to trade in warrants as well. The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?

There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important.


When I read your posts, I think you are indulging in wishful thinking. Please do not take it personal. I think you want the world to be a certain way, not as it is.

Do you really think derivatives will go away with the advent of a gold standard? I can assure you there was a derivatves market when the US was on a gold standard. It was called and still is, the Chicago Board of Trade, established in 1848. Derivatives fulfill a need by the system to lock in a price on a commodity, or yes, even a financial transaction so that a person can depend on something should it fail. The problem has been that somebody invariably tries to game the system. Thus stricter rules are needed. especially by banks but I can't help that. So I must invest wisely as I can. That is real world, real time.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby paramu » 14 Jun 2013 02:00

Image

Fisher Gold Bug Pro Metal Detector (A Gold PLUS Detector)
with 5" DD Search Coil Plus FREE Metal Detecting & Treasure Hunting Accessories

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 14 Jun 2013 02:28

^^^^^"The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?"

You do realize the US government stopped a credit default swap panic dead in its tracks in 2008?

When the tranches started to fail on dubious home mortgages the CD swaps came due and it was gigantic. I think the public still doesn't understand this. So what happened?

What happened is that all the tranches that were sold to dupes like AIG (and were intentionally desgned to fail by a criminal that has yet to be charged with anything), The US govenment through the auspices of Fannie Mae and Freddie Mac and the Federal Reserve purchased them and then declared that all interests payments would paid as scheduled per the tranche. Thus stopping the perfection of all those cd-swaps. Cold. In. Its. Tracks. Thus, no panic.

I learned a long time ago in boot camp that when the Big Green Machine (in this instance its most gracious representative, the US Marine Corps) said that you're good to go, then Marine, fix bayonets and move out. :rotfl:

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 14 Jun 2013 06:27

panduranghari wrote:Too many uncertainties and we won't see any Bancor or SDR or whatnot.

Give me a plan and perhaps I will show you how it won't work.

Yes the global economy will collapse and it should collapse. It's a debt based system which has a massive flaw.


:rotfl:

panduranghari wrote:I am a gold bug alright but my understanding of paper market lead me to here. I used to loose money in stock market. I was competent enough to trade in warrants as well. The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?

There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important.


Pandu, you need to calm down buddy. I can feel your pain when you finally bought gold and then gold dropped suddenly after losing in the stock market. But if wishes were horses, we'd all be riding.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby RoyG » 14 Jun 2013 07:07

Gold has gone down temporarily. Jokes on you only.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 14 Jun 2013 07:50

RoyG wrote:Gold has gone down temporarily. Jokes on you only.


Sorry you're down $300 an ounce. :( it must be awful.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 14 Jun 2013 10:40

http://symmetricinfo.org/2011/03/what-i ... ld-prices/

What is the relationship between US Dollars and Gold Prices?
Summary
An examination of how Gold prices and the US dollar are related. Gold prices are typically denominated in US dollars and this implies that the exposure gained from buying/selling gold is influenced by changes in the exchange rate for US dollars.

In this video we are going to try to answer the question: what is the relationship between the price of gold and the US dollar? The short answer to this question is that the price of gold is inversely related to the US dollar. The long answer involves the following example.

Setting up an example
Let’s assume that in the world there are only three currencies. We will assume the first currency is the US dollar and the second currency is gold. If you watched our previous video you know the reason that we are treating gold as a currency is because a lot of the people who demand gold in the global markets are people who are looking for a store of value for their money and because people who are investing in gold or buying gold are often comparing it to other currencies. So it makes sense to think of gold as a currency. For the third currency we will group together all the other currencies in the world and treat it as one currency. For example we will group together the Euro, the Japanese Yen, the Thai Baht, the Indian Rupee and so on and just treat it as one currency which we are going to call the “Rest Of the World”.

We are going to assume that the exchange rate between US dollars and gold is such that you can exchange 1 unit of gold for 1,000 US dollars. Typically in the gold market one unit of gold is equal to one ounce so what we are saying is that 1 unit of gold or 1 ounce of gold is equal to 1000 US dollars. That is the exchange rate between US dollars and gold.

We are also going to assume that the exchange rate between US dollars and Rest of the World (ROW) currencies is such that 1 US dollar is equal to 2 ROW currency. This is really just the same as saying that 1 US dollar is worth twice as much as the average rest of the world currency.

Now as you can imagine, there will probably be a large market for exchanging gold to ROW currencies which I am going to draw over here and the question is what should the exchange rate between gold and ROW currency?

Exchange rates are interlinked
The first thing that’s important to realize is that if you’ve defined the exchange rate between Gold/US dollars and US dollars/ROW currency you’ve effectively defined what the exchange rate is between Gold and ROW currencies as you can figure out what that exchange rate is by just solving the other two equations. If you do this you get that 1 unit of Gold is equal to 2000 ROW currency. This is also generally true: if you have defined any too exchange rates in the triangle, you have effectively defined the third.

Gold Prices are usually denominated in US Dollars
The other thing that’s important to know is that when you go out into the market and you buy gold the price of gold is typically denominated in US dollars. What that means is that when you buy gold you are buying exposure to this number [1G = 1000 USD] meaning the profitability of your investment of buying gold or your trade of selling gold will be dependent upon this exchange rate between Gold and US dollars. To be more explicit when you buy gold if the exchange rate between Gold and US dollars is 1 unit of gold is equal 1,000 US dollars and if after you buy gold this exchange rate changes to 1 unit of gold is equal to 500 US dollars you will have incurred a lost on your investment. On the other hand if the exchange rate changes such that 1 unit of gold is equal to 2,000 US dollars you will see a profit. So it’s really keen to know that when you go out into the gold market and you buy gold you are buying exposure to this exchange rate [between Gold and US Dollars]

Gold prices are linked to the value of US Dollars
But as we’ve already talked about the exchange rate between US dollars and gold is dependent upon the other two exchange rates so if we assume for a second that the exchange rate between Gold and ROW currency is constant that implies that a change in the exchange rate between US dollars and ROW currency will cause a change between US dollars and gold. So let’s assume that the exchange rate between US dollars and ROW now changes such that 1 US dollar = 1 ROW currency. In other words, the value of the US dollar has gone down relative to the rest of the world. What does that mean for this exchange rate between US dollars and gold? Well, we can to solve the two other equations and we can see that the new exchange rate between US Dollars and Gold is such that that 1 unit of goal is equal to 2,000 US dollars. In other words because the US dollar has become weaker or is worth less relative to rest of the world currencies that means that the price of gold in US dollars has gone up.

The opposite is also true. Let us assume that instead 1 US Dollar = 2 ROW currency that 1 US Dollar = 4 ROW currency. This means the value of the US dollar has gone up by a factor of 2 and would imply that the price of gold would be equal to 500 US dollars. So the big picture here is that because gold is denominated in US dollars you are getting exposure to the exchange rate between US Dollars and ROW currency.

Historical relationships
Now based upon this you might expect historically to see a relationship between Gold prices in US dollars and the exchange rate between US dollars and ROW currency. This is what that chart looks like:

The graph covers the period from 1970 to 2011. The blue line shows the price of gold in US dollars which we’ve been referring to as the exchange rate between US dollars and gold. The pink line shows the value of the US dollar relative to a basket of currencies from the ROW and so when the pink line is going up it means that the value of the dollar is strengthening relative to other currencies and if the pink line is going down it means that the dollar is weakening relative to other currencies. As you can sort of see these two lines tend to the inverses of one another.

Conclusion
So the big picture here is that when you go out into the market and you buy gold some of the profitability of that investment is simply determined by changes in the exchange rate between the US dollar and ROW currencies. Put in other words when you my gold you are getting inverse US Dollar exposure

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 14 Jun 2013 14:25

DhruvP wrote:
panduranghari wrote:Too many uncertainties and we won't see any Bancor or SDR or whatnot.

Give me a plan and perhaps I will show you how it won't work.

Yes the global economy will collapse and it should collapse. It's a debt based system which has a massive flaw.


:rotfl:

panduranghari wrote:I am a gold bug alright but my understanding of paper market lead me to here. I used to loose money in stock market. I was competent enough to trade in warrants as well. The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?

There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important.


Pandu, you need to calm down buddy. I can feel your pain when you finally bought gold and then gold dropped suddenly after losing in the stock market. But if wishes were horses, we'd all be riding.


Sir I bought gold when it was not in vogue that is in 2004. The purchase price as far as I remember correctly was 450$ per oz. I am not a trader anymore that I am interested in catching the top. Over the past 9 years I have been buying every month so much so that I eventually need a Swiss vault in genera airport to store the quantity.

Am I concerned it now 1300$ per oz. no.

Would it concern me if it fell to 450$ or less again. No.

I now have reasonable quantity to be unconcerned. Besides I don't need to sell it for at least another 35 years as I am just beyond my 30's.

Let me tell you a story I was told by an old timer.


Which reminds me of my favorite Chinese customer, Mr. Chang.

I don't remember when he first became a customer but it had to be a decade before 1974. He barely spoke English, and I'm not even sure he was legally in the US. He worked in food service at United Airlines, and his wardrobe was Shanghai c.1930.

We didn't have much in common. His English was primitive and my Chinese non-existent.

The only thing we shared was his interest in gold and my desire to sell it to him. In those days we were prohibited from selling anything that could be considered a bullion coin. That didn't matter to Mr. Chang.

There was only one coin he would buy and that was the US $20 Liberty Head coin. He was familiar with it from China and to him the Liberty $20 gold coin was gold and gold was the Liberty $20 gold coin. Any other gold item might as well be counterfeit.

Through the years I saw him almost monthly. He brought his paycheck, would negotiate price, and then decide how many coins he wanted. (The $20 Liberty cost about $50 each.) I would give him change against his check.

Originally, I was amused that he came with his own balance scale. It was made of bamboo with a plate at one end and a weighted rock at the other. It was designed to balance the $20 Liberty. If a coin failed, it was either shaved or counterfeit.

After about a decade I became annoyed with his scale. "Mr. Chang, when in heaven's name will you trust me and not need a scale?"

He considered the scale just part of doing business, but he got my message and was embarrassed. Although his scale was present for the next purchase, I never saw it again after that.

In those days it wasn't easy getting information about the gold price. There was no US market and the London AM and PM fixings were sometimes available on the radio but it often required seeking the financial pages of the Wall Street Journal to learn the value of an ounce of gold.

Mr. Chang followed the price very closely. He would call almost daily, and ask, "Wuddah prica London gol?"

Upon getting the information he would respond: "Very thank you," and that was that. There was never any doubt about it. It was Mr. Chang on the phone.

Then we didn't hear from Mr. Chang for months.

"Has anyone heard from Mr. Chang", I asked? I was sure he was ill or worse.

Then one day there he was. "Wuddah prica London gol?"

I had answered his call and asked, "Mr Chang, have you been ill? We've missed hearing from you."

Dead silence.

How in heaven's name did I know it was him, he wondered. Gold dealers are amazing, with wondrous perceptions. I guess he believed that every customer said, "Very thank you."

Mr. Chang retired. I don't know if he had social security checks coming in, but his gold coins provided for his retirement. He came in as regularly as when he was a buyer. Only this time with one or two gold coins to sell. As he came in the front door, I noted he had coins in his hand, wrapped in tissue paper. He pretended he might be buying to keep me honest, but of course I knew that was not the case.

Then we learned from one of his old Chinese cronies that Mr. Chang had passed on. In fact he had gifted several coins to the friend who gave us the sad news. We dearly missed Mr. Chang, although "Very thank you" had become a part of the language in our office.

Some year or two later a young Chinese woman, whom I later learned was Mr. Chang's grand niece, came in. She was an accountant and evidently had found Mr. Chang's check stubs with Chinese characters on them breaking down how he had spent each check.

She was convinced there were gold coins some place and wondered if we were actually storing them. It was clear that she was not part of Mr. Chang's inner circle.

She left rude and angered.

As if rehearsed, my employees looked at me and in unison we all said: "Very thank you."

March 11, 2002


It's down to perspective.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 14 Jun 2013 14:28

TSJones wrote:
panduranghari wrote:TSJones are you a paper bug?

I am a gold bug alright but my understanding of paper market lead me to here. I used to loose money in stock market. I was competent enough to trade in warrants as well. The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?

There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important.


When I read your posts, I think you are indulging in wishful thinking. Please do not take it personal. I think you want the world to be a certain way, not as it is.

Do you really think derivatives will go away with the advent of a gold standard? I can assure you there was a derivatves market when the US was on a gold standard. It was called and still is, the Chicago Board of Trade, established in 1848. Derivatives fulfill a need by the system to lock in a price on a commodity, or yes, even a financial transaction so that a person can depend on something should it fail. The problem has been that somebody invariably tries to game the system. Thus stricter rules are needed. especially by banks but I can't help that. So I must invest wisely as I can. That is real world, real time.



This will be my last reply to you because you wrote this -Do you really think derivatives will go away with the advent of a gold standard?

Anyone who does not bother reading what other person has written and just posts like a cowboy shoots first and talks later cannot be indulged in words.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 14 Jun 2013 17:46

panduranghari wrote:

This will be my last reply to you because you wrote this -Do you really think derivatives will go away with the advent of a gold standard?

Anyone who does not bother reading what other person has written and just posts like a cowboy shoots first and talks later cannot be indulged in words.


and yet you posted this?

"There will be even 50% unemployment soon because most of the jobs are truly non jobs which are generated just to make unqualified good for nothing people feel important." :twisted:

Or ask this kind of question:

"The derivative bubble is now 3000trillion dollar big, do you seriously think the derivative market can be unwound?"

As if I ever indicated such a thing!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 14 Jun 2013 19:23

panduranghari wrote:
Sir I bought gold when it was not in vogue that is in 2004. The purchase price as far as I remember correctly was 450$ per oz. I am not a trader anymore that I am interested in catching the top. Over the past 9 years I have been buying every month so much so that I eventually need a Swiss vault in genera airport to store the quantity.

Am I concerned it now 1300$ per oz. no.

Would it concern me if it fell to 450$ or less again. No.

I now have reasonable quantity to be unconcerned. Besides I don't need to sell it for at least another 35 years as I am just beyond my 30's.

It's down to perspective.


Pandu, Gold is good to have and its great that you bought some (obviously not enough to store in a swiss vault or you wouldn't be here everyday convincing everyone that the world economy is about to crumble and that 50% of the jobs are useless). However, you need to understand that times have changed since your Chinese friend bought gold with every paycheck. Gold growth is superceded by the indices growth if you look in the last 50 years. That makes sense as well, since investing in real economic activity is finally bringing more returns on investments that putting it in a passive entity like gold which is hoarding and is not really useful to anyone in the long run other than the holder.

Gold is a good hedge, no doubt about it, but if you have your entire portfolio in gold you're in for a burn. Imagine if everyone in the world keeps buying gold with all their savings instead of investing it into a corporation or a targeted ETF. What would the economic activity be? How would growth occur? This same mentality is harming Indian corporations as well because they have to raise capital from outside India (and its easier too).

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 14 Jun 2013 22:40

DhruvP wrote: However, you need to understand that times have changed since your Chinese friend bought gold with every paycheck. Gold growth is superceded by the indices growth if you look in the last 50 years. That makes sense as well, since investing in real economic activity is finally bringing more returns on investments that putting it in a passive entity like gold which is hoarding and is not really useful to anyone in the long run other than the holder.

Only the elite/western nations have the access to such deals and majority of the people in the world do not have this luxury. Hence their decision.



This same mentality is harming Indian corporations as well because they have to raise capital from outside India (and its easier too).

Market should be efficient and honest to bring confidence in raising capitol. If this basics are not there then other sources will be used.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 14 Jun 2013 23:29

Acharya wrote:Only the elite/western nations have the access to such deals and majority of the people in the world do not have this luxury. Hence their decision.


They invented a wonderful thing last century called 'the INTERNET' which is a great medium to buy stocks/ETFs on any exchange in the world. Apparently you missed that memo. Oh well.

Acharya wrote:Market should be efficient and honest to bring confidence in raising capitol. If this basics are not there then other sources will be used.


This I agree with and that is why Gold is a hedge, not a singular source of growth medium in today's world.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby RoyG » 15 Jun 2013 00:19

TSJones wrote:
RoyG wrote:Gold has gone down temporarily. Jokes on you only.


Sorry you're down $300 an ounce. :( it must be awful.


The general trend is upwards. Again go back 20 years.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 15 Jun 2013 02:20


Theo_Fidel

Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Theo_Fidel » 15 Jun 2013 02:30

panduranghari has his gold stashed in Swiss airport locker. :eek:

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 15 Jun 2013 02:39

DhruvP wrote:
This I agree with and that is why Gold is a hedge, not a singular source of growth medium in today's world.


Agree 100%. However, we are not living in certain times. The uncertainty is so noticeable that to loose more money is not a good idea for me and my young family. 5 years ago in 2008 I did loose a fair bit of money due to the crash. I cannot afford to loose this again.

Acharya ji is right. A common man has not got the time- because he is working full time, money-because good financial advice costs a lot and understanding- because the financial world is complicated to understand. For eg. Unit trust, investment trusts, ETF, shares, issues, warrants, covered warrants etc. are some basic terms which 98% of people we meet have no idea about.

With time when the current debt based financial system implodes, the new system will permit me to set up my business in India. Hopefully it should happen soon and it's out of the way.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby panduranghari » 15 Jun 2013 02:40

Theo_Fidel wrote:panduranghari has his gold stashed in Swiss airport locker. :eek:


Safer than your local bank in US.

http://goldswitzerland.com/store-silver ... h-airport/

A vault located in a politically safe and economically sound country
Vault storage outside of the banking system
Vault storage away from any type of direct government control (e.g. Government Mints)
Vault storage with the highest security and in a most secure location
1. Storage outside of the banking system offers a number of possibilities but we have found only 5 parties that would meet with the criteria of being in strong private hands as well as in a safe place.
2. Storage away from even remotely possible official (foreign) intervention left MAM with a choice of only 2 possible vault partners.

3. Storage in the safest possible place for us meant in Switzerland and choosing between Zurich airport or a remote mountain location.

Even though a remote mountain location in Switzerland can be very safe, romantic and very much hidden from any kind of public scenery, it is also a relatively expensive option. Zurich airport, designed on 750 hectares of flat landscape, offers easy access in normal times and customers can fly in, have a 5 minute walk and inspect their property at all times during business hours. Zurich airport is an extremely well protected and almost invisibly policed terrain with a highly and technically developed strong safety alert system in case of an attack or other major or minor event at or around the airport. The vaults are impossible to access without special permission and only after full compliance. Even with very detailed knowledge of the exact route to the vaults, the time it would take to cross the corridors and open 6 doors with special codes takes significantly longer than the 2 two minutes it would take for Police and or Military to arrive on the spot. Further more all exits from the airport would be closed immediately.

There has never been any reported incident near the vaults at Zurich airport. Matterhorn Asset Management is completely satisfied that this facility continues to offer maximum security to its customers.

Furthermore we can offer our customers a very personalized service and the vault can be visited for a personal inspection or audit of the precious metals or other holdings during business hours.

Inspection take place in a secure private room underneath Zurich airport very near the vaults. In order to prepare for these inspections the vault operator needs a bit of time to setup for inspection as the metals need to be moved from the vault to the private room, which for security reasons is never done at the same time as the customer visit.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby member_26147 » 15 Jun 2013 05:19

panduranghari wrote:
DhruvP wrote:
This I agree with and that is why Gold is a hedge, not a singular source of growth medium in today's world.


Agree 100%. However, we are not living in certain times. The uncertainty is so noticeable that to loose more money is not a good idea for me and my young family. 5 years ago in 2008 I did loose a fair bit of money due to the crash. I cannot afford to loose this again.

Acharya ji is right. A common man has not got the time- because he is working full time, money-because good financial advice costs a lot and understanding- because the financial world is complicated to understand. For eg. Unit trust, investment trusts, ETF, shares, issues, warrants, covered warrants etc. are some basic terms which 98% of people we meet have no idea about.

With time when the current debt based financial system implodes, the new system will permit me to set up my business in India. Hopefully it should happen soon and it's out of the way.


Panduji, had you not panicked, you would've come back up. Whether you invest in stocks, ETFs or Gold, you should be in for the long haul otherwise you will keep losing money. I do agree that you need to do a lot of homework to invest in good stocks and ETFs but don't deride the stock market, commodities and other ETFs simply because your patience with them is limited. You are banking on a black swan event (implosion of world's economy!) for the future of your family. I think thats a fool's errand!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 15 Jun 2013 07:20

^^^^Panic is such an awful thing. :(

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby TSJones » 15 Jun 2013 08:14

Deutsche bank horribly undercapitalized says US regulator and its not the only euro bank:

http://finance.yahoo.com/news/exclusive ... 05128.html

...and these guys are going to demand gold only payments from America says the Gold Bug? Ha!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Neshant » 15 Jun 2013 09:27

DhruvP wrote:Gold growth is superceded by the indices growth if you look in the last 50 years.


If you look at the last 12 years, its been nothing but debt layered upon debt. Post-2008, the only thing pushing up the markets is more debt, money printing, interest rate surpressing and stock market rigging - the latter which the federal reserve itself admits to.

One thing is for certain, the vast amounts of debts rapidly being accumulated are not going to be repaid - not at the present purchasing power of the dollar.

passive entity like gold which is hoarding and is not really useful to anyone in the long run other than the holder.


Exactly who decides what is "really useful" to anyone. Bernanke was getting a whole load of people into "really useful" investments pre-2008. Even at the height of the real estate bubble, he claimed there was no bubble and prices were rising because the economy was doing great. Now again he's getting people into really useful things on the stock market, derivative and a whole load of other speculative fronts. We'll see how this ends.

It certainly helps to have creditors around if and when the paper money system implodes. Ultimately capital can only come from savings (or looting other people's savings). It cannot come out of a printing press.

Gold is a good hedge, no doubt about it, but if you have your entire portfolio in gold you're in for a burn. Imagine if everyone in the world keeps buying gold with all their savings instead of investing it into a corporation or a targeted ETF. What would the economic activity be?


Economic decisions would be made very wisely if that were to happen. Debt would be something people would take on very cautiously. Productivity would be maximized and various useless industries like banking and paper shuffling would be largely cut out of the picture - unless they offer something of real value to society as opposed to rent seeking. Just the opposite of today.

The time to pay the piper will come eventually with wreckless spending and debt binging if there is no real growth on the income side of the ledger. When it does, either the paper holders will have to be cheated through taxation, confiscation, inflation..etc or they would stand to gain massively in huge tsunamis of defaults rolling through the system. Judging from history, I'd bet on the former.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 15 Jun 2013 10:54

TSJones wrote:Gold is a broken commodity:

http://finance.yahoo.com/blogs/talking- ... .html?vp=1


Did this wizard know that gold was going to have a decade of bull run from 2000 and put any of his investment in gold during that time? I expect this expert's answer to be NO. So take his opinion with appropriate amount of salt.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Patni » 15 Jun 2013 15:36

IMHO the indian buying of gold is more cause of it is a most suitable and within reach instrument as a hedge against rampant real CPI inflation which has been in double digits for most of the last decade. For majority of middle income to low income household in India, the priorites has been for education of younger generation after essentials are paid for and most indian parents treat educating next genration as part of their duty and pay for it as best as they can. Any gold purchase by urban household is only as saving for future and more then likely in jewellery form rather then coins or bars. Most Indians pass on the wealth in form of house to son and gold to daughter. I believe the most indian gold consumption is retail and in form of coins of under 10 gms bought a few times in a year on an average which gets exchanged for wedding jewellery. The recent spurt in gold demand is only cause more and more lower income households are able to save more then their parents generation could. I think vast lower middle class buys a "one gram jewellery" and ends up paying almost as much in making charges as the price of gold in that jewellery. IMHO the indian buying of gold is more cause of it is a most suitable and within reach instrument as weatlh storage and also a hedge against rampant real CPI inflation which has been in double digits for most of the last decade.

The goverment of the day has mismanaged the economy and is now trying to curb only inflation hedge available to common man is not going to work. From an indian prespective Gold buying as 20 to 30% of overall household saving makes good sense and will continue to be so. As is Indians pay 10% to 12% higher price for gold then Rest of World.


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