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

KrishnaK · Post by **KrishnaK** » 10 Jul 2013 05:32

Neshant wrote:Remember the good old days when you were pumping "cloud computing" before I told you it was just marketing

That's news to me, cloud computing being hype !

TSJones · Post by **TSJones** » 10 Jul 2013 05:51

delete

Neshant · Post by **Neshant** » 10 Jul 2013 11:08

When I point out data does not back you up

You pointed out nothing except a buzz word (3d printing) and made tall claims around it.

When I point out its been around for ages and its nothing new, you have no come back to it.

How have companies been able to squeeze so much work out, while folks are being over worked that is not automatically mean more productivity

Sure it is. A smaller workforce is made to do the same work - only more of it and at the same or lesser pay.

Again I ask - why the need to print up billions and go into debt to the tune of trillions if all this productivity is coming out of 3d printing and cloud computing.

You need to cloud compute that and give me the answer.

My immutable law stands :

There has not been a single new productive industry since 2000 that has generated well paid jobs on a mass scale.

All the money printing, stock market rigging, fancy terminology, marketing gimmicks and slick talking are not going to change that fact.

TSJones · Post by **TSJones** » 10 Jul 2013 13:17

^^^^^^^Economic paradigm shifts do not happen on command but on a combination of neccessity and random happenstance. The trick is to build a system receptive to it and yet resilient to a lot of the harmful effects of serendippity.

panduranghari · Post by **panduranghari** » 10 Jul 2013 17:33

Acharya wrote:http://fofoa.blogspot.com/2010/07/debto ... avers.html

He is very good. Do read as many of his posts as you can. Its one education that you will never ever get anywhere else.

TSJones · Post by **TSJones** » 10 Jul 2013 20:29

Acharya wrote:http://fofoa.blogspot.com/2010/07/debto ... avers.html

Standard libertarian fare that attempts to portray the French revolution as a revolt of debtors versus savers. Utter horse shit.

Never mind the fact of a monarchy unable and unwilling to to try and improve people's lives and keep them from starving. "Let them eat cake!".

I have read the same idiocy about the American revolution and how the founding fathers wanted to get out of their debt. Standard Libertarian monied/gold propaganda.

You guys buy into that horse cake and it will spin your head off.

"God grant that not only the love of liberty but a thorough knowledge of the rights of man may pervade all the nations of the earth, so that a philosopher may set his foot anywhere on its surface and say: This is my country. " .....Ben Franklin

Theo_Fidel · Post by **Theo_Fidel** » 10 Jul 2013 21:23

Neshant wrote:Sure it is. A smaller workforce is made to do the same work - only more of it and at the same or lesser pay.

And the definition of productivity is..... ..Aiy Vey!

Don't slide off the high horse. Your claim was that no new industries have come along. Not about wages or economic warfare or the middle class....
Apparently it is all marketing phrases.
Here is what McKinsey says. 3D Rapid prototyping is already a $10 Billion USA industry and growing at 30% per year.

svinayak · Post by **svinayak** » 10 Jul 2013 21:36

panduranghari wrote:
Acharya wrote:http://fofoa.blogspot.com/2010/07/debto ... avers.html
He is very good. Do read as many of his posts as you can. Its one education that you will never ever get anywhere else.

Good site. There are other comprehensive sites with more details. History will give lot of insight into what the world economy is going through now.

svinayak · Post by **svinayak** » 10 Jul 2013 23:04

http://www.bloomberg.com/news/2013-07-0 ... osers.html

What’s Good for U.S.-China-Japan Hurts Emerging Markets

What’s good for the global economy’s superpowers risks creating losers in other parts of the world.

Signs that the Federal Reserve is preparing to curtail its stimulus are boosting interest rates abroad as well as in the U.S. The strictest credit squeeze in China in at least a decade threatens to erode a pillar of international growth. Japan’s reflation push is lifting the exchange rates of trade rivals and luring capital.

While the transitions could mean slower growth in the U.S. and China, they ultimately prime the three biggest economies for less volatile and longer-lasting expansions. Losers for now include the emerging markets and commodity producers previously buoyed by easy U.S. monetary policy and Chinese demand. Economies that still need cheap cash or weaker currencies, including the euro area, also could suffer. Policy makers already are responding.

“Pieces of the world are moving, and when that happens you have frictions,” said Stephen Jen, co-founder of hedge fund SLJ Macro Partners LLP in London. “There’s more divergence, and financial markets will see more volatility.”

Lowered Forecast

The shifts are reflected in today’s new International Monetary Fund forecasts, which show the gap between developed-and emerging-market growth rates will remain close to the narrowest in a decade, at 3.8 percentage points in 2013. Further undermining the trend set in the wake of the 2008 global financial crisis, the Washington-based lender cited a slowdown for emerging markets in cutting its prediction for worldwide expansion this year to 3.1 percent from 3.3 percent in April.

The new environment is leaving some emerging countries -- especially Brazil, Mexico, South Africa, Turkey and Ukraine -- vulnerable to a sudden stop in which capital flows are thrown into reverse, say economists at Morgan Stanley, who used 12 metrics including debt issuance and current accounts to measure the risk.

For all the shake-up, international policy makers have long sought such changes because of concerns about easy U.S. money, China’s outsized demand and Japan’s malaise. Group of 20 finance ministers and central bankers will assess the outlook when they gather next week for talks in Moscow.

Significant Progress

“We are seeing significant progress in the global economy now, so people shouldn’t be worrying,” said Holger Schmieding, chief economist at Berenberg Bank in London. “The gradual return to a more balanced pattern of global growth should be good rather than bad for almost everyone in the medium term.”

The biggest source of market turmoil was the June 19 announcement by Chairman Ben S. Bernanke of a possible time frame for the Fed to begin paring its $85 billion in monthly asset purchases, starting as soon as later this year.

Since Bernanke first raised the possibility of 2013 tapering in May 22 congressional testimony, the yield on 10-year Treasury notes has risen to 2.62 percent at 10:30 a.m. in New York today from 2.04 percent, according to Bloomberg Bond Trader prices. Treasuries lost the most since 2009 in the first half of the year and posted their longest run of quarterly declines since 1999.

Jim Paulsen, chief investment strategist at Wells Capital Management, calls the gains in long-term borrowing costs a “good yield rise” because they reflect mounting confidence at the Fed and among investors in the U.S. economy. He finds that since 1967, whenever the 10-year bond yield has been below 6 percent, any increase typically has been associated with improving sentiment.

Rising Payrolls

U.S. payrolls rose by 195,000 workers in June, beating analysts’ forecasts, and revisions added 70,000 jobs to the employment counts for April and May, according to Labor Department data released July 5. The jobless rate remained at 7.6 percent, near a four-year low.

If the faith continues to solidify, “higher interest rates should not materially impact economic activity, and the stock market may continue to provide favorable results,” said Paulsen, who helps manage more than $340 billion in Minneapolis. The Standard & Poor’s 500 Index has risen 15 percent this year.

Tapering “is actually healthy,” given that an expansion in the Fed’s balance sheet beyond $3 trillion has failed to spur much growth in credit or the economy, according to a June 27 report by BlackRock Inc., the world’s largest asset manager. Gross domestic product grew at a 1.8 percent annualized rate in the first quarter, revised from a previous estimate of 2.4 percent, according to Commerce Department data.

Tighter Credit

There is less room for celebration elsewhere as investors push yields up even in economies less able than the U.S. to cope with tighter credit. The decoupling is reflected in the 0.6 percent decline since May 22 in the S&P 500 Index (SPX) compared with a 3.7 percent fall in the MSCI World Index.

Countries that may suffer from unwanted yield increases include the U.K., Russia and those in the euro area’s crisis-hit periphery, said Stephen King, chief global economist at HSBC Holdings Plc in London.

The yield on Spain’s 10-year note has risen to 4.71 percent from 4.18 percent on May 22, even with the economy contracting for seven straight quarters. Portugal’s yield last week jumped above 8 percent for the first time since November as the government struggled to address crisis-fighting austerity fatigue. Ten-year U.K. government bond yields climbed to 2.59 percent on June 24, the highest since 2011.

Such gains will make it costlier for governments to finance their debt and for consumers and companies to access credit, extending the countries’ woes.

‘Incipient Recovery’

“Rather than being a sign of incipient recovery, a sudden spike in bond yields might be enough to send some economies off the rails altogether,” said King, adding that the U.S. may suffer a backlash if trade dries up as a result.

Policy makers are pushing back in the hope of persuading markets to refocus on the weakness of their economies. Mark Carney, who became governor of the Bank of England on July 1, and European Central Bank President Mario Draghi both signaled last week that they will keep interest rates low for longer than investors anticipated.

The prospect of less U.S.-led stimulus also is rocking emerging markets. Particularly prone are economies that took advantage of easy money to run up current-account deficits and borrowing imbalances, according to Michael Saunders, a Citigroup Inc. economist in London. Outside of China and the Middle East, emerging economies have aggregate current-account shortfalls of about 2 percent of GDP, the highest since the late 1990s.

Disappearing Surpluses

Thailand (EHCATH) and China (EHCACNY) are among nations whose surpluses have shrunk, while Indonesia (EHCAIDY) and India (EHCAIN) face mounting deficit challenges. Gaps in Chile (EHCACLY) and Brazil (EHCABRY) also have grown. Meantime, average private-sector debt in South Korea, Thailand, Singapore and Indonesia has risen by 25 percentage points of GDP in the last four years, according to Citigroup.

China, Hong Kong (EHCAHK) and India are in a “high-risk danger zone” if a pullback by the Fed prompts investors to punish Asian countries that have weak economic fundamentals and are too slow to reform, according to a June 28 report from Nomura Holdings Inc.

In Europe, Hungary and Poland are at risk because foreign investors have large holdings of local-currency debt, according to Oxford Analytica, based in Oxford, England. Turkey is especially vulnerable because of its reliance on foreign cash to finance its large current-account gap at a time when political tensions are rising, the consulting company said in a report last week.

Worsening Fundamentals

“Many emerging-market countries now face the long-absent challenge of rising capital needs with worsening fundamentals at a time when global-liquidity conditions may not be easing further,” said Citigroup’s Saunders.

That already is forcing a response as authorities from Brazil and Thailand to India and Indonesia raise interest rates, intervene in currency markets or unwind capital controls to stanch the exit of cash or limit its fallout. In doing so, they’re reversing some of the measures introduced to cope with the hot money sent their way by the loose monetary policies of recent years.

China is also in transition as its policy makers seek to rein in financial speculation and real-estate prices, signaling tolerance of a weaker expansion. Interbank borrowing costs reached records on June 20 before easing.

First Miss

HSBC and Goldman Sachs Group Inc. are among those now predicting expansion of 7.4 percent this year in the world’s second-largest economy, compared with Premier Li Keqiang’s 7.5 percent forecast. This would be the first miss for a government growth prediction in 15 years. Manufacturing expanded at the slowest pace in four months in June, and the economy probably eased for a second straight quarter, according to the median estimate in a Bloomberg News survey.

Chinese authorities may be trying to make economic performance more consistent after a credit surge helped propel expansion above 9 percent in recent years, said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd. By addressing the imbalances, China also may avoid the mistake the U.S. and Europe made in not tackling excesses before they sparked crises.

“The new leadership quite clearly seems to be taking a much longer-term view on China and are prepared to take some risks that growth in the short term will disappoint in order to encourage a more balanced and sustainable economy,” he said.

Likely Losers

Again there are likely losers, among them Australia, South Korea and Taiwan, each of which dispatches more than a quarter of its exports to China. New Australian Prime Minister Kevin Rudd is warning that the end of a China-led mining boom possibly portends recession, noting trade with China represents 10 percent of GDP.

China accounts for one-sixth of global output, estimates Julian Callow, chief international economist at Barclays Plc in London.

“But the consequences of a domestically driven Chinese slowdown would be much more significant than this implies, given China’s role as a major importer of commodities and capital goods, and in particular its role in supporting business confidence across Asia,” said Callow, who calculates China accounted for 43 percent of worldwide growth from 2007 to 2012.

Close Connection

While he said cheaper commodity prices would be good for advanced nations, they would hurt producers. Deutsche Bank AG analysts estimate the Chinese have accounted for about a quarter of worldwide demand for major raw materials in recent years. Chinese purchases of copper, coal, iron ore and oil are all “closely connected” to loan-growth conditions and so are at risk if the credit crunch continues, according to Bank of America Merrill Lynch analysts.

Companies and countries that produce materials for transportation, power and property development will be particularly hit, said Larry Hatheway, chief economist at UBS AG in London. More than 80 percent of the exports to China from Russia, Brazil, Australia, Canada and Indonesia are for domestic use, UBS calculates.

“If China slows, this will have a disproportionate impact on commodity producers and chunks of emerging markets,” said Hatheway. “Property and infrastructure are big uses of nickel and copper, etc, so a slowdown in China will obviously mean a pretty generalized effect on the commodity universe.”

Deflation Fight

Japan, the world’s third-largest economy, is trying to end 15 years of deflation-fighting by easing monetary and fiscal policies and pursuing deregulation. The effort overseen by Prime Minister Shinzo Abe is starting to pay off. Factory output rose the most in May since December 2011, retail sales climbed and consumer prices ended a six-month slide.

“Abenomics is aimed at ending deflation and rebuilding the nation’s fiscal health by spurring longer-term growth,” said Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo. “It’s essential and seems to be on the right track.”

A byproduct is nevertheless a falling yen. The currency weakened the most in the first half of this year versus the dollar since 1982. It also dropped 12 percent against the euro and about 7 percent versus the sterling, threatening to undercut European trade.

“Japan is exporting deflation risk to Europe, increasing competitive pressures when much of Europe is suffering chronic growth deficiency,” said Lena Komileva, managing director at G+ Economics Ltd. in London.

Emerging markets again may suffer, BlackRock’s Peter Fisher said June 27 on Bloomberg Television’s “Surveillance.” While hurting exports, the weaker yen is drawing investment away from these countries and toward Japanese equities -- the Nikkei 225 (NKY) Stock Average has gained 39 percent so far this year.

“That’s a whole lot of pressure” on these nations, said Fisher, a former U.S. Treasury and Fed official.

To contact the reporter on this story: Simon Kennedy in London at [email protected]

To contact the editor responsible for this story: Craig Stirling at [email protected]

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

KrishnaK · Post by **KrishnaK** » 10 Jul 2013 23:10

Neshant wrote:Again I ask - why the need to print up billions and go into debt to the tune of trillions if all this productivity is coming out of 3d printing and cloud computing.

Debt is what is used to create gigantic infrastructure that can provide cloud computing. Look at the margins of Amazon, the world's largest cloud provider and you'll see how it's the fancy money printing that's used to back something that's as much of a long shot as that.

svinayak · Post by **svinayak** » 10 Jul 2013 23:17

KrishnaK wrote:
Neshant wrote:Again I ask - why the need to print up billions and go into debt to the tune of trillions if all this productivity is coming out of 3d printing and cloud computing.
Debt is what is used to create gigantic infrastructure that can provide cloud computing. Look at the margins of Amazon, the world's largest cloud provider and you'll see how it's the fancy money printing that's used to back something that's as much of a long shot as that.

They are using the money to create a long term global monopoly on productivity tools/infra and IP so that they control the global economy. That vision may be a good strategy but there is no guarantee.

KrishnaK · Post by **KrishnaK** » 10 Jul 2013 23:29

Acharya,
They're using the money to make more for themselves. Exactly as we would/should be doing for ourselves. In fact what TSJ says above is the simplest and clearest explanation for what they're doing.

Economic paradigm shifts do not happen on command but on a combination of neccessity and random happenstance. The trick is to build a system receptive to it and yet resilient to a lot of the harmful effects of serendippity.

Anybody who thinks change is something that can be controlled or even channeled slightly, let alone managed is living in la la land. The more enabling technologies like "cloud computing", "smart phones" and "3d printing" gets established, the more normal people will have the power to innovate with just their brains. With every passing day, they wield less in control. And it's a one way street.

P.S. IP on all sorts of things is increasingly accessible to the lay person. I worked at a startup where every single thing, from the OS on the cloud compute instances we used, to the Mapreduce implementation (Hadoop) to the machine learning algorithms we used was all open source. We could just not have managed to do that barely a decade ago.

ramana · Post by **ramana** » 11 Jul 2013 02:03

TSJ, Have you read Gordon Woods "Radicalism of the American Revolution"? We can discuss in strat forum.

TSJones · Post by **TSJones** » 11 Jul 2013 02:12

ramana wrote:TSJ, Have you read Gordon Woods "Radicalism of the American Revolution"? We can discuss in strat forum.

Ramana, no I have not but let me check it out and I will get back to you. Thanks, TSJ

TSJones · Post by **TSJones** » 11 Jul 2013 02:14

News on the latest sale of 10 year treasury notes:

http://finance.yahoo.com/news/treasury- ... 14334.html

...please note that there were more bidders than there was debt to buy.

And it's only going to get worse as sequestration continues.

svinayak · Post by **svinayak** » 11 Jul 2013 03:01

http://www.thefinancialist.com/chinese- ... s-go-west/

What are upscale Chinese homebuyers looking for in the United States?

Great locations in New York, Los Angeles or San Francisco. Properties in shiny new developments. Crash pads for kids to use during college – even if those kids are currently in preschool.

It also helps if property developers reach out to Chinese customers with staff who speak Mandarin and information in their language. So it’s natural that residential developers from China are starting to tap into the growing Chinese market in the United States. But the strategy also provides an opportunity for diversifying developers’ investments amid fears of a property bubble back home.

“Chinese developers are losing confidence in the domestic market and are now seeking to find more secure returns in a place like the U.S.,” said Ben Carlos Thypin, director of market analysis for research and consulting firm Real Capital Analytics Inc.

A deal in San Francisco may offer a taste of what’s to come, analysts say. China Vanke, the mainland’s biggest developer of residential properties, said in February that it is partnering with American property developer Tishman Speyer on a project for two luxury condo towers in San Francisco that will have 655 residences and bay views.

China Vanke will own a 70 percent stake in the $620 million project, which will be marketed to mainland Chinese buyers, according to a Credit Suisse research note entitled “First Project in the US: Reconfirming a Trend.” In April, as part of its expansion, the company also took a stake in a condo project in Singapore.

Many purchases are tied to children’s education – parents might plan for their child to live there during college or after graduation. Often, they’re thinking way ahead.

“Chinese families will say, ‘I think my children might go to school there,’ and I’ll say, ‘Oh, how old are your children?’ and they’ll say, ‘4-years-old,’” O’Neill said. “We hear that quite often.”

svinayak · Post by **svinayak** » 11 Jul 2013 03:03

Where Is the Global Economy Going?

TSJones · Post by **TSJones** » 11 Jul 2013 08:44

gold not a safe haven says expert......

http://finance.yahoo.com/blogs/big-data ... 53878.html

....look to miners for direction gold is taking.

Austin · Post by **Austin** » 11 Jul 2013 09:54

Gold has its ups and downs but any one looking for long term investment and not looking to make a quick buck can always rely on Gold , when the chips are down the market always run towards gold and nothing else really matters.

As they say Gold and Land Prices never fall and you can never go wrong buying both for long term investment with high returns.

svinayak · Post by **svinayak** » 11 Jul 2013 10:21

http://www.timescolonist.com/business/g ... d-1.464429

Gold bugs remain bullish on gold, say upward trend 'not reversed'
ABDUL LATHEEF / THE CANADIAN PRESS
JULY 10, 2013

Email Print

TORONTO - As gold slowly recovers from its biggest quarterly loss on record, gold bugs remain bullish and say it is still worth investing in despite the hammering the yellow metal has taken this year.

"I firmly believe that we will see higher gold prices in the future and that the long-term upward trend has not been reversed," said Rolf Schneebeli, former head of the World Gold Council for the Middle East and India.

Gold fell 23 per cent to US$1,235 an ounce in the second quarter that ended on June 28, its biggest quarterly plunge since trading began in 1971.

Investing in gold has often been seen as a hedge against inflation and when central banks opened the taps to easy money in the wake of the financial crisis in recent years, investors flocked to gold in anticipation of rising prices.

However, the expected rampant inflation never materialized and now the U.S. Federal Reserve is talking about easing back on its stimulus.

Talk of the tapering of the stimulus has clobbered both the price of gold and the stocks of the companies that mine it.

The S&P/TSX Global Gold Index is down nearly 50 per cent from the start of the year, with heavyweight Barrick Gold Corp. (TSX:ABX) down nearly 60 per cent.

Compounding the affect on the price of the metal has been a strengthening in the U.S. dollar and for the gold miners it has been the increasing costs to get it out of the ground.

But Schneebeli says market consensus is that a price below $1,100 is quite unlikely.

"Currently the markets seem to believe that the worst (of the economic crisis) is over and that normality has returned. This might be premature and some negative surprises might well be positive for gold again," said Schneebeli, who is currently CEO of the consulting firm Gold Services AG, based in Zurich.

However, not everyone is bullish.

CIBC (TSX:CM) on Wednesday slashed its forecast price for gold to US$1,200 per ounce for the remainder of this year, rising to only $1,350 in 2014 before falling back to $1,300 in 2015 and to $1,200 long term.

The bank had previously forecast a price of gold for this year to be $1,700, $1,800 in 2014 and $1,500 in 2015, with a long-term price of $1,500.

On Wednesday, the August gold contract on the New York Mercantile Exchange was up $12.80 at US$1,258.70 an ounce.

"Sure, nothing ever goes down in a straight line and there’s bound to be a bounce after such a stellar rout, but for us, the bigger question is whether or not gold could or should still be seen as an investment – now , or even over the next five years?" CIBC analyst Leon Esterhuizen wrote in a report.

"Outside of continued money printing, which must ultimately undermine the relative value of the U.S. dollar in gold terms, everything else remains pointing in the wrong direction for the gold price for now."

But Himadri Bhattacharya, who has tracked gold for years, believes despite the sharp fall in its price this year, gold's attractive investment properties for individuals and institutions still hold.

"The issue is at what level investors should buy again given the current bearish undertone. My sense is that gold at or below $1,100 is a good buy," said Bhattacharya, global adviser at RisKontroller GmbH, a Swiss company that develops risk management solutions.

The reason for that, he says, is one of the "bearest" forecasts (by UBS) on gold price over the next few months is $1,050 per ounce."

"From a purely technical trading perspective, $1,000 is a strong support, meaning thereby that a lot of buying interest is likely to emerge at this level," he said.

Hong Kong-based Marc Faber, publisher of the Gloom, Boom and Doom report, also thinks gold will go up.

"I am buying every month and I keep approximately 25 per cent of my assets in gold," said the maverick investor, pointing out that he has repeatedly pronounced his faith in gold.

© Copyright 2013

TSJones · Post by **TSJones** » 11 Jul 2013 19:29

Gold nears 1300 but analysts say don't buy:

http://finance.yahoo.com/news/gold-near ... 59906.html

Theo_Fidel · Post by **Theo_Fidel** » 11 Jul 2013 20:12

Historically the price of gold has tracked inflation.
Right now the inflation adjusted average runs at about $500 per forbes but I’d go with $600 just to be sure.
The price will keep trying to return to this inflation average.
No one can see the future but at some point the two curves will merge.

Gold is a good hedge if you are trying to track inflation.
Nothing wrong in holding a small chunk as a hedge.
Not as jewelry but as bullion or even paper instruments.
Don’t expect to retire or get wealthy of it how ever.

Virupaksha · Post by **Virupaksha** » 11 Jul 2013 20:28

That graph will hit the hall of fame of most nonsensical graphs ever.
Until 1971 when the price of gold is shown to be around inflation, dollar was tradable with gold. So speaking "historically" is a non-sequitor in this aspect.

The only important part of the graph is that after 1971- when there seems to be no corelation with whatever that is.

Theo_Fidel · Post by **Theo_Fidel** » 11 Jul 2013 20:53

The dollar is still trade-able for gold.

svinayak · Post by **svinayak** » 11 Jul 2013 21:27

THere is no fixed dollar price for gold as before. Dollar printing is resulting in two things. It is creating inflation due to fiat money and current financial situation(due to imbalance) inside US and outside US. Also dollar is seen as competing with gold for global asset. But gold cannot be a dollar as a trading currency and Dollar cannot replace gold as a stable asset ( not controlled by a country and its central bank)

TSJones · Post by **TSJones** » 11 Jul 2013 21:59

What country in its right mind would want to underwrite the price of gold with its currency? Not even the Swiss attempts this. So let the marketplace place a value on gold per any currency. Especially when there are not enough 10 year US treasury notes to satisfy demand anyway.

svinayak · Post by **svinayak** » 11 Jul 2013 22:37

http://www.zerohedge.com/contributed/20 ... prosperity

Why the Gold Standard Can Return the World to Global Economic Prosperity
smartknowledgeu's pictureSubmitted by smartknowledgeu on 12/13/2012 07:15 -0400

With youth unemployment at 56.4% in Greece and 55.9% in Spain, with nearly 1/3 of 25-34 year olds in America living with their parents, with more than 100,000,000 in China still earning $1 or less a day, and with food prices rising by more than 32% since 2007 in the UK, all due to immoral Central Bank monetary policies that deliberately devalue global fiat currencies in a race to the bottom, a gold standard is quite capable of returning the world to global economic prosperity and ushering in one of the most stable economic growth periods in the history of the world.

For example, the Central Banks’ propensity to deliberately destroy wealth is easily illustrated by the current conditions that they have created in global bond markets, where despite the high risk of owning sovereign bonds, Central Banks refuse to offer higher yields for the public assumption of this enormous risk, and in fact, in some countries, have even goaded the public into paying them interest (negative yields) on government bonds issued in Germany, Finland, Denmark, Switzerland, Netherlands, and Austria (with France among other countries likely next in line). Central Banks have successfully sold their propaganda that government bonds are “safe havens” for decades to the public, and the public has gobbled up this heaping mound of rubbish hook, line, and sinker.

For this reason, governments and bankers (because they are two heads of the same monster) can offer public negative yielding bonds and still trick the public into buying them. Furthermore, in the US, the Central Bankers have pledged to buy 90% of all new government bond issues in 2013, the only scenario that will present (and perhaps only delay) a total collapse of the US Treasury bond market. Thus only trickery, deceit and chicanery are necessary tools on behalf of Central Bankers to prop up the illusion that Treasury bonds are “risk-free”. Nothing on the surface is ever what it seems to be. Because we have always dug below the surface and have never accepted the garbage that governments and bankers attempt to repackage as great value and sell to the public, we put everyone on notice in January, 2007 to get rid of USD denominated bonds and reiterated "10 Reasons Why No One Should Own Any Dollar Denominated Bonds, v 2.0", in February of 2008, when we also stated that physical gold and physical silver were much better places to park your money back then. Since then, both gold and silver have already both nearly doubled in price against the USD. Not bad for what bankers were trying to portray as “crazy talk” back then, right?

In any event, those that wish to keep the people hopelessly enslaved in our current, debt-based, Ponzi-ridden, fiat currency system always attack the idea of a gold standard because they say that the use of a gold standard today is impossible because:

(1) The price of gold would have to be “too high” to reimplement a gold standard,

(2) A gold standard would not prevent runaway inflation because there are historical periods of runaway inflation under previous gold standards; and

(3) If the same private interests that run our current global monetary system run a gold-based monetary system, then there is no sense in having a gold-based monetary system.

TSJones · Post by **TSJones** » 12 Jul 2013 01:01

^^^^No government wants to guarantee the price of gold. Especially when you can't get a lot of governments to have full convertibility of their currency or even allow the market place to freely function. Some countries seem to think it is their privilege to export as much as possible and to curtail imports (via taxation or structured impediments) as they please. You want a country to guarentee the price of gold? Then by all means have your country to do it. I would love to see China try for instance.

svinayak · Post by **svinayak** » 12 Jul 2013 01:04

To be crystal clear that a gold standard has never failed to admirablyperform its
job of enforcing price stability and to prevent conditions of runaway
inflation, let’s examine the oft
-given example of Bretton Woods. Critics, or moreaptly put, disingenuous banking shills
like Paul Krugman, state that gold standardssimply do not work. They falsely state that
Bretton Woods failed to prevent runaway inflation and thus serves as sufficient proof that
any subsequent attempt to implementa gold standard in the future would also fail again.
However, during Bretton Woods,the US Central Bank never implemented a true gold standard
in which gold reserves backed a constant percentage of every US dollar they elected to create.

In other words, the US Federal Reserve secretly created a large quantity of US dollars backed by
nothing (essentially our current day system), even though they falsely informed the world
that they were creating dollars backed by gold. In the process, they secretly diluted the
gold standard and did not maintain a gold standard. Had the US Federal Reserve actually
maintained a true gold standard, inflation would have been kept at every low rate. The
decision of the US Federal Reserve to deceive the world and to refuse to maintain the gold
standard is the act that ultimately led to the collapse of the Bretton Woods agreement.
So at this point and time, many of you may be thinking,
“Haven’t you just proven the argument that as long as the people in charge of the
banking system are corrupt, a gold-backed currency will not protect the people?”

Theo_Fidel · Post by **Theo_Fidel** » 12 Jul 2013 01:17

BTW almost every oz of gold coming into India is imported. This is a foreign substance after all.
So whyfor are the nativists so gold obsessed. All colonized minds I tell you…..

-------------------------------------------------------

It is silliness to say the dollar is backed by nothing.
All financial instruments are implicitly backed by the assets of the entity issuing them.
Similarly debt should be measured against assets not income.

Now let me see, what are the assets of the GoTuS. For the moment my mind has gone blank....

svinayak · Post by **svinayak** » 12 Jul 2013 01:35

What about Air and Water...

TSJones · Post by **TSJones** » 12 Jul 2013 01:36

......and the thought comes to mind, why is it that when people are so sure of the inevitabilty of gold do they want some government to guarantee the price?

svinayak · Post by **svinayak** » 12 Jul 2013 02:02

A gold-backed currency will not protect the people
ABSOLUTELY NOT. AND HERE’S WHY.

Even though Bretton Woods was a pseudo, and not a true, gold standard, it still
protected the holder of US dollars against banker fraud a million times better than
today’s unsound monetary system that bestows Central Bankers with the unchecked
power to create an unlimited supply of new money as debt and to create money that
is backed by nothing. The event that caused the owners of the US Federal Reserve
to lobby President Nixon and then under-secretary to the US Treasury, Paul Volcker, to
end the gold standard, was France’s demand of gold bullion from the US Federal
Reserve in exchange for its significant supply of trade-surplus US dollars.
France knew that the US Federal Reserve had failed to honor its pledge of
maintaining a true gold standard and that the US Federal Reserve was creating
millions of new dollars backed by nothing to fund an intensifying Vietnam War.
So they called the bankers’ bluff and demanded gold in return for their supply of paper dollars
that were being debased by the American Central Bank’s failure to maintain a true gold
standard. The private families that owned the Central Bank feared that they would lose
valuable gold and receive significantly devalued US dollars in return (due to their
scam of not maintaining the gold standard). Consequently, Nixon’s advisers,
including Volcker, ordered President Nixon to slam the door shut on the gold standard when
Great Britain followed France’s lead and demanded to redeem $3B in devaluing
US dollars in gold

Theo_Fidel · Post by **Theo_Fidel** » 12 Jul 2013 02:13

Waal, air we always have had, monsoon brings us water...
Gold we don't have and import freely. All a conspiracy I say. Now they are trying to sell us diamonds instead...
It is foreign I tell you.
Support the proles. Long live the revolution.....

svinayak · Post by **svinayak** » 12 Jul 2013 02:21

Why thakleef, Indians are paying with their hard earned money to buy gold from anywhere in the world.
Rest of the world used to pay us in gold for more than 2000 years.
What is the problem. Gold is from the earth.

TSJones · Post by **TSJones** » 12 Jul 2013 03:42

^^^^^you can still demand payment in gold. Whatever the puchaser's country currency converts into gold, then he has to cough it up. Of course you've got to face a number of fees for bullion handling and shipping. So it's never just the price of gold, it's always something more. Let's face it, what you really don't like is converting currency to bullion at the market place because perhaps your government has inserted an impediment between you and gold? This is not the Indian economy forum but I think that is your true motivation.

svinayak · Post by **svinayak** » 12 Jul 2013 04:16

KrishnaK · Post by **KrishnaK** » 12 Jul 2013 05:04

Acharya,
The takleef is that these Indians should put their money to better use by investing it in infrastructure. At least the government should make it a viable option.

JwalaMukhi · Post by **JwalaMukhi** » 12 Jul 2013 06:35

Well, Indians love to open account in Swiss Bank. But unfortunately, it is little out of reach for most people. So, Gold investment could be considered as sort of poor man's individualized swiss bank account.

Locks up capital no doubt, but everyone needs a swiss bank account onlee, what to do. Do not have to onlee penalize poor man for that.

The normal taxation revenue when channeled correctly would not necessitate raiding the poor man's swiss bank for investment in infrastructure. Poor man's swiss bank investment should be the last thing a government should be worried about, when there are genuine 'swiss bank investments' to go after for infrastructure investment.

TSJones · Post by **TSJones** » 12 Jul 2013 13:24

US scores a surprising budget surplus......

http://www.nbcnews.com/business/us-post ... 6C10607875