Ragnarok
30th June 2010, 08:01 AM
Highly recommended reading:
http://fofoa.blogspot.com/2010/06/mad-world.html
Snip:
"With a fresh round of "balance sheet money" petrifaction and conversion into "base money" through QE seemingly on the horizon, it may be time to take a fresh look at the most important and frightening situation that the Western public simply does not get. That the Fed and the ECB have been postponing (and ONLY postponing) the total collapse of our debt-driven economy and the entire international monetary and financial system (the $IMFS) that, without their actions, would have already collapsed.
This postponement has been effected only by piling on more of the same debt, on top of an already-too-big mountain of debt. Sterilization schmerilization. If the Fed and the ECB had not intervened on such a massive scale, everybody in the entire Western world would have already lost their illusory wealth two years ago.
How can the Western public possibly imagine what is coming? Some imagined something back in September and October, 2008, but then it didn't come. Now it is much worse, yet no one sees it coming this time. Western paper wealth is a complete mirage, more now than ever, yet they sit tight after receiving the gift of two more years to understand and prepare.
FOA wrote back in April of 2001, "My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)"
"Buying it outright for cash" is exactly what QE is. "Dumping it on your front lawn" is what the Fed and the ECB are doing right now. Not literally, of course, but they are dumping non-contractible, petrified base money on top of your paper wealth, diluting it in ways you will only see once, once it is too late to do anything about it, that is.
Bernanke wrote in 2002, "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost" in a speech entitled "Deflation: Making Sure It Doesn’t Happen Here." Today he is putting his theories to the real-world test, doing exactly what he said he would do back in 2002.
Optimistic deflationists like Ambrose Evans-Pritchard and Andrew Roberts at RBS see this as a good thing. Pritchard writes, "The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes." And Roberts says this is the Fed tack "which I personally prefer". [1]
More realistic (in my opinion) deflationists see the necessity of credit contraction, economic contraction and defaults to cleanse the system. But what all deflationists seem to miss is the fragility of the US dollar as the linchpin holding the entire global financial system together. And what they seem to either not realize or completely ignore, or perhaps avoid, is that Bernanke is testing the strength of this rusty old pin with every move he makes.
Gargantuan efforts have been made to extend the mirage and pretend it is real. It is not. And although this façade of paper wealth is accepted at face value by the vast majority, the rot suffered underneath through the process of extension is nearly complete.
Most readers do not understand the serious nature of what I write. They still react with a skeptical mind to my story, and to the story presented by ANOTHER and FOA, as if they were some kind of a speculative exercise for investors."
"Does this sound scary? A little creepy perhaps? It should. If you really take the time to understand what is happening, you should be utterly - speechless -.
But on the flipside, holding physical gold in your own possession will convey to you a sense of security rather than that sense of fear and loathing brought on by the system. Holding gold brings calm and peace of mind. Holding gold brings the power of money creation back to the people. The old saying really is true – he who holds the gold makes the rules. So please, in this time of great uncertainty, hold gold, and make your own rules."
Sincerely,
FOFOA
[1] RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve
[2] Ben Bernanke needs fresh monetary blitz as US recovery falters
[3] What Obama Does Not Know
[4] BIS 80th Annual Report
http://fofoa.blogspot.com/2010/06/mad-world.html
Snip:
"With a fresh round of "balance sheet money" petrifaction and conversion into "base money" through QE seemingly on the horizon, it may be time to take a fresh look at the most important and frightening situation that the Western public simply does not get. That the Fed and the ECB have been postponing (and ONLY postponing) the total collapse of our debt-driven economy and the entire international monetary and financial system (the $IMFS) that, without their actions, would have already collapsed.
This postponement has been effected only by piling on more of the same debt, on top of an already-too-big mountain of debt. Sterilization schmerilization. If the Fed and the ECB had not intervened on such a massive scale, everybody in the entire Western world would have already lost their illusory wealth two years ago.
How can the Western public possibly imagine what is coming? Some imagined something back in September and October, 2008, but then it didn't come. Now it is much worse, yet no one sees it coming this time. Western paper wealth is a complete mirage, more now than ever, yet they sit tight after receiving the gift of two more years to understand and prepare.
FOA wrote back in April of 2001, "My friend, debt is the very essence of fiat. As debt defaults, fiat is destroyed. This is where all these deflationists get their direction. Not seeing that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because policy will allow the printing of cash, if necessary, to cover every last bit of debt and dumping it on your front lawn! (smile) Worthless dollars, of course, but no deflation in dollar terms! (bigger smile)"
"Buying it outright for cash" is exactly what QE is. "Dumping it on your front lawn" is what the Fed and the ECB are doing right now. Not literally, of course, but they are dumping non-contractible, petrified base money on top of your paper wealth, diluting it in ways you will only see once, once it is too late to do anything about it, that is.
Bernanke wrote in 2002, "The US government has a technology, called a printing press, that allows it to produce as many US dollars as it wishes at essentially no cost" in a speech entitled "Deflation: Making Sure It Doesn’t Happen Here." Today he is putting his theories to the real-world test, doing exactly what he said he would do back in 2002.
Optimistic deflationists like Ambrose Evans-Pritchard and Andrew Roberts at RBS see this as a good thing. Pritchard writes, "The only plausible escape route for the West is a decade of fiscal austerity offset by helicopter drops of printed money, for as long as it takes." And Roberts says this is the Fed tack "which I personally prefer". [1]
More realistic (in my opinion) deflationists see the necessity of credit contraction, economic contraction and defaults to cleanse the system. But what all deflationists seem to miss is the fragility of the US dollar as the linchpin holding the entire global financial system together. And what they seem to either not realize or completely ignore, or perhaps avoid, is that Bernanke is testing the strength of this rusty old pin with every move he makes.
Gargantuan efforts have been made to extend the mirage and pretend it is real. It is not. And although this façade of paper wealth is accepted at face value by the vast majority, the rot suffered underneath through the process of extension is nearly complete.
Most readers do not understand the serious nature of what I write. They still react with a skeptical mind to my story, and to the story presented by ANOTHER and FOA, as if they were some kind of a speculative exercise for investors."
"Does this sound scary? A little creepy perhaps? It should. If you really take the time to understand what is happening, you should be utterly - speechless -.
But on the flipside, holding physical gold in your own possession will convey to you a sense of security rather than that sense of fear and loathing brought on by the system. Holding gold brings calm and peace of mind. Holding gold brings the power of money creation back to the people. The old saying really is true – he who holds the gold makes the rules. So please, in this time of great uncertainty, hold gold, and make your own rules."
Sincerely,
FOFOA
[1] RBS tells clients to prepare for 'monster' money-printing by the Federal Reserve
[2] Ben Bernanke needs fresh monetary blitz as US recovery falters
[3] What Obama Does Not Know
[4] BIS 80th Annual Report