Inflation or Deflation?

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re: No bubble in gold & silver

Post  Shelby on Wed Feb 02, 2011 1:37 am

Another reader commented to rebuke Mike Stathis's nonsense, so this may be a sign that the people are starting to wake up! Plus we have SRSrocco's update on the Silver Eagle sales, Unfreakinbelieveable. And we have Android Linux computer-in-a-cell-phone sales at +600% per year growth. More Unfreakinbelieveable! The world is shifting very rapidly!!!!

http://www.marketoracle.co.uk/Article25984.html#comment100014

The only way to halt the gold bull

Mike, the only thing to halt the gold bull market is a significant increase in real interest rates. Real interest rates must be at least 4-5% to break the back of gold. (You may say "real interest rates are determined by bogus government statistics, so I don't care it." Yes, government statistics are bogus but ordinary people care the headline inflation numbers.) The cost of an increase in short term interest rates by 5-6% is roughly $600-700 billion per year for US banking system, in other words it is the declaration of the death of financial system. Volcker had done it at the beginning of the 1980s, but today's America is far weaker from A to Z than 1980's America. In order for the US economy to really recover, the excessive debt must be wiped out. This huge debt burden cannot be paid back in today's dollars' purchasing power. The system needs bankruptcies, defaults, debt restructuring, debt-equity conversion and most importantly currency depreciation. Only after the excessive debt is wiped out we can see more realistic interest rates and a stable financial system.

I am not a gold bug but I think the introduction of gold as a monetary asset would be a very useful event. Sooner or later we will face precious metals shortages. Make no mistake, gold is still the #1 reserve currency of the world. China, Russia, India want it, the price of gold is not important for these sovereign states, how much gold they possess matters. Precious metals shortages will trigger the interest rates in an upward manner. So to avoid this inevitable outcome, gold must be accepted as a currency in classical terms, namely gold must be deposited in banks and it must pay interest.

Even at the height of the financial crisis we will surely use dollars, euros, pounds etc. to meet ordinary life's necessities cos they are bad money. Since gold is good money it won't circulate in the economy unless we are obliged to sell, it will be hoarded and hidden. I agree with you, as long as oil and basic commodities are priced in U

P.S. Unfreakinbelieveable is my tongue-in-cheek imitation of Steve, hehe

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Govt inflation data is flawed

Post  Shelby on Wed Feb 02, 2011 2:31 am

http://www.marketoracle.co.uk/Article25984.html#comment100010

Shelby wrote:10 grocery products 20% smaller for the same price:

What inflation? Just make it smaller, but hide it:

http://money.cnn.com/galleries/2011/pf/1101/gallery.downsized_consumer_products/index.html

So the point is that to get REAL positive interest rates, is going to take nominal rates in the realm of 20+%, which no western nation can survive fiscally.

For example, in USA with $15 trillion of debt, 20% is $3 trillion a year in interest payments, but the USA collects less than $2 trillion in taxes. And then how do you run the government on $-1 trillion? So the governments would borrow more, which would cause the inflation rate to go even higher, it is a spiral that has no solution.

But the end game is very simple to understand. The wise people will buy gold & silver, and the rest will be bankrupted. Sorry to say, but that is the fact. It may just take some people a little time to figure it out.

Have you seen the Silver Eagle sales in USA for month of January? Unfreakinbelievable! 6 million oz in 1 month. It is more than 50% higher than any other month in history.

The end game is rapidly approaching. You've got to be crazy to keep your money in fiat or a bank. They (including the government banking insurance) are all bankrupt. It is a clicking time bomb.

Rather deal your silver and gold, and gain +15% a year in ounces, whilest keeping your networth in metal at all times.

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gold & silver only?

Post  Shelby on Thu Feb 03, 2011 6:46 pm

http://www.marketoracle.co.uk/Article25984.html#comment100061

Shelby wrote:Brian Thiesen,

There is no confusion as to who gained more, those in silver or those who follow Mike Stathis, just see my reply to your comment in the other article:

http://www.marketoracle.co.uk/Article25961.html#comment100063

On your other points, yes silver will be priced in gold and gold will be priced in silver, as it was for 2000+ years of human civilization, except just recently since 1920s when the 300 year public cycle wave was peaking and fiat central banks spread all over the world.

Now the *national* central banks are all going to die, as the 300 year private wave cycle begins. Because as I explained the math in my prior comment above, there is no mathematical way the current western fiat systems can survive a return to positive REAL interest rates.

No, there won't be only gold & silver. The politicians will get together and figure out how to make new fiat system that with regional central banks that bankrupts those who prevent the current one from returning to positive REAL interest rates. After that bankruptcy, then we can get back to high interest rates, saving in bonds, etc.. Similar to the 1980s, except with severe bankruptcies much more severe than 1920s (because the debt-to-GDP ratios are much more severe), so much more global turmoil and change (as we are seeing now in Africa with govts overthrown due to bankruptcy of the people due to food price inflation and thus hunger).

The big question is what form with those bankruptcies take? Will it be a steady devaluation of paper fiats relative to gold & silver, until the paper fiats are worth say 5% of what they were in 2001? Or will it be a quick devaluation at some point, due to denial to deal with the problem by the western govts?

I think it will be a combination of the two, and thus I would trust your brokerage paper digits, because eventually the govt is going to be forced to get nasty in order to force the bankruptcy on people. And usually socialist democracies steal from the middle class to give to the entitled class and the rich. So just ask yourself, does your brokerage account put you in the middle class?

Brian Thiesen wrote:
"By the way 20-500 trillion is nothing, that is all a show when you decide to take some time and understand Uniform Commercial Code you will realize owning slaves (humans) is the ultimate commodity, the market is just a game to further that goal."

Yes you are correct, because the slaves refuse to stop using debt, and debt requires a fractional reserve system, because if you loaned all the gold in the world at 5% for 300 years, then the interest compounded (the increase of the money supply needed) would be 2,273,996 times greater, but gold can only be mined at about 2 - 3% increase. Thus all fiat systems are inherently debased and bankrupt. This only becomes apparent then when the fractional ratio gets so far out-of-whack that the people stampede. We are very close to that now, because there is no mathematical way to get back to positive REAL interest rates.

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Massive "GDP" growth on the way

Post  Shelby on Wed Feb 09, 2011 7:42 pm

http://www.kitco.com/ind/willie/feb092011.html

The effect of higher prices will be called economic growth. The price inflation within the adjustment process with full motive will grossly under-estimate the actual rising price rate. Therefore, the adjustment off the nominal economic activity will be grossly inadequate. The 10% to 12% price inflation will be called 3% to 4%, and thus a 6% to 9% error in the Gross Domestic Product will be made. The consequence will be that a powerful recessionary surge downward will be called a positive 4% to 5% GDP growth.

China ended up with massive poverty after 600 years of playing with paper money, then they were addicted to opium, then communism, and now back to paper money again:

http://www.kitco.com/ind/schoon/feb092011.html

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Major attack on inflation and gold & silver!

Post  Shelby on Thu Feb 10, 2011 11:13 pm

I would love to see Jason Hommel of SilverStockReport.com refute this guy, because this guy raises some important points.

This guy has quoted some charts from SilverStockReport.com, and has correctly stated that burying capital in gold & silver for centuries, will cause one to lose their talents (Parable of the Talents):

http://www.marketoracle.co.uk/Article26187.html

That is why I have prepared for the time when I must convert my metals into productive assets by leasing them (and possible equity swaps).

However, this guy claims that the end of this negative real interest rate cycle will be 2011 or 2012! He has the following chart (click for article) to support his thesis:



At first glance, that chart appears very convincing. But it obfuscates a very fundamental factor, which this guy has also apparently overlooked.

The prior peaks on that chart (where it touches the line), were all on gold standard, except for the 1980 peak, which was "good as gold" reserve system, because the positive real interest rates were brought very high by Volcker. But the key thing he is missing is that the fiat system is no longer "good as gold" and those high positive real interest rates can not be achieved on the current fiat system. It is fiscally and structurally impossible.

So yes he is correct that eventually technology and the growth of the developing world will take us to new high in the stock/gold ratio, he wrong about the timing. Horribly wrong.

We are in the death of the current fiat system, which will return to its intrinsic value of 0. The stock/gold ratio will go below 1. The chart above will radically overshoot that line, until the currency used to measure with, is brought back to "good as gold".

It is very good we have guys like this. We need them, in order to show that the current secular cycle is no where near mature yet. When all these guys have hidden under a rock, and 10+% (unlike the only 1% now) of the public thinks gold & silver will never decline again in price, then we will be at the top of this secular cycle.

Guys like this are part of climbing the "wall of worry" in every secular market. They bring out many good facts and truths, but they miss some important fact that leads them to the wrong conclusion.

P.S. The chart showing declining silver and gold prices since 1600s, is because that is when central banking started and began the long 300 year public wave ride of dishoarding precious metals from private sector to the inner circle of bankers (the globalists and their public sphere of control). But this has bottomed and now we are going into a 300 year private wave cycle.

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As I said, long time until the next big liquidity crisis

Post  Shelby on Sat Feb 12, 2011 9:21 pm

Buy your silver and buckle your seatbelts folks. We are probably not even at 2004 yet (although patterns may be accelerating in time look how much more steep the curve is now compared to the prior cycle). We have up to another 2 years of massive silver price rises before the next liquidity crisis.

So I stand by my prediction of the next huge global contagion sometime late 2012 or after. But I stand by my prediction of a $41 - $60+ silver price this year and then a fall back to the 50 gold/ratio before moving up again.


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Re: Inflation or Deflation?

Post  Shelby on Sun Feb 13, 2011 11:16 am

My opinion is those yields are going much higher and late this year or sometime next year things bust wide open for the Western world, and I do not mean that in a positive way

Bear in mind that the chart I showed was yield curve, meaning the spread between the long (10 year) and short end (2 year) of the bond market.

So this means the short-end of the curve is rising faster than the long end, which is what happens as the reflation picks up speed.

People misinterpret this move as the end of the epic multi-decade bond bubble. I don't know when that epic move will occur, when it does, it means society bailed out of fiat for gold. I don't see that happening this year.


Last edited by Shelby on Mon Feb 14, 2011 8:38 pm; edited 1 time in total

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HYPERinflation end game?

Post  Shelby on Mon Feb 14, 2011 2:30 am

I basically agree with this article:
http://www.321gold.com/editorials/schiff/schiff021011.html
Food prices will likely be a major factor for breaking away from the USD.

This would likely set off a chain reaction, that is, once people start wanting other currencies for payment rather then US dollars (and in some cases this may be legislated) this will unleased a tsunami of USD trying to find a home. Ultimately that home is the USA. and at some point I think people will buy anything just to get rid of USD so all those USD around the word will be trying to buy goods and services from the US thus pushing paper prices up incredibly for those living there.

This of course almost effects everyone, so maybe why everyone including non US citizens like myself have an option about it. For example the NZ government does not hold any Gold or Silver and our currency has never been backed with precious metals, we have USD and other paper currency holdings. Countries like China will try to buy food from NZ with USD, maybe there will be a small window where they will be accepted, but then that will close, but then what is so good about NZD??... So the dominos fall.

What happens when every USD ever printed that is located outside the US is sent home? Hyperinflation I think, and not just for the USA.

It is very interesting to ponder how the debasement of the dollar is going to play out at the end game.

I had reasoned and asserted in 2010, that global HYPERinflation would be impossible for any extended period of time, because hyper-inflating commodities would shut down production globally and it would quickly crater into global depression and chaos.

When there is a single country that is HYPERinflating its currency, then production only stops within that country. The production of commodities and services continues on indefinitely in the vast majority of the world, so the HYPERinflation can continue in that country for some time.

However, as you and Schiff and others (myself included) have pointed out, the dollar debasement will affect everyone who holds or accepts dollars.

The problem is that where can people dump dollars? They can't dump them all back to USA, because USA doesn't produce what is needed to buy.

So the dollars have to be dumped on the producers, but if the producers refuse dollars, then the producers have no customers.

China is trying to move away from this with bilateral arrangements, but these are tiny compared to the world flow of dollars.

The volume of dollars in the world is so huge, that Bennie can create a few $trillion here and there, and it really won't cause the type of exodus that you and Schiff are expecting. All it will do is drive inflation where it hurts the most, in the developing world, where food is say 30% of a family's annual budget.

The only people who can stop this nightmare are the boomers and the westerners. They have to go buy gold and silver, and put a stop to Bennie before he scorches the entire world.

But unfortunately our brothers and sisters in the west are too busy living high on the debt hog.

The way this will end up, is that when the globalists are ready (when they have transferred all the secured assets from the rotten debt to themselves), they will declare new regional currencies and take the dollar down overnight in a series of decrees. As Lindsey Williams says, watch the Euro. After it is taken out, you will have about 2 weeks to get out of paper dollars.

So yes, we will get a hyperinflation, but it will be nearly instant. You will either have gold and silver or you won't. Most westerners won't.

The other way it works is a stampede to gold & silver (and not commodities), with supply constrained by the globalists themselves, thus most westerners won't get any that way either. Which is what I think would happen if the westerners woke up and tried to buy gold & silver in massive quantities too soon. I wanted to test this theory by trying to find a way to market gold & silver at an exponential rate to westerners. I think it probably is just a pipe dream though.

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Dollar chart

Post  Shelby on Mon Feb 14, 2011 6:43 am

Note that this chart if used the correct ShadowStats.com data, it would look much worse. It would instead show the fall continuing straight down off cliff after 1975 and not slowing down and down to less than $0.01 (1 penny) already. Also the historic volatility between $0.40 and $1.00 would look much smaller and be squeezed to the top the chart (due to the correct logarithmic scaling). Logarithmic scaling is the only way for humans to correctly visualize the exponential function (proportional change):


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We need a proper definition of "HYPER"

Post  Shelby on Mon Feb 14, 2011 8:37 pm



I agree that commodities are rising very fast in price, but no where near hyperinflation in prices.

Hyperinflation is where prices are doubling every every week or so. We need to understand the exponential function. Find another version of your chart, where the prices of cotton on the left vertical axis ($200, $180, $160, etc) are closer bunched together near the top and not equally spaced. If you find such a correctly adjusted logarithmic chart, then you will see that the shape of that straight line rise changes to a slowing down rise and with the recent changes being small proportionally than the prior rises on your chart. From Nov to Feb, the rise was $150 to $190 or +33% over 4 months (+135% per annum rate), but from Aug to Nov, the increase was $80 to $150 or +88% over 3 month (+1136% per annum rate). Thus we can clearly see that the rise in the cotton price is slowing down and will soon peak and decline, just as I have been predicting. You are fooled by your eyes and the fact that humans can not intuitively detect proportional change. Humans only see nominal change. That is why you must ALWAYS use logarithmic charts! The globalists do NOT want us to use logarithmic charts, because they don't want us to visualize correctly. They want ignorant sheep.

I wish Jason would write an article about this, to teach investors to always demand logarithmic charts for everything.

What a logarithmic chart does, is it correctly displays proportional change (i.e. the % in the exponential function). For example, since November, cotton has risen roughly $50 from $150 to $190, so +33% over a period of 4 months. Since 4 months is 1/3 of 12 months, we can cube 1.33 to see that is only a +135% per annum rate of increase in the cotton price.

Now to a more important point. The psychological significance of "Hyper" in hyperinflation, is that it means the masses have become aware of the problem and are stampeding from the fiat currency. Thus by definition, the rate of increase in prices will be accelerating, not decelerating as we see with cotton.

Thus is it very important that you understand that once hyper realization occurs with the westerners, then its game over in a matter of weeks, because:

1. The whole world can't hyperinflate commodities for more than a couple of weeks, because all production globally will stop.

2. There isn't enough gold and silver for every westerner-- the globalists have hoarded most of the gold and dispersed most of the silver in industrial products. Actually we the people have more silver (18 billion oz?) in our possession in the form of silverware/jewelry, than we do gold.

I found a logarithmic versus non-logarithmic cotton futures ETN chart comparison for us:

http://stockcharts.com/h-sc/ui?s=BAL


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A recording you can use to explain to people who love bonds

Post  Shelby on Tue Feb 15, 2011 5:04 am

I made this someone who is a millionaire in bonds:

http://www.coolpage.com/commentary/economic/shelby/why_gold.mp3

Realize I am having a "foggy brain" day, so my coherence is not what it would be on a better day.

I am attributing this "brain diarrhea" day to eating pork over past few days for first time in year or more.

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Very interesting...

Post  Shelby on Fri Feb 18, 2011 12:30 pm

http://edition.cnn.com/2011/WORLD/asiapcf/02/17/china.inflation/index.html?hpt=C2

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Faber and Schiff explain the end game, have same timing as me roughly a few years out maybe 2018+

Post  Shelby on Fri Feb 18, 2011 6:29 pm

http://www.youtube.com/watch?v=kYl_FFFGRBM
http://www.youtube.com/watch?v=pOOpEBh_js4

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bankrupt to millionaire

Post  Shelby on Sun Feb 20, 2011 10:51 am

http://www.marketoracle.co.uk/Article26118.html#comment100989

Shelby wrote:
Dan,

Assuming this is not illegal in your jurisdiction, assuming you won't owe tax on the forgiven debt, assuming you feel the banksters have looted our society and the value of money and thus stolen from us, gut your house of everything you can sell all for cash, the toilet, bathtub, doors, windows, etc.. Go buy 500oz of silver with cash, and hide it. Declare bankruptcy. Buy a $3000 used mobile home, then go park it some where free where you can grow your own food and catch fish. Wait. Within 10 years or so, you may be a millionaire (see my prior post I expect silver $400+ by then).

This video may be relevant to my justification:

http://www.youtube.com/watch?v=Cmg-41xACTA

Cheers.

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gold vs. other options

Post  Shelby on Wed Feb 23, 2011 6:08 am

http://www.marketoracle.co.uk/Article25914.html#comment101221

Shelby wrote:
Hi Brian,

Here are some replies to your questions:

1) Anyone who buys on margin can lose several times their investment. Additionally, since most people are in net debt, they are effectively on margin, even if not in a margin brokerage account.

2) I do not need to use it in a store, I can sell it for fiat. Or even lease it for rents that disguise an interest bearing return for tax purposes. The end game is where the globalists back the new regional currencies with gold, and pay very high interest rates to suck all the gold back into the banking system, and gold will be convertible at the banks. There is even a video at the Fed showing this coming future. The globalists have started hinting at this. One of their code-of-ethics is they must warn you, before they screw you.

3) People comment because they want to distill truth.

4) Bunker mentality applies generally to all forms of preparing for outcomes that are paranoid, not necessary a nuclear attack, but the general concept of not respecting the perpetual march of the maximum division-of-labor trend.

5) Yes the globalists will profit handsomely on the rise of the gold price as they purchased back at $200s, and will sell for the new bonds that will pay 20+% interest in coming regional currencies. Who said bankers will get rid of currencies? Not me. I said the end game by around 2024 or before, is to destroy the national currencies and replace them with regional currencies and regional central banks, so that the globalists have more control and we can less affect them locally. But to get this, they have to sacrifice something temporarily. They will temporarily let gold come back as money, but not as a currency, only as a store-of-value and convertible at banks. This will enable them to raise interest rate super high, and then they bring the entire world (including developing world) into their next big bond bond bubble as they then slowly fractionally debase the gold backing while no one is paying attention. Then the death of the regional currencies (like today's crisis but some decades from now), will be the final end game leading to a one world currency and end times. This has all been known and planned for 2000 years. Do you want me to show you the public plans written about 100 years ago?

6) Agreed, they are monitoring everything.

7) Correct money can not buy salvation. Jesus said so in Matthew 19, that the only way to perfection is to give it all away and walk from this life of death, to the life of life. You are getting into the philosophical. Maybe we should stay on the financial.

8.) My point is I have to buy something. I can't buy $1 million of food. What do you suggest I buy other than gold and silver? Land is also illiquid. Stocks (and bonds) are losing value relative to gold and silver since 2001 and 2004 respectively. I don't think you can find anything but gold and silver. Eventually everyone will figure this out, and I want to be early.

9) Ah 1% now, but by the end game, at least 10%, as was the case in 1980. All mass psychology phenomenons have this pattern, and it is known as the exponential function. The early adopters profit the most. The globalists were the earliest as they purchased around $200s as they told the central banks to sell to them (such as Gordon Brown who sold away most of UK's gold). The central banks have stopped selling now.

10) Since gold can always be converted to fiat, then I can profit on silver by taking profits in gold. As for the time when real interest rates go skyhigh and gold and silver fall in price (the new regional currencies coming), then I can loan my silver and gold at 0% interest rate, and watch my ounces increase as fast as the fiat interest rate. Thus I capture all the gain (the loss in the price of silver) in terms of increased ounces, while my borrower pays a 0% interest rate, while everyone else pays 20+%. I detailed the math on this at the "How will we trade..." thread in Precious Metals forum (goldwetrust.up-with.com).

11) Not sure what you mean here, but life does not reward burying money in any form. I am eager to lease mine (a form of investing in others' businesses), or invest it directly in their businesses as soon as possible.

12) Nothing on earth has a high above ground inventory relative to industrial demand, except gold. Second is silver. Copper and everything else isn't even close. Copper has only 6 month inventory above ground. This means it can never be a store-of-value, because it is primarily consumed and thus has no store-of-liquidity and thus is a very unstable value that is not orthogonal to economic conditions. You can Wikipedia "orthogonal", it is a critical mathematical concept.

13) The idea of profiting on catastrophe is that you profit because you help make it less of catastrophe by providing some needed function, such as storing up real capital in the form of real money, and only gold (and silver) qualifies because of #12 above.

14) The globalists want you to believe that paper is money. It is only an illusion. Paper money has lost 95+% of its value since 1900. One ounce of gold can still buy a fine man's suit, just as it could in 1900.

15) Agreed gold and silver are only tools, but when you have $1 million and no other suitable investment options, then they become your main tool at certain junctures.

16) Much better people will buy gold and silver than hoarding commodities. The sooner we kill the corruption of the central banks printing paper money like crazy, the less damage will be done to the world's poor. The more we delay, the worse it is going to be for everyone.

17) Money is the root of all evil, whether it is paper or gold or whatever. That is just nature. Nevertheless still doesn't tell me what to do with my $1 million?

18) It matters. If you put $1 million in paper in 1900, you would have less than $50,000 now in purchasing power parity. If you put it in gold, you would still have the same $1 million in purchasing power.

Cheers.

End game:

http://www.marketoracle.co.uk/Article20327.html

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China bust?

Post  Shelby on Thu Mar 03, 2011 10:31 pm

http://www.marketoracle.co.uk/Article26687.html

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no hyperflation, a volatile (yet persistant) transfer to gold instead

Post  Shelby on Tue Mar 08, 2011 7:40 pm

http://www.marketoracle.co.uk/Article26766.html

Shelby wrote:
Nadeem wrote:
"However the interest rate risks are transferred to the currency markets and this also suggests that the risk of hyperinflation is higher as the system is geared towards perpetually increasing debt until the bubble bursts amidst an hyperinflationary panic rather than mechanisms for less severe normalisation of debt due to just high inflation but rather an hyperinflation outcome."

This is because the currencies are not backed by anything (gold) that tracks the inflation. But hyperinflation is not sustainable when the whole globe is locked into it, because hyperinflation of commodities is unsustainable globally (no release value), thus we are certain to get bouts of renewed collapse, similar to 2008.

This is why only gold can retire the debt, so what we have is a process of transfer of wealth from those who don't have gold to those who do. The end game is those who don't have gold end up with about 1% of their purchasing power by 2021 or so.

The UK will not succeed in moderating this by 2015, that is pure fantasy. The fallacy in the GDP projection in part 1, is that it is not real GDP as measured against the increase in the gold price (the only true metric of inflation). This will become more evident as time goes on...

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real vs. bankster hocus pucos

Post  Shelby on Wed Mar 09, 2011 11:03 pm

http://www.marketoracle.co.uk/Article26766.html#comment102402

Shelby wrote:
Nadeem, you continue to confuse _NOMINAL_ inflation with _REAL_ inflation. Nominal inflation is the change in fiat prices. Real inflation is the change in fiat prices minus the interest paid on bonds. Another measure of the real inflation is the price of gold. This is why gold increases when the interest rate paid on bonds, is lower than the increase in fiat prices.

I have written in numerous of my published articles on this site, as well as repeated in numerous comments I have made on this site as follows:

http://www.marketoracle.co.uk/Article26704.html#comment101931

"Gold stores more value than fiat, when the interest paid on fiat bonds is less than the (nominal) inflation rate, which over any sufficient period of time, is ALWAYS. Period."

So the point is that gold is telling us that the real inflation rate is much higher than the nominal inflation rate the govt is using to arrive at REAL GDP from NOMINAL GDP.

You see the globalists have you totally fooled, because they have convinced you to use nominal inflation and ignore the relationship between opportunity cost (bond interest rates) and fiat prices.

During the 1980s, the real inflation rate was negative, because the interest rate paid on bonds was double-digits and much higher than the rise of fiat prices.

And that is the entire crux of why the world is in the problems it is. Humans can not understand why gold is money, and fiat is not. I just explained why above. Fiat is the way the globalists deceive, steal, and screw up society. Why do they do it? Because we let them, and power is addictive.

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Censorship

Post  Shelby on Thu Mar 10, 2011 11:41 pm

Nadeem has always published my comments, until the one in the prior message.

He can't handle the truth. He is owner/editor of marketoracle

This is why we need ssshhhout.com. A way we can add comments to any page on the internet, so the truth can not be hidden from each other.

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China's inflation at breaking point?

Post  Shelby on Fri Apr 22, 2011 8:48 pm

http://www.zerohedge.com/article/china-inflation-and-wage-protests-spread-turn-violent

We know China has 1000s of protests per year, so not sure if this is significant.

China is raising interest rates and reserve requirements rapidly. All over the world, there is removal of central bank liquidity. We are heading into the next liquidity crisis after this blowoff top in commodity inflation.

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China: mal-investment in the wrong places

Post  Shelby on Sat Apr 30, 2011 5:45 am

Socialism: Spending Other People's Money 101

http://business.inquirer.net/money/breakingnews/view/20110430-333823/Beijing-turns-to-currency-to-cool-inflation

Beijing also has resorted to the blunt tool of freezing prices of electricity and some other basic goods, but that is starting to backfire.

In the southeast, export regions are suffering power shortages that force factories to suspend production every other day. Power companies are squeezed between low state-set rates and high gas and coal prices, so they have avoided adding more generating capacity despite double-digit annual increases in demand.

"At the moment it is not very attractive to build an electricity plant in China and some regions have a shortage of electricity," said Louis Kuijs, a World Bank economist in Beijing. "At some point these administrative prices must be raised."

Chinese leaders have ordered local authorities to ensure adequate supplies of vegetables in markets and to pay subsidies to poor families.

In a possible effort to deflect criticism, it has imposed fines on retailers who it said cheated shoppers by overstating the size of price cuts on discounted items.

"I think you should have confidence in the Chinese government's capability in managing vegetable prices well," said a deputy commerce minister, Fu Ziying, at a news conference this week. He gave no time frame for when inflation might subside.

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Dollar - Yuan will go to parity

Post  Shelby on Fri May 06, 2011 4:18 pm

I don't remember where I had posted about that, I remember hedy had replied saying a stronger Yuan would be good and I had presented some reasons why it would coincide with a depression for China. But that ultimately it would mean opening China up to the world and be good. Perhaps someone can find those prior comments and provide a link?

Let me now give the big picture I see. You know the big macro picture is what I enjoy trying to excel at. I think the TPTB want to take the Euro, dollar, and Yuan to parity. Since dollar index is mainly weighted to the Euro, this means the dollar index won't crash-- this will confuse many people. Instead, the dollar and the Euro will both collapse relative to gold, whereas, the Yuan will rise in value as it will be "as good as gold".

This will push us towards the regional currencies of the 10 kings, which will be convertible to gold at any bank. We will enter a period of great progress (with a gold backed world financial system) in terms of lifting the billions from poverty. But the transition period will be brutal on the middle class around the world. This rise of gold relative to Euro and dollar, is going to bankrupt the middle class in those regions. The Chinese middle class will see their net worths' decimated in terms of quantity of Yuan as their real estate bubble crashes and the depression that results from a strong Yuan, but the international purchasing power of the Yuan they retain will become worth 6 times more internationally. The Chinese will thus drive investment in the developing world, becoming consumers and their exports will move to high end and they will become importers from the rest of developing world.

http://www.gold-eagle.com/editorials_08/summers050411.html

P.S. the billions of poor lifted up to middle class is going to be incredibly bullish for silver industrial demand, where silver demand will triple annually at least.

Note also that 6-to-1 current Yuan exchange rate is approximately the ratio of salaries for the same jobs in developing world versus western world. Thus bringing the Yuan to parity with dollar and Euro, will bring parity in world's salaries. This is necessary to eliminate nation-states and move towards one world governance (the overriding goal of Rothschild and Rockefeller).

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Kicking the can down the road, more money printing

Post  Shelby on Sat May 21, 2011 9:26 am

This should give a short-term lift to gold & silver prices until the Greece issue comes back around in a few weeks:

http://www.bloomberg.com/news/2011-05-20/imf-board-approves-36-8-billion-loan-to-portugal.html

IMF Board Approves $36.8 Billion Loan to Portugal

Portugal has until 2013 to cut its budget gap to 3 percent from 9.1 percent of gross domestic product last year. Photographer: Mario Proenca/Bloomberg

Yeah right. No country has been able to reduce budget deficits when they are running huge debts with rising interest rates coming.

You see what I mean about 2013 being the year that global economy implodes?

Btw, the USA provides most of the funding for the IMF, so that is the Fed printing $36 billion for Portugal. You see QE never stops, they just rotate the venues.

Greece issue is coming soon, which may be the impetus to drive dollar higher again and give us our bottom in silver, before they decide to bailout Greece:

http://www.bloomberg.com/news/2011-05-21/greek-government-bonds-slump-on-concerns-over-debt-restructuring.html

Greek Government Bonds Slump on Concerns Over Debt Restructuring

Greek government bonds plunged, driving up 10-year yields to a record, amid mounting bets the nation won’t be able to avoid reorganizing its debt.

Greek two-year notes fell for the first time in three weeks. The spread, or yield difference, between the 10-year bonds and similar-maturity German bunds widened to an all-time high. Fitch downgraded Greece’s credit rating to B+ from BB+, four notches below investment grade, boosting demand for the relative safety of German government bonds.

“We still have the backdrop of possible Greek restructuring, and concerns over that are driving peripherals lower and pushing spreads wider,” said Peter Chatwell, a fixed- income strategist at Credit Agricole Corporate & Investment Bank in London.

The Greek 10-year yield rose 113 basis points in the week to 16.57 percent as of 5:18 p.m. yesterday in London after reaching a euro-era record 16.59 percent earlier. The nation’s two-year note yield climbed 57 basis points to 25.46 percent. It reached a record 26.77 percent on May 12.

Greece’s budget deficit is forecast to exceed the 7.5 percent of GDP target under the EU-led bailout, reaching 9.5 percent this year, the European Commission said on May 13. The nation’s debt, already the euro area’s biggest relative to economic output, may reach 158 percent of GDP this year and peak at 166 percent next year.

Interesting interview:

http://www.bloomberg.com/video/68695152/

The difference between Asian crisis and EU crisis is that southern EU can not repay, they have no potential for growth.

The EU banks are all complicit in the southern EU crisis, thus they can not allow a true default without cause derivatives contagion throughout EU and the world.

This is why they are kicking the can down the road, so they will do some kind of restructing of Greece that do not involve mark-to-market to buy time. But as this Professor says in the interview, in about a year or so, the default is coming.

This is why I am saying that we are going to get the big blowup in oil in 2012 and then by 2013, we will have massive derivatives contagion and global implosion.

TPTB want to maximize the bang.

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Appears we are in a duplicate cycle and 2011 is 2005 or 2006

Post  Shelby on Sat May 21, 2011 10:56 am

Ah here is the chart we need to see the correlation.

Notice we have a similar pattern on the blue and orange lines in 2011, as was in 2005, or perhaps 2006 if cycle has accelerated. And notice the yellow period in 2004-2005 corresponds to yellow in 2009-2010. Difference is appears the patterns are either accelerated (or we are only in 2005 now), which is to be expected as leverage and instability is increasing as we race towards the end game of global breakdown.

So as I have been saying, S&P will continue up and perhaps peak in 2012, just as it did in 2007, unless we are in 2005 now in which case peak could come in 2013.

This is why I will go long on silver here (at $30 or below). I also want to get ready for global collapse in 2013 or 2014 (but I lean towards the sooner date). I am becoming much more confident now of this.

http://financialsense.com/contributors/chris-puplava/global-slowdown-ahead-recession-not-likely

Our recession model typically provides several months warning before a recession begins and the 20% mark is often the line in the sand with only one false signal (1987) over the last thirty years. Given the current reading rests at a 3% probability of a recession beginning over the next 6 months, I am in agreement with the ECRI’s Lakshman Achuthan that a recession is not in the cards as of yet.



Let me remind about this prior post:

http://www.gold-eagle.com/editorials_08/mchugh051411.html



Another view of growth leading indicators doesn't provide a compelling picture that we are facing an imminent global recession:

http://financialsense.com/contributors/chris-puplava/why-bill-gross-is-wrong-in-the-short-term


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China can not reform its growth engine

Post  Shelby on Sat May 21, 2011 12:31 pm

http://financialsense.com/contributors/michael-shedlock/china-may-face-out-of-control-inflation

1)Yes, but not yet. It will take a decline in investment growth to reduce labor demand.

2)Yes, an increasing if still-minority number of economists now recognize that the growth model is unsustainable, although I am not sure all of them fully understand why it is unsustainable and the role of rising debt. For that reason, I think they misunderstand the nature and difficulty of the adjustment process. I suspect that after another year or two in which consumption growth continues to remain below GDP growth, there will be much greater awareness of how intractable the problems are.

More here:

http://globaleconomicanalysis.blogspot.com/2011/05/chinas-real-estate-developers-struggle.html

When I listen to the key man in china:

http://www.charlierose.com/view/interview/11663

I come away with the sense that they think they can solve the growth vs. inflation problem "by having everyone on the same page" (that is what he said). So clearly this is a model of totalitarianism. They are going to try to micro-manage the solution, by suppressing some sectors and subsidizing other sectors. It will of course fail horrendously, as it is a friction on the free market adjustments which thus won't take place.

So the conclusion is that inflation will get out-of-control, and it will take a year or two for China to burn itself to the ground with rampant inflation, before their growth model is proven to be unsustainable with a horrendous crash.

See prior 2 posts today.

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Re: Inflation or Deflation?

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