Today’s article in the Financial Post:
Some weeks ago, in an editorial about the financial crisis in the main section of this paper, a writer commented approvingly that: “Our currencies are no longer tied to gold, which means central banks can act to mitigate monetary deflation and interrupt the deadly feedback loop of mounting defaults, declining real wages and prices and increasingly onerous dollar-denominated debt. … Today we are no longer in the infancy of macroeconomics.”
Every day that passes contradicts this statement. Central banks and governments around the world have so far tried a variety of means to prevent the collapse of credit markets. They have repeatedly injected cheap liquidity into banks, purchased mortgage-backed securities and commercial paper, nationalized banks, insurance firms and mortgage finance giants, increased the amounts of deposits insured and forced interest rates lower.Nothing has so far succeeded. Stock markets continue to slide down, investors everywhere are fleeing for safer havens and we learn every day of a new major firm on the verge of bankruptcy because it is short of cash. FULL ARTICLE
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Gold and Silver sure are selling off alot lately. What is that telling us in the context of everything that is going on lately?
Everyone is fleeing to cash. We are in the de-leveraging process and it’s deflationary. Gold and silver are in the same boat.
It seems to me that the massive bank failures were like the earth quake and all this deleveraging is like the tide going out before the tsunami. Pretty soon, the US is going to see a hyper-inflationary shock wave.
The markets can trade trillions in currency transactions per day, wal-mart can adjust prices in all stores within hours. The “crack up boom” will be like nothing ever seen in the history of human kind.
excellent analogy, david c.
sure, the prices of the precious metals have been smashed down on the paper markets, but try getting your hands on physical, particularly in coins, or small bars. dealers are struggling to supply product, and clients are on allocation lists.
“It is worth recalling what credit actually is, since so many people seem to have forgotten. It is necessarily based on savings, that is, the surplus left over when people choose not to spend all their earnings but to keep some for later consumption.”
I had actually forgotten this, or rather I never knew it or I did not care to know it.
Until recently I had contests with my friends to see who had the greatest number of credit cards. I usually managed to win.
The result is that I got in debt with every single bank. Somehow I gained some maturity and I have spent this truthful year of 2008 earning much more income, spending much less in current consumption, and using all that cash in paying back all those banks. My credit rating with credit agencies is still horrible and I still have zero credit cards with available credit greater than zero, but somehow I feel that this is equivalent to saving. I have bailed myself out and am proud of it!
Actually it does, if apples or wood started to be used as currency, then lent out.
Counterfeit Capital Cannot Save U.S. Financial Institutions.
The following is an example of one absurdity on top of another.
First it is absurd to talk about capital (when it does not exist in real terms) by referring to credit created out of thin air by the Federal Reserve. This illusion of using mirrors and flashing lights is what is being touted as the elixir for the perishing monetary system.
The second absurdity piled on top of the first one is the bureaucracy created to process those ‘participants’ who feel coerced or desperate enough to opt for nationalization of their private entity. The summary steps described by Paulson (who is the quickest link to finding out who all belongs to the unConstitutional coup) in his 20 October, 2008 statement will take on horrific bureaucratic dimensions, there can be no doubt.
The irony is that these massive disincentives will make the influx of counterfeit ‘capital’ a monumental failure, which will mean that the unConstitutional coup will have to rachet up its coercive measures. The unConstitutional coup will become more and more visible – as targets of ridicule and scorn.
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