Mike Maloney: The Coming Wealth Transfer

History may not repeat but it sure does rhyme. Mike Maloney has studied monetary and financial breakdowns throughout history and concludes that there's nothing new or different happening this time, except its global and far more massive than any other time in history.

Worse, there are echoes of 1911 where a series of diplomatic blunders and national pride and intransigence combined to create the still largely inexplicable start to WW I.

Chris Martenson: Well it’s global this time, right? This is -- there’s nowhere to hide. (...) What has happened when we’ve tried to print our way to prosperity before? What has happen? Why has it happened and what have been the consequences always been?

Mike Maloney: Whenever you try to print your way to prosperity it transfers well from the masses to the few. The few being the people running the game and then also the hucksters that are very nimble, the con artists and so on. You see these people get rich during the Weimar Hyperinflation. There were quite a few of these fancy salespeople that got rich; they didn’t stay rich once things stabilized again.

But it creates such a topsy turvy world that the normal person that does not know how to operate under these weird economic conditions cannot possibly keep up with things and wealth is transferred away from those people to the people that are very good at observing what’s going on that second and adjusting to it. But the one thing that I see as a constant throughout history is that gold and silver eventually do an accounting of all this -- the financial -- you know financial finessing that the governments are doing.

And when it does that it -- there is a transfer of wealth to the people that own gold and silver. And so -- it’s very rare moments in history. This does not happen often. But it’s a great opportunity and I’ve just -- you know if you look at gold right now the public’s opinion of gold is quite low because it’s been going down for three years.

But if you look at it in a longer timeframe and I started investing in gold in 2002 and by early 2003 I started investing in silver and if you look at it from the year 2000 it’s still the best performing of the assets. It’s still out performed the Dow and S&P and real estate.

And I will continue, myself, to accumulate on the way down I see this as an opportunity. And if it goes lower than it is right now, you know nobody has a perfect crystal ball. So it may have already put in its lows. But I just accumulate every single month and I will continue doing that because I see that as the only sure thing in this crazy world of currency creation.

Click the play button below to listen to Chris' interview with Mike Maloney (43m:35s)

This is a companion discussion topic for the original entry at https://peakprosperity.com/mike-maloney-the-coming-wealth-transfer/

Thank you for that.
I think Asimov was right.

The size of an empire is dependent on it's speed of communication.
The reason that this money printing exercise has been successful for so long is that the feedback loops are very tight. (Thanks Donella) In the case of the Bots they are in nanoseconds. This level of control is a direct result of global communications. I think this is the reason that we see a global phenomenon too. (Technology, Yay!)

One of the ways of hiding your wealth is by buying education. Hence apprenticeships are not supported and neither is higher education. I don't know how the rationalizing policy makers think that we are going to "grow the GDP" by crippling levels of education. To work smarter it is best to be armed with the facts. Perhaps they are planning to milk the top end of the bell curve. (Artificial intelligence etc.) That is very risky because the smartest are prone to listen only to the voices in their own heads.

We are led by the least among us
T. McKenna.

Just for the record, I am not an arch-duke.

Great podcast.  One point that I wish had been given further discussion is the risk of capital controls as we get further down this path.  I currently keep my gold vaulted with Hard Assets Alliance and the only reason I haven't taken physical delivery is because I worry about how hard it might be to sell it if I ever need to convert to cash quickly.
So, I suppose my question is: how high a risk do people (Chris and other members of the PP community) consider the threat of capital control and how many people here keep their gold under their own watch as opposed to a vaulting service?

A corollary question would be: do people feel the same way about silver?  Personally I like the thought of keeping my silver within the vaulting system so that I could sell quickly because I see it more as an industrial investment than a wealth-preserver and potential monetary unit.  But - my thoughts evolve day-to-day the more I learn.

Thanks for the thoughts.

If a another financial crisis erupts and a bail out of the banks is again required, new rules coming out of the G-20 last month will enable the banks to target pension funds first for a "bail-in", and bank deposits second.

Inline image 1

I miss America.

From: http://www.silverdoctors.com/canada-includes-bail-in-provision-for-systemically-important-banks-in-2013-budget/

Titled ECONOMIC ACTION PLAN 2013 and tabled in the House of Commons by Minster of Finance James Flaherty on March 21st, the official 2013 Canadian budget contains an explicit provision that Canada will pursue the bail-in model for systemically important banks for future bank failures!
Depositor haircuts have just jumped to this side of the pond, effective the next bank crisis/ failure:

The bail-in provision in Canada’s 2013 budget can be found on pages 144,145: www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf

Thanks Br3dS01, I was wanting to look into that. You saved me a lot of time.  I still feel safer in Canada though, its banking system just got rated most sound in the world for the 7th year in a row.http://www.cba.ca/en/media-room/50-backgrounders-on-banking-issues/667-global-banking-regulations-and-banks-in-canada
Even if the entire global system collapses, the Canadians will offer a more sensible approach to problems and think through them in a more collective and friendly manner.  Plus, many people here are very forward thinking and some are already trying to create their own alternative economies from the ground up.  One of the Gulf Islands in BC already has is own currency.

Archie get a raise of 5% but,inflation is at 8% Archie dose not understand that he is losing money. Wealth transfer has been going for a long time, now it is coming to a end.   

The size of an empire is dependent on its speed of communication.
Indeed. The Roman Empire at its height was 3 months wide in summer, 5 months wide in winter. Things are a bit different now? Good or bad?

Capital controls are a certainty. They have already started. Just look at Cyprus to see the authorities'  game plan for when things start to unravel. Everything was locked down. My approach is a blend of gold, silver & cash in my possession, the rest geographically dispersed offshore. Realistically only silver coins could potentially substitute as money for normal daily transactions like buying food. I also like Bitcoin as a way of getting out of the system and bypassing capital controls. 

For me THIS is easy.  Just read The Colder War, by Katusa.  Putin wants to CONTROL many natural resources and thus position himself and Russia to show the world, especially Europe, that HE calls the shots.  I can "FREEZE" you, he says.  I can just cut off what you need in the winter, or whatever whenever IF you disagree with me.  This a political POWER grab.  Sure, maybe to protect his territory, as we encroach upon that, but maybe more???  The rise of another superpower, not by military war, but just by turning off the valves!!  Or, making the prices too high–think Ukraine.
However, Saudia Arabia and the USA see this and both agree to bring him to his knees.  Thus, we "humble" (maybe even partially destroy) Iran, Russia and others and demonstrate to China what POWER we WESTERNERS really have.


Just a GUESS.  But this makes eminent eminent sense to me.  Try The Colder War, please   Zen

Chris.  Hope my comments about Russia are helpful as you made that a big point with Mike. I'd like to hear what others think about that.  Why demonize Putin, why make personal attacks?
Also, Chris.  Can you speak more of the process of the bond bubble collapsing.  What brings it about?

What are the indicators of that happening?  Does the bond collapse necessarily cause the real estate and stock market collapse?  To what degree?

GREAT interview, especially the end for me. The best rationale for buying gold NOW: Distributors/sellers will NOT be able to get enough SUPPLY!! They just cannot DELIVER, without gigantic premiums.  Many thanks!!!

With gold/silver resolved, we can then turn to spiritual resiliency, my personal primary conversation.  Zen

"One point that I wish had been given further discussion is the risk of capital controls as we get further down this path.  I currently keep my gold vaulted with Hard Assets Alliance and the only reason I haven't taken physical delivery is because I worry about how hard it might be to sell it if I ever need to convert to cash quickly."
Many thanks.  Another excellent rationale for doing just that.  I will open an account there and deposit some yellow stuff, as well as having some physical in hand.

I was surprised when this was the offering this weekend, as Chris had recently interviewed him as recently as this summer.  It is not a complaint though, as Maloney is definitely worth listening to.  I've read his book and watched Hidden Secrets of Money. 
For me, I think I am becoming more and more interested in the technical analysis of events unfolding, and am hoping Chris and Peak Prosperity can interview people with intimate knowledge of details about the coming changes.  I know this is a very specific observation/request, but the website has won me more over as one of the THE alternative media that I rely on.

That said, when the conversation comes up about very old gold bars being noticed in certain transactions, and China's hunger effectively accounting for nearly all gold production, I want help connecting those dots.  I know the information is limited, but the real wealth being accumulated in the East has been a theme addressed in several podcasts.  As information and sources become available, please keep us informed, as I believe this is a major story to watch.

When the Bank of Japan initiates something similar to the QE program the US just finished, amazingly timed perhaps, I'd like more discussion on just how that keeps/relates to American markets and how it helps maintain the status quo.  Yes, everything is global now, and everything lines up, but specific information provides more nuance. I understand everything is interconnected, but filling in the background helps the average listener a lot.  I know some of this content is reserved for paying customers, but there are other examples where detail just doesn't give us something else to worry about, but keeps us informed about potential risks. If change is coming, I want as much information as possible.  Maybe PP is willing to take suggestions?  An analysis of the exact math in credit market expansion since 2007 would be helpful.  A discussion about how such growth can't continue would be interesting. What some of the early trouble in the bond markets might be, as Chris has said he thinks this will be an early indicator.    Over the years many people have said that Europe is in a much worse situation than the US, especially Portugal, Spain, Italy, and Greece.  Info about the debt levels, the expansion over there, etc.  Another great topic for a podcast would be a specific detail of what we know of the shale oil plays and how much the collapse in the price of oil is going to effect their so-called profitability.  Finally, and I am just typing as I think…more specifics on the reality things paper are doing just fine, while real things have plunged in value.  Why hasn't property fallen with gold, silver, and oil?

Just my two cents.  Have a good day everyone.


The Deviant.


Cheap Oil Defines the Playing Field

Commerce and trade have a knack for producing winners and losers; it’s simply the nature of competition and exchange. This is being felt rather acutely in the global markets with the plunge in oil prices. For some countries, this is a boon, while for others it is undeniably a bane.

Emerging markets that are combating high inflation and encumbered by wide trade deficits see the collapse in crude oil as a godsend. Brazil and India would fall in this category. Falling oil prices help counteract the rapid pace of inflation across the rest of the economy, as is the case in Brazil, where the current inflation rate of 6.75% is the highest the emergent South American juggernaut has seen in 3 years. In India, all of the government’s responses to the state’s untenable trade deficit (including curbing gold imports) have not had as dramatic an effect as the simple drop in oil prices. As India’s energy imports become cheaper, its trade deficit continues to shrink.

On the other end of the spectrum, developed markets that are caught in the doldrums of a potential recession (think: Japan, the EU) are shuddering every time the price of crude oil ticks lower. In quite the opposite scenario from Brazil or India, Europe and Japan are doing everything they can to encourage inflation. Falling oil prices make this a nearly impossible task, as lower energy costs inextricably cause the prices of other commodities and products to fall due to lower processing and transportation costs. Japan even had its sovereign debt downgraded from Aa3 to A1 by Moody’s.

The globe’s largest economic entity (by population and per capita GDP), the EU, and its third-largest economy, Japan, are desperate for price growth; meanwhile, two of the world’s fastest growing economies are rooting for $40-$50 oil. This unavoidably sets up a zero-sum geopolitical landscape in which there will be clear winners and losers.

Yes, the OPEC nations have a role to play, but one that is less definitively about success or failure. Oil-producing countries would certainly like to see higher oil prices, but if they can squeeze out their U.S. competitors and cut into the fracking boom, I venture they wouldn’t mind that, either.

Russia is a glaring exception to this characterization. Russia is, in some ways, in the same situation as its BRICS companions, struggling with rampant 12% inflation. The Red Bear, however, is also an oil exporter, and without high oil prices (and a willing buyer), the country’s economy is crumbling. The ruble sits at an all-time low against the dollar in spite of the Russian central bank’s shedding of forex reserves and accumulation of gold to try and protect the currency. As it stands, Russia can’t even give away its sovereign debt.

Under the thumb of economic sanctions, it seems Russia comes out the worse no matter which way the crude oil market trends. But this does not negate the impending geopolitical battles between developed and emerging economies over oil prices. More than the spread of disease or terrorism, these tensions over oil will likely be the defining issue facing the world powers in 2015.

News & Notes

An accident of some sort occurred this week at a Zaporizhzhya, Ukraine nuclear power plant, the largest nuclear plant in Europe, but it is not believed to be a serious hazard to surrounding countries. Nonetheless, the incident brings back images of the Chernobyl disaster in 1986.

Student leaders of Hong Kong’s Occupy-style “Umbrella Revolution” surrender to Beijing authorities for their part in organizing and participating in pro-democracy demonstrations. None of the students will be charged with crimes for their actions.

Sony suspects that a group from North Korea is responsible for the enormous cyberattack on the entertainment media giant. Coincidentally (perhaps), this comes shortly after state officials declared that the upcoming comedy film, “The Interview,” a fictitious chronicle of an assassination attempt on supreme leader Kim Jung-un, is seen as “an act of war.”

The Shanghai Gold Exchange has already broken last year’s sales records with an entire month remaining on the calendar. Meanwhile, the world’s second-largest gold demander, India, saw November gold imports hit a 41-month high.

A LOOK AHEAD: We should receive a bit more perspective on November’s non-farm and private sector payrolls when the JOLTS (Job Openings and Labor Turnover Surveys) report for the month previous (October) is released on Monday. Consumer sentiment figures for November will come out on Friday, while the next all-important FOMC meeting is scheduled for Wednesday, December 17.

By Everett Millman, head content writer at Gainesville Coins, a leading gold and silver distributor.

Gold Drain at the New York Fed: Where's It Going?

Posted: 06 Dec 2014 11:28 AM PST

Nick at Sharelynx Gold, also known as Gold Charts "R" Us emailed an interesting chart last week showing gold drain at the New York Fed.  Earmarked gold dropped 42 tonnes for the month of October as foreign countries repatriate their gold home. Here's a link to Earmarked Gold with a second chart that shows all Fed holdings. Gold Charts "R" Us has 1,000's of pages and over 10,000 charts on a subscription basis, but you can check out the site for free until December 14. Click on the first link at the top for a look.  Where's the Gold Going? This was the largest monthly drawdown in 13 years and the largest series of drawdowns since 2007 (drawdowns in red on above chart).  So, where's the gold going? Three answers: Germany Koos Jansen at BullionStar reports German Gold Repatriation Accelerating. That article is interesting because it takes to task extremely sloppy Bloomberg reporting regarding German golf repatriation. Netherlands  On November 21, Jansen reported Netherlands Has Repatriated 122.5t Gold From USThe Dutch central bank, De Nederlandsche Bank (DNB), has repatriated in utmost secret 122.5 tonnes of gold from the Federal Reserve Bank of New York (FRBNY) to its vaults in Amsterdam, The Netherlands, according to a press release from DNB published today (November 21). DNB states it has changed allocation policy from 11 % in Amsterdam, 51 % at the FRBNY, 20 % in Canada and 18 % at the Bank Of England (BOE); to 31 % in Amsterdam, 31 % at the FRBNY, 20 % in Canada and 18 % at the BOE. According to the World Gold Council’s latest data DNB has 612.5 tonnes in official gold reserves. Belgium Yesterday, Jansen reported Belgium Investigating To Repatriate All Gold Reserves. Countries want their gold back. Who can blame them? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com

Material possessions degrade over time.  Period, end of story.  Whether its grain that you have grown, a building that you have constructed, a piece of furniture, or even a piece of amazing art work, whatever you can create or "own" in the physical world.  That is the only real physical "wealth" in accordance with our current cultural narrative and it always degrades over time.
Economies have savings accounts (non renewable resources) and income (our ecosystems).  Those are the only true manifestations of physical wealth.  We are in the process of abusing both, so we should expect our individual and collective net worth to be going down at this point in time.  The world does not owe us a positive return on our investments.  The only countervailing force that we have against entropy is consciousness which manifests itself both in the nature of the technology that we create and the type of relationship that we have with the world around us.  The awareness of that fact seems to be just barely making a dent in our cultural awareness. Abstract instruments that we collectively call wealth, whether it be gold, silver, paper, tally sticks, feathers, fine works of art are all dependent on cultural narratives. Some have long cultural histories and are far more likely to endure into the future, like gold and silver, others obviously not so much.  Gold and silver are unique in that they are also part of our economic saving systems in that have industrial value. Their actual practical future value is dependent on the level of technological reset that we are expecting due to the level harm we building in the system, but I have no interest in making that kind of prediction. Interest in that whole thought pattern is perverse.

We are at war, with each other and the world around us.  That is what needs to stop.  World War I was a resource war, Britain was converting their fleets from coal to oil and Germany was looking to build a relationship with the oil resource rich middle east and complete for the next big prize.  It is all part of our current level of insanity.  We have gone from ancient times where we were enslaving each other, to the current time where we are enslaving the natural world (GMO crops), but the consciousness is still the same.  You can say that we have say we have evolved at some level, but engineering plants that can be dowsed with toxins and survive and forcing human labor into the fields is created by the same primitive consciousness and will come to the same bad end.

The Anglo-American empire is crumbling for sure, now that there are cracks in the seams the lunacy of it all is starting to show itself. In its failure, the lies and stupidity can show itself.  It is no longer the accepted world order with its brutal iron fisted control, those without a voice both within and outside are now strong enough to have their voices heard, a new story is starting to emerge.  The Ukrainian story has happened thousands of times before, this time we are finally watching with our eyes open.  It is our Bill Cosby moment.

But why focus our attention there, so what if the Anglo-American empire is replaced with a Sino-Russian empire.  Is our only problem the fact that we personally are no longer the de facto benefactors of the current world system.  Can we finally be rid of that mentality, primitive dominate or be dominated level of consciousness? How much more pain do we need to inflict on ourselves and each other?  Can we take the next step in consciousness and be rid of all this?  Will we take this truly seriously and do the hard work to change ourselves?  


Thank you Chris and Adam for bringing Mike Maloney back… always informative.  At one point Mike talks about the monetary experiment we are in the midst of, saying we have never been here before… and indeed, that is true.  It brought to mind a quote from the great Jim Grant (a future interview target?) who said the same thing with more nuance in this recently listed, must listen Cato institute speech;


Here is the "money" quote, starting at about 15:96;

""What's new today isn't ultralow interest rates… What is new is governmentally sponsored asset booms superimposed on ultralow interest rates…"

Back to the Yahoo article. 

Not long ago, Porsche debuted its limited-run Panamera Exclusive Series at the LA Auto show – 100 specially minted cars that offer the best of what Porsche can cram into a luxury five-door. But at an astounding $310,000 a pop, they don’t exactly come cheap.Regardless, the entire lot recently went up for sale. In the span of 48 hours all the limited edition cars were accounted for, reportedly a shock even to Porsche’s top dogs. And now a new report from Autocar suggests that Porsche will give it another try … perhaps with different models.

Speaking with the British outlet at the LA Auto Show, Porsche chief of research and development Wolfgang Hatz commented, “I wish we’d offered more cars for sale; the response has been incredible.” Hatz noted that the Exclusive Series tested the waters of both consumer interest and the abilities of Porsche’s suppliers. “I’m sure we will do more in the future.”

Consumer interest?  No, this is yet another sign of how the 0.1%... or the 0.01% maybe.. spend their money.  For now, these folks who have benefited from the money printing want works of art, real estate, and limited edition Porsche Panamera's that cost 2X that of the non-limited edition.  But what happens when the cracks in the system become more apparent to all?  What will happen to the relatively small Gold and Silver markets... the physical markets... when this Porsche buying crowd gets defensive again?  For now, the Porsche is an asset, and interest in this asset is booming.

I actually think the best form of money in a modern economy is an electronic currency fully backed with gold.  Obviously debt based money and gold are incompatible due to different expansion variables.  Gold in an economy can only grow based on mine supply and trade surplus and debt based money must grow exponentially as Chris covers so well.I think an electronic system using debit cards that would be tied to gold storage facilities that hold segregated gold bb’s, maybe 1/100th of an ounce.  If you buy a TV from Walmart worth 3/100th of an ounce of gold an automated system shifts 3 bb’s from your little pile into Walmarts big pile.  If you buy a pack of gum worth 1/100,000th of an ounce of gold, the automated computer system makes a debit from your account and credits Walmart but does not transfer the gold until it reaches 1/100th of an ounce and then shifts a gold bb to balance the payment.  This would maintain 100% backed sound money without regressing from electronic payments. 
 The storage facilities would compete for business based on how secure they were, participating retailers, honesty/track record, and ease of payment ect ect.  I think this type of system would be superior to coins of either gold or silver but those could also be used parallel to this system.  Though debt based money and gold are incompatible that doesn't mean electronic transfer systems and gold are also incompatible.  I think they could compliment each other quite nicely.   Thoughts?

[quote=bwh1214]I actually think the best form of money in a modern economy is an electronic currency fully backed with gold.
Isn't that how the FOREX works? The result is more paper claims exist in relation to physical assets which translates to fractional reserve banking. Anything which is infinitely divisible (which digital currency is) cannot function as a store of value.
To address the problem of money I've recently found it helpful to understand what an economy actually is. I call an economy the 'transition of energy'. It has three stages;

  1. Growth/Extraction
  2. Refining
  3. Transportation
  4. Growth/Extraction - Goods are either grown or extracted. Examples of grown goods are corn, wheat, cattle, trees. Examples of extracted goods are iron, copper, oil, gold
  5. Refining - Most of the goods listed above are refined to produce more complex goods; wheat is ground to flour, cattle slaughtered for steak, iron refined into tools and so on.
  6. Transportation - These goods are then transported to markets to be traded; either directly for another good or for money which is used to purchase future goods.
    All 3 stages require energy, hence why I call an economy the 'transition of energy'. Remove energy from any of the three stages and your economy collapses. Surplus energy allows the economy to grow, a deficiency means the economy will shrink.
    Where the central banks, private banks (and any other counterfeiter) step in is at the end of stage 3 when goods come to market for trade. Now counterfeiters don't produce anything of value, rather they force you to accept their promises as lawful mediums of exchange (usually through deceit or through threats of violence or incarceration). Digitising this medium doesn't resolve the issue - what we really want is a promise that if we don't wish to exchange the product of our labour in return for goods right away we can do so at some point in the future. The commodity we actually want is trust. Trust requires transparency. Transparency requires audits - the ability to show people you have what you say you have.
    At one time I did like the idea of a gold back currency that can be electronically issued - but how do you trust centralised government to remain honest? Especially when exporters claim strong currencies harm their business and use extensive lobbying power to get government to debase (or just hold the economy to ransom like in 2007 - 2008). On the flipside welfare states will necessitate the debasement to afford expensive social programs where the debts must be inflated away.
    In short, I don't think you can reform money/currency without reforming the system. For me, governance needs to come from the local level, then follows the issue of money. Switching to a gold standard (issued by any means you care to suggest) will not solve society's ills - it's simply too late for that. I think what we are ultimately facing is a crisis of values.
    Solution? For me, reform must happen at the local level. Communities must be formed that produce food and create a skill-set (such as construction, legislation). Then they can set the commodity which their labour is paid in. I imagine such a thing would happen naturally as communities form and solving the problem of money for themselves would make them realise how fraudulant the current system is.
    Just my thoughts. As always I appreciate the criticism so fire away!
    All the best,