Chris, I found you two months ago and immediately felt no longer alone. I don’t want to understand money like you do but I do want to thank you from the bottom of my heart. I am down under and what I would most like to do is to "buy" you a beer one day. The highest praise down here and never used by me before.
I guess we are going to lose the world as we know it next week and I wanted to say thanks before it happens because I expect a lot more will be trying to say it afterwards.
I think Scotiabank has branches in the US and you can always call them up… I noticed you can even start accounts online which means that you should be able to fund it with whatever money you want and buy gold or silver through them.
at least in the short term (6 months - 1 year) if currencies is a relative value game? If the EU or the rest of the world is doing just as badly or worse, why would the USD fall? It is still the largest economy with the most amount of ‘tools’ to handle stress. If I look at other smaller economies which are in just as much debt, where money supply is on the exponential part of a curve etc. but these economies are not only smaller but are less diversified and don’t have as many ways to wiggle their way around the messes, then why wouldn’t the US$ remain the global currency? There is value to being the world currency, and just like how the 800 lb monkey in industries trade with premium multiples, so should the world’s ‘goto’ currency. Unless everyone is going to base their currency or foreign investments on something else like gold or oil (problem is storage), then the fiat currency is here to stay. What if EVERY country wrote down the value of their currency by 50%? The US$ would still be strong since everyone else takes a much needed devaluation.
I agree that ultimately the USD is doomed to fail, Chris is right.
When though is the question? As a USD Forex trader, my answer is not soon, 2009 at the earliest. The USD Index began a 5 wave rally in mid-July, and is just entering the explosive ‘3rd of 3rd wave’ stage. As a Canadian I watched on Friday as the USD/CAD was moving furiously higher.
In a few months, the USD will peak and climax with a destructive and metoric fall.
Don, you should take the time to understand money, it is a very important subject, even for us ‘down under’.
The level of credit expansion here in the last 10 or so years has been massive, our ‘economic boom’ has followed much the same pattern as anywhere else and we will suffer the same consequences of it. I am shocked by the lastest rate cuts of the Reserve Bank in the face of rapidly rising money market rates, this is more credit expansion i.e. inflation.
Ok, so maybe the Australian dollar may not burn up completely, like the US dollar, because we do produce some real stuff but get used to prices rising as the AUD depreciates against anything you want to use it to buy, except maybe presently overpriced real estate.The purchasing power of us savers is being ruined by the government!
Thanks jdownie for taking the time and trouble to respond. I was born there but am now over the ditch and a confirmed kiwi.
I have taken a bit of time lately but I have always resented the attention money demanded of me. I understand that most people on this site think that money will continue in some form or other but I found Chris through looking for "the end of money" which conclusion I had come to on my own. I am as uncertain of the future as any of us. Maybe it will continue but I know that we have been eating oil and the planet has to shed most of it’s people very quickly. I’ve regarded it lately as a race between money and oil and I now see money as winning. I’m already in my mid 50’s and I am certain I will not see out my allotted lifespan by purchasing my sustenance. Money is to me a fictional aberation that has consumed us.
at least in the short term (6 months - 1 year) if currencies is a relative value game? If the EU or the rest of the world is doing just as badly or worse, why would the USD fall? It is still the largest economy with the most amount of ‘tools’ to handle stress. If I look at other smaller economies which are in just as much debt, where money supply is on the exponential part of a curve etc. but these economies are not only smaller but are less diversified and don’t have as many ways to wiggle their way around the messes, then why wouldn’t the US$ remain the global currency? There is value to being the world currency, and just like how the 800 lb monkey in industries trade with premium multiples, so should the world’s ‘goto’ currency. Unless everyone is going to base their currency or foreign investments on something else like gold or oil (problem is storage), then the fiat currency is here to stay. What if EVERY country wrote down the value of their currency by 50%? The US$ would still be strong since everyone else takes a much needed devaluation.
I think Joe2Baba is right and the train has left the station. I have been buying for 30 years as a numismatist and more recently (8 years) as a bullion hoarder. I have ordered from many different internet sites and none to my knowledge accepts credit cards for bullion purchases but perhaps for numismatics they will. I have gone to coin stores, gun shows, estate sales, etc but find the best place to buy a diverse grouping of coins at reasonable prices are the many coin shows that occur in most major cities every few months. There will be scores to hundreds of dealers and invariably 10-20% will have some offering of bullion whether it is junk silver coins, silver eagles and other silver bullion, and every manner of gold coin and bullion. I make a few recon. passes around the booths and then figure out where the best price is. One can usually bargain for a better price with bulk purchase as well. Unfortunately, today we had a coin show in Austin and the offering was the poorest I had ever seen. There was less than a handful of gold bullion and the only silver was a bowl of 2008 silver eagles going for $25firm. All of my dealer friends told me it is hard to come by and on backorder. My internet purchase last month is on a 12-14 week delivery timeline and this is from one of the country’s bigger sellers. Today I ended up purchasing some numismatic dollar pieces for only a few dollars over spot so I was happy for that . I think the above recommendations are helpful too. Start with what you can sleep with at night, i.e. start small if you have any trepidation because of the anti-goldbugs or deflationists.
Hi again Don, was just going to add to my previous post; It’s as if the government want us all to become speculators, to speculate on the stock market etc in an attempt to maintain the purchasing power of our savings. Leaving it in the bank and earning a low rate of interest won’t make up for this continuing loss of purchasing power. Of course, speculating on the stock market you could lose the lot.
Money will continue in some form, it has to, as long as people wish to trade. The problem today is that what is considered ‘money’ today is not really money at all but cheques written by the government, it is government debt. True money is a commodity, something you will trade with someone for his/her goods and services, thus obtaining value for value, many commodities have been money in past times; gold, silver, tea, salt, cattle,…
As you probably realise, cheques can have monetary properties, you will accept a cheque as payment for your goods &/or services because you expect it will be redeemable for ‘money’ within a short period, you accept a cheque you are effectively a creditor of the person who wrote it. Modern banknotes are just irredeemable cheques, the only reason they are accepted as payment at all, is because the governmnent says so, so you have to i.e. legal tender. Australian (and probably NZ) banknotes used to have printed on them the words ‘The treasury promises to pay the bearer the equivalent in gold coin’. The gold coin was the money, the banknote was the promise to pay money i.e. the cheque.
What happens to a cheque that cannot be redeemed (bounces)? It becomes worthless. Ever wonder how the government continues to grow ever larger and more powerful while giving us ‘tax cuts’? They just give us back dollars that are worth less!
I think/ believe I understand what you are saying. I have made a post over to "what to say to the next generation" that is partly in response to your reply too. Summed up; Anyone can trade for what they want but only fools trade for what they need.
We are coming from very different perspectives. You are right in there with money and I don’t want to go too far there because it becomes unreal for me by my criterea - I can only fill my head with so much detail without developing tunnel vision.
Your perspective is no doubt much more informed than mine if we are only talking money. But we have population, energy and the environment in there with it all.
I come from philosophical and anthropological backgrounds. I can’t see money just in it’s own terms.
Hi All, I’ve always thought it a little strange that the biggest economy in the world has been borrowing money from folk that earn $6.00/day. That’s not how it should work! Anyway, looks like those days are gone now, despite the ‘all in this together’ talk I can see some big fractures opening up in that cosy club. Thanks from New Zealand for your great work Chris.
all the traders I used to visit are clean out of gold and silver. And this
started about three weeks ago. One internet dealer did manage to get his hand
on some silver. But charged 60% over spot price before adding tax. This lasted
about four days and he was cleaned out again.
The only places I think I
could get my hand on some metal, would be old dusty coin shops. And only junk
silver and 6 gram 10 guilder pieces. But this would be the last opportunity.
When I bought my first
metal about a year ago, the dealers would look strange that someone like me,
blue collar worker (I entered the shop in a boiler suit), buying gold and
silver. Till that moment only lawyers, ceo’s and other expensive looking folk
would buy metals.
Another thing is that we
are getting mailings from scrap metal dealers. They are looking for old coin
and old rings etc. Paying about 20% above the spot-price! This is all the proof
I need for price manipulation. Any trading being done is for much higher prices
than the spot-prices. Even for junk and scrap.
"What if EVERY country wrote down the value of their currency by 50%?
The US$ would still be strong since everyone else takes a much needed
devaluation." – xflies
Xflies alludes to the distinction between relative strength and absolute strength. If the US$ rises 10% vs. the euro, but falls 50% vs. gold, which is more important?
Currently, we don’t see this phenomenon very often, because central bankers are acting in collusion (as evidenced by last week’s coordinated rate cut). When the heavily euro-weighted dollar index rises, metals tend to weaken in dollar terms (which may imply that Europe and Asia are the primary markets for gold, rather than the US).
Nevertheless, if all fiat currencies continue depreciating together, gold is likely to carry on rising in all of them. There’s no perfect absolute reference standard, as shown by gold’s 21-year, 70% drop (1980 - 2001) during a mildly inflationary period. But over the long term, it’s the only one we’ve got. An ounce of gold during Julius Caesar’s reign would buy you a fine toga, and it will buy a good semi-custom suit today (or maybe two of them, at a store that’s going out of business).
Agricultural prices go back to ancient times as well. But since agriculture was animal-powered and firewood was gathered locally "for free," records of energy prices are very recent. Yet they are critical in a world whose population is projected to peak at 9 billion in mid-century.
Designing Bretton Woods III is tough job, but somebody’s gotta do it.
It’s looking like the banksters think that if they all inflate within prescribed limits of each other, everything will be hunky dory. The fatal weakness of that conceit is that they can’t print commodities. A worldwide drop in consumption has had the effect of lowering commodity prices now, But as to the future, if they do manage to ward off a credit collapse with massive injections of money, they are laying the seeds of a credit collapse caused by a hyperinflationary blowoff - a far worse scenario. I’ve gotten into the habit of expecting government authorities to take the worst actions possible and I’m rarely wrong.They are static thinkers without ability to imagine the consequences of their actions. Hence, they always blame the free market.
There is a point where the banksters are going to be forced to go on a precious metal standard. Otherwise even governments won’t be able to function. When that day comes, precious metals will have a value we can’t imagine today. Meanwhile follow Greshem’s law which states that bad money drives out good money.Save your precious metals for the day when fiat currencies are useless.
I live on the Cape; no pawn shops here. Years ago I bought a Martin guitar from a Boston pawn shop. The neighborhood was somewhat risky; I asume that they have gotten worse. If you want a fellow gold/silver seeker to accompany you, email me SLJ2000@aol.com. I don’t like to go to Boston for the hell of it but if this has a good chance of success, will consider it.
While we are all in agreement that the dollar is doomed, and that some form of something is needed for trade - be it gold or widgets, or whatever - the story in the US is the story EVERYWHERE. We cannot deny the facts that the rest of the worlds ‘widgets’ are in as poor a state as ours, and it’s not just the US whose money will fail, but all money. The G7 meeting has no alternative but to make reservations at the Bretton Woods Motel 6 ballroom. The questions to be answered there will be quite more complex than those posed before though. This time decisions will be made not just about the rules, but how many players are going to be allowed in the league, and who the head coaches will be. The central banks have been in this thing as a team themselves since the beginning - that will not change! I would suggest that the future brings new and a limited amount of tradable currencies, even more centralized control of the money supplies, and a wiping of HUGE levels of government debt across the planet.
Hey, it might sound far-fetched, but we need to remember the far-fetched minds of the folks who are making these decisions.
Bob
Here is a picture of the main source of our monetary problems. Practically every financial entity in the world is infected with them to various degrees. Notice that the total of derivatives exceeds total world wealth by four times.
As Jim Sinlair defines derivatives:
Without regulation.
Without listing on public exchanges.
Without standards.
Therefore not in the least bit transparent.
Therefore without an open market of the bid/ask type.
Dealt in by private treaty negotiations.
Without a clearinghouse
Unfunded without financial guarantee of any kind.
Functioning as contracts of specific performance.
Financial character or ability to perform is totally dependent on the balance sheet of the loser in the arrangement.
Evaluated by computer assumptions made
by geek, non market experienced mathematicians who assume religiously
that all markets return to their normal relationships regardless of
disruptions.
Now in the credit and default category
alone considered by accepted authorities as totaling more than USD$20
trillion in notional value.
Notional value becomes real value when
the agreement is forced to find a real market for ending the obligation
which is how one says sell it.
Social Security and Medicare are programs tied to approximately 80 million retiring American voters. These voters will act in their own self-interest and refuse any political ‘solution’ which eliminates these programs (at least in their present form). Our government will not formally "default" on these programs or any other ‘entitlement’ or debt obligation. They’ve already repeated the mantra.
The obvious "solution" (practical way to address the issues) is to pay both entitlements and debt obligations with debauched dollars–dollars which are "monetized" (created by accounting book entries of the FRS) into existance. Thus, any and all holders of $dollars$ and dollar-denominated assets suffer a decline in purchasing power (falling standard of living) together.
There are a number of fundamental ‘forces’ which effect the pricing (valuation) of commodities.
Supply and demand (think globally)
Value (stability) of the fiat currency used to price the particular commodity
Actions of commodity speculators
Actions of various hedge funds, central banks, and who know what else
The trend line for all commodities is UP. The reason for this is that mankind can’t counterfeit physicals like governments can counterfeit fiat paper currency. Over time, all goods and services are "repriced" using the larger pool of currency. The only counter is greater or more efficient productivity…which creates genuine "wealth" that didn’t previously exist.
The goal of monetary policy, which began under Volcher, was to pair monetary growth (money) with economic productivity (growth), thus maintain a constant value for the dollar. Greenspan appeared to follow Volcher, but the economic growth was an illusion. Bernanke has been forced to move away from a policy of maintaining dollar value.
