<< <i>The drop last week in silver was designed by the government, the same way they, and the Wall street boys , cut up the Hunts in the 80’s. The socialist do not want people in the gold and silver market they want people in TREASURIES. Just as they hated the Hunts, they hate the folks not keeping their money in the banks or buying those, “SAFE GOVERNMENT SECURITIES.” The way they killed the Hunts is exactly the same way they drove the price of silver down last week, they simply changed the Comex rules bankrupting a bunch of traders, and Obama or Bernanke called Soros and told him to dump his holdings. >>
Probably the only guy they didn't call last week to sell their silver was Osama.
They may have not ordered Soros or Slim to dump some silver, but maybe they made them a sweetheart deal with potential future payback if they played along. I think that's the same way they got Buffet out of his 120 MILL oz. of silver in 2004. Warren thought enough about the potential of silver to be hoarding it from 1996-2004. He was a few years early, but way ahead of the crowd, like always. He knew value and saw it with silver. Like Greenspan before him, he tossed off his personal beliefs in hard assets when offered a govt deal or govt job. Now he goes around saying PM's are dumb because we dig a hole in the ground to find it....then dig another hole in the ground (ie a vault) to then store it.
This article will get the fiat bug's blood boiling. But some worthwhile thoughts in this article and in some of the links. Brushed up on the 1934 silver act which effectively took silver out of the hands of everyone but the govt. (500 oz limit).
The commodities rout that knocked off $99 billion of market value last week is driving out speculators and leading Goldman Sachs Group Inc., which forecast the plunge, to predict a possible recovery.
The combination of slower growth in U.S. service industries and fewer German manufacturing orders helped drive the Standard & Poor’s GSCI Index of 24 commodities down 11 percent in five days, the most since December 2008, and erased all the gains since mid-March. Wheat, zinc and gold rebounded at the end of the week as U.S. payrolls exceeded economists’ forecasts, reducing concern that demand will weaken.
“Given the magnitude of the pullback, it does create an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten,” Jeffrey Currie, the London-based head of commodity research at Goldman, said in a May 6 interview. A month ago, Currie told investors they should be “underweight” in commodities. “In the very near-term, we’d be a little cautious,” he says now.
While US payrolls were eagerly reported at +$244K. The household survey portion was "quietly" reported as -190K. Some divergence there.
The US payrolls report benefited from 175,000 "jobs" via the birth death model. McDonalds hired 62,000 people in one day in April as part of a hiring promotion. So expect a nice boost to the McJobs non-farm payroll numbers in May along with a Birth Death Model adjustment which should be higher than this past month. Right there is probably a +250,000 job boost to keep the recovery going. McD's received >1 MILL applications for those 62K jobs.
<< <i>The US payrolls report benefited from 175,000 "jobs" via the birth death model. McDonalds hired 62,000 people in one day in April as part of a hiring promotion. So expect a nice boost to the McJobs non-farm payroll numbers in May along with a Birth Death Model adjustment which should be higher than this past month. Right there is probably a +250,000 job boost to keep the recovery going. McD's received >1 MILL applications for those 62K jobs. >>
I wouldn't give too much credit to McD's. That was a PR stunt. The average was 3-4 hires per store. Given a typical turnover rate at a given store, I'd say each store probably hires 3-4 people per month normally.
My comments were more on a cynical basis. We're trading real jobs for McJobs. As long as the black box Birth Death Model is on the payroll creating jobs on paper, and McD's is adding another 62,000 jobs, what's to worry about? Recovery assured.
<< <i>They may have not ordered Soros or Slim to dump some silver, but maybe they made them a sweetheart deal with potential future payback if they played along. >>
What better payback could they ask for than a headsup to 5 COMEX hikes. A chance to buyback in at a 30% discount sure seems like a nice spifff. On the other hand do we even know for sure they sold anything or for that matter that they even owned any silver. Just saying they sold would have the desired reaction. They play ball with JPM and they stay in the club come bailout time.
<< <i>Cynicism is very hip these days! Cynicism has replaced apathy as the new "in" attitude to have! >>
Cynicism is developed after a long history of being lied to and knowing it.
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Soros and Buffett are extentions of the current regime. It is what it is. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Cynicism is very hip these days! Cynicism has replaced apathy as the new "in" attitude to have! All the cool people are very cynical >>
It's not something new for me. I had huge questions about the system back in the mid-1990's. You know, stock market forever, retire on a massive 401K by just putting a tiny amount in each year, guaranteed 7-8% per year for life, etc. That's when my cynicism began. No Johnny Come Lately. I think my cynicism peaked around 2004 during the housing "boom." There's nowhere to go but up now.
Think this won't happen here? Fighting the Greek meltdown On May 11, thousands of angry Greek workers, students - and even pensioners - will again take to the streets to protest the government's response to the economic crisis. They say they shouldn't be made to pay for the mistakes of their government – past or present. Many of them think the government was wrong to borrow money which ties it to carry out strict austerity measures...
Thank you for the links. Dr Paul correctly identifies the root/underlying issue as a moral one, not primarily 'economic'.
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
Charles Riley, On Wednesday May 11, 2011, 5:20 am EDT This just in from the Treasury Department: The United States will not be unloading its nearly $400 billion stash of gold to delay hitting the debt ceiling.
At least not if Treasury Secretary Tim Geithner gets his way.
As the government approaches the legal borrowing limit currently set at $14.294 trillion, some have suggested the government could sell its gold reserves, as well as other assets such as mortgage-backed securities or student loan portfolio.
Reaching the debt ceiling would mean the government couldn't borrow more money, and selling assets would mean an additional revenue stream without running up any more debt.
That would buy politicians a little extra time to negotiate, chest-thump, and whatever else the debt ceiling debate will bring.
But Treasury is already warning lawmakers that holding a giant yard sale of government assets isn't a responsible move.
In a letter sent to Congress last month, Geithner said any "fire sale" of assets would be "damaging to financial markets and the economy" and would "undermine confidence in the United States."
Still, the allure is there. All that gold is just gathering dust, after all, stored in vaults in New York, Colorado and Fort Knox, Kentucky.
The Treasury Department has 261.5 million ounces of gold in its reserves, easily the biggest stockpile on earth. With gold selling at about $1,515 an ounce, that means Uncle Sam is sitting on $396 billion worth of the shiny stuff.
According to the World Gold Council, the United States holds more than twice as much gold as runner-up gold hoarder Germany.
I just started a thread on that very same link pretty much on cue with you PMC.......whoops. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
my repost from another thread...i think it's important...if it is innocuous............ or important, please comment (and apologies if mentioned or posted elsewhere) the thinking is it is supposed to somehow undermine the gold Comex naked short selling
Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak
Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things.... shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on?
QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health
The Treasury Department has 261.5 million ounces of gold in its reserves, easily the biggest stockpile on earth. With gold selling at about $1,515 an ounce, that means Uncle Sam is sitting on $396 billion worth of the shiny stuff.
Good thing they sat on it too. Had they dumped it back in 1999-2001 along with Great Britain, it would have been worth only around $70 BILL rather than nearly $400 BILL. When a new currency regime is required down the road that gold will be critical. Not a chance in the world it would get sold off before then. Your 401K's and IRA's would get tapped first. Of course all this assumes that we still have legitimate title to 100% of those 262 MILL ounces.
<< Cynicism is very hip these days! Cynicism has replaced apathy as the new "in" attitude to have! All the cool people are very cynical >>
I only become cynical when I'm told how important it is to protect the environment in the Gulf and a moratorium on drilling is placed on US companies but somehow the countries with much less expertise like China and Cuba and Venezuela contract with each other to drill in those same Gulf waters and our government says .............................................................
oh, nothing.
Q: Are You Printing Money? Bernanke: Not Literally
You can't count housing, as it is recovering from a market abnormality (supply glut), just as you wouldn't point to the fall of gold/silver after it hit $800/$50 in early 80's and say that deflation was in effect then. Wages almost never keep up during inflation. And I haven't seen any durable goods get cheaper. There are no excess inventories of durable goods. I have yet to hear of someone waiting to buy an appliance because they will be cheaper next month. Of course, tech doesn't count because tech is always getting cheaper.
<< <i>Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak >>
A few days or weeks does not a trend make.
<< <i>Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things.... shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on? >>
Not sure what you're buying or where, but I'm not seeing any services getting cheaper either in my home or in my industry. It's hard for services to cut prices when their cost of fuel and supplies keeps increasing.
<< <i>QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health >>
And QE seems to be doing its job. The banks and the PTB are NOT going to just let deflation take over. The current Keynesian economic system is not designed or intended for that to happen, and the current people in power will make sure that it doesn't... at least until the 2012 election, and even then I have no hope.
The Treasury Department has 261.5 million ounces of gold in its reserves, easily the biggest stockpile on earth. With gold selling at about $1,515 an ounce, that means Uncle Sam is sitting on $396 billion worth of the shiny stuff.
Contrast that with todays article that states we will reach a $1 trillion deficit by the seventh month this year. All the gold in Ft Knox (if its really there) is less than 3 months deficit.
Can you imagine asking China for all that gold every year. Or worse yet, if they asked us to put it all on a ship as the price for continued treasury purchases.
Well, if the plan was to bankrupt the country while changing the greatest place on earth from a land of freedom and prosperity to ( you know what we have already and where it's headed so methinks this part can be left out ) then the plan has succeeded.
Check out the picture of the national debt counter in the land of "readers, movers and shakers", NYC where thousands walk and drive by that thing every single day and have done so for years and think nothing of asking for more of the same. Even begging for more or demanding it. Whatever works to keep it going
Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak
Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things.... shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on?
QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health >>
Prices on most goods produced from China are up 8% to 15% over last year. Expect to see most of these price hikes passed through to consumers this Fall. Prices are going to be up and margins are going to be lower as well. Count on it. MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Try plotting your electric bill for the past 5 years on a sheet of graph paper. Same goes for the mileage and gasoline expenditures that I keep in my car - I keep setting records for the highest price I've ever paid for a tank of gas almost every time I fill up. Funny thing - even tho' my mortgage has a fixed rate, the escrow amount keeps climbing every year. And don't even get me started on Dish Network.
Q: Are You Printing Money? Bernanke: Not Literally
jmski52.............What about the price of fertilizer? I really don't know but I'm assuming it has to be higher then 5 years ago. Maybe not?
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Guess who is paying for the 99 week unemployment insurance-mostly small business. He pays $2400 yearly now for him and his son. He used to pay around $300 before the 08 meltdown. He layed off 3 of his last employees about 18 months ago so just him and his son. He cannot afford to hire anyone right now.
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you.
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you. >>
If this is the case, then no one should have bought any computers, televisions, cell phones or other electronics during the past several decades. Also, no one should currently be buying real estate, since it is widely expected that its price will continue to go down.
"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods."
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you. >>
So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually.
What about the price of fertilizer? I really don't know but I'm assuming it has to be higher then 5 years ago. Maybe not?
Another good observation. Last year, I could find a bag of 12-12-12 for $9.99. Then it started going up. The best current price I can find is $17.99. That is for a small 50 lb. bag of all-purpose fertilizer. I assume that the farmers are seeing roughly the same percentage increases. I know that the fertilizer company stocks were hot a few months ago, but then they got hit. I don't follow them, but it might be worth a few minutes' research time. Potash Corp.
<< <i>If this is the case, then no one should have bought any computers, televisions, cell phones or other electronics during the past several decades. Also, no one should currently be buying real estate, since it is widely expected that its price will continue to go down.
"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods." >>
You can't count tech as it is ALWAYS getting cheaper as technology matures and technology advances. If you wait for computers, TVs, etc. to get cheaper in ANY economy, you'll never buy one because by the time the price does come down the new model is out.
Real estate is also different in that it can be an income-producing asset. RE in Phoenix may continue to come down, but if I can buy a SFH for $100k with 25% down @ 5-6% and cash flow $200/month free and clear in addition to building equity it's not a bad cash-on-cash return (and fairly low risk), plus its value won't go down forever and chances are in 10-20 years it will be worth more than what you paid. This is also somewhat true if you live in it rather than rent it out. You have to live somewhere, and right now in PHX it's cheaper to own than to rent. So if you plan to live in a home and pay it off in 15 years, you'll be better off in 15 years than you would be living in a rental, REGARDLESS of RE prices. You may be able to time the purchase of the home better, but it's impossible to pick the bottom and you don't know what interest rates will be next year, so while todays prices might not be the lowest, it may still be a decent time to buy all things considered.
Mild deflation would probably not be felt, it is assumed for discussion here that we are discussing a noticable inflation rate north of 5%. And there are going to be times when delationary effects will be felt. For instance, prices of consumer goods in general has remained low this past 20 years due to a shift (exploitation) of low wage labor in 3rd world countries and the wal-mart-ification of the supply chain - ALL while energy prices remained low. So those savings have been passed on to us consumers for the past couple of decades, but now there are no more large scale savings to be had as everything that can be offshored has been offshored and as those economies develop and their costs and wages increase, so will the prices of everything they make.
<< <i>"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods." >>
Overall prices in general slowly declined from 1800-1906. In actuality a good thing because everyone's cost of living improves. There's a lot to be said for declining prices as growth and efficiencies improve. Any violent swings in prices that occured in the 19th century tended to be banker, congress, and corporate induced (ie unbacked paper money, or not holding enough gold, or just contracting/expanding the money supply). The contrived banking panic in 1907 followed by the FED's actions from 1913-1929 ensured rising prices. It wasn't until 1933 that once again prices were on the same general level as they had been before the FED took over. Keynesian crackonomics has corrupted minds and lead them to believe that you need inflation to grow (ie 2-3% per year average over decades is a good thing).
<< <i>So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually. >>
Yes, our economic system is a Ponzi scheme. Those who get to spend "new dollars" first get the most value. But it results in inflation, not deflation.
Dollars are only stored purchasing power that hinges on (wide acceptance by) others willing to accept those worthless tokens in exchange for real goods or services. Printing more dollars can only result in reduced purchasing power, not more. When the scheme collapses, no one will be willing to accept the worthless tokens (inflation), as opposed to deflation where everyone would be wanting to exchange their goods or services for fewer worthless tokens.
At least when you're trading in cowrie shells, you still have some nice looking shells when all's done. Now all you get is some germ infested cotton rag to carry around. Now with gold used in exchange, you get a shiny piece of metal so that's not so bad either.
Mild deflation would probably not be felt, it is assumed for discussion here that we are discussing a noticable inflation rate north of 5%. And there are going to be times when delationary effects will be felt. For instance, prices of consumer goods in general has remained low this past 20 years due to a shift (exploitation) of low wage labor in 3rd world countries and the wal-mart-ification of the supply chain - ALL while energy prices remained low. So those savings have been passed on to us consumers for the past couple of decades, but now there are no more large scale savings to be had as everything that can be offshored has been offshored and as those economies develop and their costs and wages increase, so will the prices of everything they make.
So if offshored prices increase it would make sense to bring back the manufacturing base back to the U.S. Why export our wealth overseas if the costs are no longer lower. I would assume that would be a good thing for the U.S. and bad for China.
<< <i>So if offshored prices increase it would make sense to bring back the manufacturing base back to the U.S. Why export our wealth overseas if the costs are no longer lower. I would assume that would be a good thing for the U.S. and bad for China. >>
Offshore labor prices are increasing for two reasons: One is inflation in the other countries and the other is USD weakening/others strengthening. There is a tipping point where it might make sense to bring production back to the US, but I think we are still far from it. In China I believe they make on the order of $2/day compared to $80/day or more in the US, not counting taxes, benefits, etc. Even if they make $10/day in China, their labor rates would have to quadruple before you even start considering moving those factories, and that doesn't count the tax holidays and lighter operating restrictions/regulations, and lack of unions these companies have in other countries.
What you hit on is part of why China is keeping its currency artificially low... They know they'll be less attractive in the world marketplace.
<< <i>So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually. >>
Yes, our economic system is a Ponzi scheme. Those who get to spend "new dollars" first get the most value. But it results in inflation, not deflation.
Dollars are only stored purchasing power that hinges on (wide acceptance by) others willing to accept those worthless tokens in exchange for real goods or services. Printing more dollars can only result in reduced purchasing power, not more. When the scheme collapses, no one will be willing to accept the worthless tokens (inflation), as opposed to deflation where everyone would be wanting to exchange their goods or services for fewer worthless tokens. >>
I see it differently. First I think only a small % of people will view the dollar as worthless. Your explanation assumes that the Ponzi scheme can continue forever. I say it cant. Second, there is more debt than there are dollars. That debt is only supported by higher inflation expectations. If expectations reverse, then debt becomes quite cumbersome and will collapse. This will be massively deflationary. We saw a brief glimpse of the future in 2008, just before the FED jumped in and gave the banks back all the money they had lost.
There are very few, if any, people alive today that truely know deflation. We have all become accustomed to inflation. Failure occurs when we become complacent. There is a reason why specific asset bubbles only occur every generation or so. There needs to be time to get in new blood to replace those who were burned in the last bubble. Time to get a new crop of investors who say, "this time its different". Well, we certainly have a new crop of investors in this 78 year experiment with constant and continued inflation expectations.
A U.S. debt default could have unintended consequences, including making the dollar stronger.
Government bonds are denominated in dollars, but they are not dollars themselves. If a default occurs, it will be because the Fed is not printing enough dollars to redeem the bonds coming due. This could happen through a refusal to raise the debt ceiling, or by Congress reining in the Fed.
If this happens, U.S. bonds will take a hit in price, but the dollar itself may gain value, because dollars will be in short supply, but they will still be needed in large quantities for private and public transactions.
A default in federal debt will have the same deflationary consequences as a widespread default in private debt, at least over the short term. People who are counting on being able to raise money by selling their government bonds will instead have to raise cash through other means, and this competition for cash will drive up the value of the dollar. This happened in 2008, when the shortage of cash was precipitated by the stock market meltdown and the credit freezeup. It could happen again, for different reasons.
<< <i>At least when you're trading in cowrie shells, you still have some nice looking shells when all's done. Now all you get is some germ infested cotton rag to carry around. Now with gold used in exchange, you get a shiny piece of metal so that's not so bad either. >>
germ infested cotton rag
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>At least when you're trading in cowrie shells, you still have some nice looking shells when all's done. Now all you get is some germ infested cotton rag to carry around. Now with gold used in exchange, you get a shiny piece of metal so that's not so bad either. >>
<< <i>I see it differently. First I think only a small % of people will view the dollar as worthless. Your explanation assumes that the Ponzi scheme can continue forever. I say it cant. Second, there is more debt than there are dollars. That debt is only supported by higher inflation expectations. If expectations reverse, then debt becomes quite cumbersome and will collapse. This will be massively deflationary. We saw a brief glimpse of the future in 2008, just before the FED jumped in and gave the banks back all the money they had lost. >>
The worthless token known as the US Dollar *IS* debt! If you have 1 FRN, the federal reserve owes you! This is why the Fed's balance sheet is so important, becaue they are our creditor.
If you had a business and you supplied food to restaurants, and one restaurant stops paying its bills, and let's say they owe you $5000. Once you start to realize they are in trouble, suddenly you'd be willing to take $4000 or $3000 or even less to settle their account because you know that once they declare BK you're not getting anything. Not only that, you'd cut them off and only deal with them on a cash basis going forward if they ever did pay off their balance. The restaurant's debt (your account-receivable) becomes more devalued by the day, and it's a race by all suppliers to cut ties and get paid while there's anything left.
How/when did I say I assume the ponzi scheme will go on forever? It is doomed and has maybe 1-2 years left. When the scheme implodes, those left holding FRNs will be screwed, not enriched as you suggest. When our debtor (the fed) either cranks up the printing press to levels we can't imagine (much higher than today), or becomes insolvent, no one will want to store purchasing power in FRNs. In this scenario it is the rush of people/businesses/countries trying to redeem their stored purchasing power (FRNs) for real goods that will cause hyper-inflation. Whereas in today's world, if I give you $50k you might hold onto it for a while or even put it in the bank until you find a use or the right investment - no rush. Once people see the ponzi scheme starting to collapse, no one will want to hold that $50k any longer than they have to. They would try to park it in a real asset (such as gold) as soon as possible to preserve the value, rather than hold devaluing FRNs.
If the US fails to raise its debt ceiling and as a result cannot pay off maturing treasuries, then the value of treasuries will drop/plummet (just like the creditors' AR of the failing restaurant), and there will be a stampede for the door to get out of them because the value is falling and there is uncertainty about getting your money back. I own a TON of silver, and when I watch the value fall from $50 to $35 I still am not worried because I know that there is a bottom because silver has intrinsic value. But when you hold the note of a failing restaurant or a failing federal reserve bank, the bottom is ZERO because there is no intrinsic value. Fear is more powerful than greed, and when treasury prices start sliding, panic will set in.
Maybe you should ask the people of Zimbabwe what happened to the value of their currency as their ponzi scheme imploded...
Comments
<< <i>The drop last week in silver was designed by the government, the same way they, and the Wall street boys , cut up the Hunts in the 80’s.
The socialist do not want people in the gold and silver market they want people in TREASURIES.
Just as they hated the Hunts, they hate the folks not keeping their money in the banks or buying those, “SAFE GOVERNMENT SECURITIES.”
The way they killed the Hunts is exactly the same way they drove the price of silver down last week, they simply changed the Comex rules bankrupting
a bunch of traders, and Obama or Bernanke called Soros and told him to dump his holdings. >>
Probably the only guy they didn't call last week to sell their silver was Osama.
They may have not ordered Soros or Slim to dump some silver, but maybe they made them a sweetheart deal with potential future payback if they played along. I think that's the
same way they got Buffet out of his 120 MILL oz. of silver in 2004. Warren thought enough about the potential of silver to be hoarding it from 1996-2004. He was a few years
early, but way ahead of the crowd, like always. He knew value and saw it with silver. Like Greenspan before him, he tossed off his personal beliefs in hard assets when offered
a govt deal or govt job. Now he goes around saying PM's are dumb because we dig a hole in the ground to find it....then dig another hole in the ground (ie a vault) to then store it.
This article will get the fiat bug's blood boiling. But some worthwhile thoughts in this article and in some of the links. Brushed up on the 1934 silver act which effectively took silver
out of the hands of everyone but the govt. (500 oz limit).
Silver taken down? Jeff Nielsen
roadrunner
The combination of slower growth in U.S. service industries and fewer German manufacturing orders helped drive the Standard & Poor’s GSCI Index of 24 commodities down 11 percent in five days, the most since December 2008, and erased all the gains since mid-March. Wheat, zinc and gold rebounded at the end of the week as U.S. payrolls exceeded economists’ forecasts, reducing concern that demand will weaken.
“Given the magnitude of the pullback, it does create an opportunity for more upside potential, particularly in the second half of this year, when fundamentals are expected to tighten,” Jeffrey Currie, the London-based head of commodity research at Goldman, said in a May 6 interview. A month ago, Currie told investors they should be “underweight” in commodities. “In the very near-term, we’d be a little cautious,” he says now.
The US payrolls report benefited from 175,000 "jobs" via the birth death model. McDonalds hired 62,000 people in one day in April as part of a hiring
promotion. So expect a nice boost to the McJobs non-farm payroll numbers in May along with a Birth Death Model adjustment which should be higher
than this past month. Right there is probably a +250,000 job boost to keep the recovery going. McD's received >1 MILL applications for those 62K jobs.
roadrunner
<< <i>The US payrolls report benefited from 175,000 "jobs" via the birth death model. McDonalds hired 62,000 people in one day in April as part of a hiring
promotion. So expect a nice boost to the McJobs non-farm payroll numbers in May along with a Birth Death Model adjustment which should be higher
than this past month. Right there is probably a +250,000 job boost to keep the recovery going. McD's received >1 MILL applications for those 62K jobs. >>
I wouldn't give too much credit to McD's. That was a PR stunt. The average was 3-4 hires per store. Given a typical turnover rate at a given store, I'd say each store probably hires 3-4 people per month normally.
and McD's is adding another 62,000 jobs, what's to worry about? Recovery assured.
roadrunner
All the cool
Liberty: Parent of Science & Industry
<< <i>They may have not ordered Soros or Slim to dump some silver, but maybe they made them a sweetheart deal with potential future payback if they played along. >>
What better payback could they ask for than a headsup to 5 COMEX hikes. A chance to buyback in at a 30% discount sure seems like a nice spifff. On the other hand do we even know for sure they sold anything or for that matter that they even owned any silver. Just saying they sold would have the desired reaction. They play ball with JPM and they stay in the club come bailout time.
<< <i>Cynicism is very hip these days! Cynicism has replaced apathy as the new "in" attitude to have! >>
Cynicism is developed after a long history of being lied to and knowing it.
8:24
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Greece Threatens to Leave Euro Zone >>
No one would miss them. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>Jim Rogers on Glenn Beck hosted by Judge Napolitano, starts at 8:24
8:24 >>
The borrower always becomes slave to the lender.
Funny when Jim Rogers said that Bernanke hasn't been right in eight years. Nor has Geitner.
<< <i>
<< <i>Jim Rogers on Glenn Beck hosted by Judge Napolitano, starts at 8:24
8:24 >>
The borrower always becomes slave to the lender.
Funny when Jim Rogers said that Bernanke hasn't been right in eight years. Nor has Geitner. >>
On the radio or tv??????
<< <i>Cynicism is very hip these days! Cynicism has replaced apathy as the new "in" attitude to have!
All the cool
It's not something new for me. I had huge questions about the system back in the mid-1990's. You know, stock market forever, retire on a massive 401K by just
putting a tiny amount in each year, guaranteed 7-8% per year for life, etc. That's when my cynicism began. No Johnny Come Lately. I think my
cynicism peaked around 2004 during the housing "boom." There's nowhere to go but up now.
roadrunner
<< <i>Soros and Buffett are extentions of the current regime. It is what it is. MJ >>
Yup
Free Trial
Ron Paul's Words of Warning From 1983 to 2008
On the dollar:
1983 on the dollar
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Think this won't happen here?
Fighting the Greek meltdown
On May 11, thousands of angry Greek workers, students - and even pensioners - will again take to the streets to protest the government's response to the economic crisis. They say they shouldn't be made to pay for the mistakes of their government – past or present. Many of them think the government was wrong to borrow money which ties it to carry out strict austerity measures...
<< <i>Excellent from 1983!
Ron Paul's Words of Warning From 1983 to 2008
On the dollar:
1983 on the dollar >>
Thank you for the links. Dr Paul correctly identifies the root/underlying issue as a moral one, not primarily 'economic'.
This just in from the Treasury Department: The United States will not be unloading its nearly $400 billion stash of gold to delay hitting the debt ceiling.
At least not if Treasury Secretary Tim Geithner gets his way.
As the government approaches the legal borrowing limit currently set at $14.294 trillion, some have suggested the government could sell its gold reserves, as well as other assets such as mortgage-backed securities or student loan portfolio.
Reaching the debt ceiling would mean the government couldn't borrow more money, and selling assets would mean an additional revenue stream without running up any more debt.
That would buy politicians a little extra time to negotiate, chest-thump, and whatever else the debt ceiling debate will bring.
But Treasury is already warning lawmakers that holding a giant yard sale of government assets isn't a responsible move.
In a letter sent to Congress last month, Geithner said any "fire sale" of assets would be "damaging to financial markets and the economy" and would "undermine confidence in the United States."
Still, the allure is there. All that gold is just gathering dust, after all, stored in vaults in New York, Colorado and Fort Knox, Kentucky.
The Treasury Department has 261.5 million ounces of gold in its reserves, easily the biggest stockpile on earth. With gold selling at about $1,515 an ounce, that means Uncle Sam is sitting on $396 billion worth of the shiny stuff.
According to the World Gold Council, the United States holds more than twice as much gold as runner-up gold hoarder Germany.
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
the thinking is it is supposed to somehow undermine the gold Comex naked short selling
Hong Kong 1 kilo contracts starting May 18th
<< <i> There's nowhere to go but up now.
To remake a Carly Simon song, "Deflation is making me wait, making me wait."
Knowledge is the enemy of fear
Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak
Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things....
shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on?
QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health
Liberty: Parent of Science & Industry
Good thing they sat on it too. Had they dumped it back in 1999-2001 along with Great Britain, it would have been worth only around $70 BILL rather than nearly $400 BILL. When a
new currency regime is required down the road that gold will be critical. Not a chance in the world it would get sold off before then. Your 401K's and IRA's would get tapped first. Of
course all this assumes that we still have legitimate title to 100% of those 262 MILL ounces.
roadrunner
All the cool
I only become cynical when I'm told how important it is to protect the environment in the Gulf and a moratorium on drilling is placed on US companies but somehow the countries with much less expertise like China and Cuba and Venezuela contract with each other to drill in those same Gulf waters and our government says .............................................................
oh, nothing.
I knew it would happen.
<< <i>"inflation" of what? housing prices? no. salaries? no. durable goods? no. >>
You can't count housing, as it is recovering from a market abnormality (supply glut), just as you wouldn't point to the fall of gold/silver after it hit $800/$50 in early 80's and say that deflation was in effect then. Wages almost never keep up during inflation. And I haven't seen any durable goods get cheaper. There are no excess inventories of durable goods. I have yet to hear of someone waiting to buy an appliance because they will be cheaper next month. Of course, tech doesn't count because tech is always getting cheaper.
<< <i>Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak >>
A few days or weeks does not a trend make.
<< <i>Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things....
shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on? >>
Not sure what you're buying or where, but I'm not seeing any services getting cheaper either in my home or in my industry. It's hard for services to cut prices when their cost of fuel and supplies keeps increasing.
<< <i>QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health >>
And QE seems to be doing its job.
The banks and the PTB are NOT going to just let deflation take over. The current Keynesian economic system is not designed or intended for that to happen, and the current people in power will make sure that it doesn't... at least until the 2012 election, and even then I have no hope.
Contrast that with todays article that states we will reach a $1 trillion deficit by the seventh month this year. All the gold in Ft Knox (if its really there) is less than 3 months deficit.
Can you imagine asking China for all that gold every year. Or worse yet, if they asked us to put it all on a ship as the price for continued treasury purchases.
Check out the picture of the national debt counter in the land of "readers, movers and shakers", NYC where thousands walk and drive by that thing every single day and have done so for years and think nothing of asking for more of the same. Even begging for more or demanding it. Whatever works to keep it going
United States public debt
Perhaps the greatest tragedy in world history has already transpired. Millions are totally ignorant to the changes.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>"inflation" of what? housing prices? no. salaries? no. durable goods? no.
Even food and energy commodities are down over the past several trading sessions, as the herd starts moving to different asset classes, and the "safe" stuff is off the peak
Services? prices for all kinds of services are falling as people compete for business cutting lawns, painting houses, repairing things....
shop around, clip coupons, lots of goods and services are getting cheaper. We're operating way off our capacity in this country, how can you have sustained "inflation" with unemployment at 10% (or higher, if you count it right) and so much demand destruction going on?
QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. Frankly, we could use more signs of inflation in the above metrics for our long term health >>
Prices on most goods produced from China are up 8% to 15% over last year. Expect to see most of these price hikes passed through to consumers this Fall. Prices are going to be up and margins are going to be lower as well. Count on it. MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I knew it would happen.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Please explain what's dangerous about lower prices. Most of us would welcome them.
My Adolph A. Weinman signature
Box of 20
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you.
<< <i>
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you. >>
If this is the case, then no one should have bought any computers, televisions, cell phones or other electronics during the past several decades. Also, no one should currently be buying real estate, since it is widely expected that its price will continue to go down.
Also check this out:
"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods."
My Adolph A. Weinman signature
<< <i>
<< <i><< QE is about preventing massive, systemic deflation, which is the real danger in a huge economy. >>
Please explain what's dangerous about lower prices. Most of us would welcome them. >>
In a deflationary environment, ALL economic activity grinds to a halt. Why spend money today when it will be worth more tomorrow? You would welcome the lower prices, but you wouldn't take advantage of them, expecting goods to get cheaper for you. >>
So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually.
Knowledge is the enemy of fear
Another good observation. Last year, I could find a bag of 12-12-12 for $9.99. Then it started going up. The best current price I can find is $17.99. That is for a small 50 lb. bag of all-purpose fertilizer. I assume that the farmers are seeing roughly the same percentage increases. I know that the fertilizer company stocks were hot a few months ago, but then they got hit. I don't follow them, but it might be worth a few minutes' research time. Potash Corp.
After the spike in 2008-2009, fertilizer prices crashed - but now they are higher than before the run up and still rising in a steady climb.
I knew it would happen.
<< <i>If this is the case, then no one should have bought any computers, televisions, cell phones or other electronics during the past several decades. Also, no one should currently be buying real estate, since it is widely expected that its price will continue to go down.
Also check this out:
"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods." >>
You can't count tech as it is ALWAYS getting cheaper as technology matures and technology advances. If you wait for computers, TVs, etc. to get cheaper in ANY economy, you'll never buy one because by the time the price does come down the new model is out.
Real estate is also different in that it can be an income-producing asset. RE in Phoenix may continue to come down, but if I can buy a SFH for $100k with 25% down @ 5-6% and cash flow $200/month free and clear in addition to building equity it's not a bad cash-on-cash return (and fairly low risk), plus its value won't go down forever and chances are in 10-20 years it will be worth more than what you paid. This is also somewhat true if you live in it rather than rent it out. You have to live somewhere, and right now in PHX it's cheaper to own than to rent. So if you plan to live in a home and pay it off in 15 years, you'll be better off in 15 years than you would be living in a rental, REGARDLESS of RE prices. You may be able to time the purchase of the home better, but it's impossible to pick the bottom and you don't know what interest rates will be next year, so while todays prices might not be the lowest, it may still be a decent time to buy all things considered.
Mild deflation would probably not be felt, it is assumed for discussion here that we are discussing a noticable inflation rate north of 5%. And there are going to be times when delationary effects will be felt. For instance, prices of consumer goods in general has remained low this past 20 years due to a shift (exploitation) of low wage labor in 3rd world countries and the wal-mart-ification of the supply chain - ALL while energy prices remained low. So those savings have been passed on to us consumers for the past couple of decades, but now there are no more large scale savings to be had as everything that can be offshored has been offshored and as those economies develop and their costs and wages increase, so will the prices of everything they make.
<< <i>"For example, both the U.S. and Germany enjoyed very solid growth rates at the end of the 19th century, when the price level fell in both countries during more than two decades. In that period, money wage rates remained by and large stable, but incomes effectively increased in real terms because the same amount of money could buy ever more consumers' goods." >>
Overall prices in general slowly declined from 1800-1906. In actuality a good thing because everyone's cost of living improves. There's a lot to be said for declining prices as growth and efficiencies improve. Any violent swings in prices that occured in the 19th century tended to be banker, congress, and corporate induced (ie unbacked paper money, or not holding enough gold, or just contracting/expanding the money supply). The contrived banking panic in 1907 followed by the FED's actions from 1913-1929 ensured rising prices. It wasn't until 1933 that once again prices were on the same general level as they had been before the FED took over. Keynesian crackonomics has corrupted minds and lead them to believe that you need inflation to grow (ie 2-3% per year average over decades is a good thing).
roadrunner
<< <i>So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually. >>
Yes, our economic system is a Ponzi scheme. Those who get to spend "new dollars" first get the most value. But it results in inflation, not deflation.
Dollars are only stored purchasing power that hinges on (wide acceptance by) others willing to accept those worthless tokens in exchange for real goods or services. Printing more dollars can only result in reduced purchasing power, not more. When the scheme collapses, no one will be willing to accept the worthless tokens (inflation), as opposed to deflation where everyone would be wanting to exchange their goods or services for fewer worthless tokens.
So if offshored prices increase it would make sense to bring back the manufacturing base back to the U.S. Why export our wealth overseas if the costs are no longer lower. I would assume that would be a good thing for the U.S. and bad for China.
Box of 20
<< <i>So if offshored prices increase it would make sense to bring back the manufacturing base back to the U.S. Why export our wealth overseas if the costs are no longer lower. I would assume that would be a good thing for the U.S. and bad for China. >>
Offshore labor prices are increasing for two reasons: One is inflation in the other countries and the other is USD weakening/others strengthening. There is a tipping point where it might make sense to bring production back to the US, but I think we are still far from it. In China I believe they make on the order of $2/day compared to $80/day or more in the US, not counting taxes, benefits, etc. Even if they make $10/day in China, their labor rates would have to quadruple before you even start considering moving those factories, and that doesn't count the tax holidays and lighter operating restrictions/regulations, and lack of unions these companies have in other countries.
What you hit on is part of why China is keeping its currency artificially low... They know they'll be less attractive in the world marketplace.
<< <i>
<< <i>So the current system sounds like a Ponzi scheme, no? All Ponzi schemes fail. Deflation will come eventually. >>
Yes, our economic system is a Ponzi scheme. Those who get to spend "new dollars" first get the most value. But it results in inflation, not deflation.
Dollars are only stored purchasing power that hinges on (wide acceptance by) others willing to accept those worthless tokens in exchange for real goods or services. Printing more dollars can only result in reduced purchasing power, not more. When the scheme collapses, no one will be willing to accept the worthless tokens (inflation), as opposed to deflation where everyone would be wanting to exchange their goods or services for fewer worthless tokens. >>
I see it differently. First I think only a small % of people will view the dollar as worthless. Your explanation assumes that the Ponzi scheme can continue forever. I say it cant. Second, there is more debt than there are dollars. That debt is only supported by higher inflation expectations. If expectations reverse, then debt becomes quite cumbersome and will collapse. This will be massively deflationary. We saw a brief glimpse of the future in 2008, just before the FED jumped in and gave the banks back all the money they had lost.
There are very few, if any, people alive today that truely know deflation. We have all become accustomed to inflation. Failure occurs when we become complacent. There is a reason why specific asset bubbles only occur every generation or so. There needs to be time to get in new blood to replace those who were burned in the last bubble. Time to get a new crop of investors who say, "this time its different". Well, we certainly have a new crop of investors in this 78 year experiment with constant and continued inflation expectations.
Knowledge is the enemy of fear
A U.S. debt default could have unintended consequences, including making the dollar stronger.
Government bonds are denominated in dollars, but they are not dollars themselves. If a default occurs, it will be because the Fed is not printing enough dollars to redeem the bonds coming due. This could happen through a refusal to raise the debt ceiling, or by Congress reining in the Fed.
If this happens, U.S. bonds will take a hit in price, but the dollar itself may gain value, because dollars will be in short supply, but they will still be needed in large quantities for private and public transactions.
A default in federal debt will have the same deflationary consequences as a widespread default in private debt, at least over the short term. People who are counting on being able to raise money by selling their government bonds will instead have to raise cash through other means, and this competition for cash will drive up the value of the dollar. This happened in 2008, when the shortage of cash was precipitated by the stock market meltdown and the credit freezeup. It could happen again, for different reasons.
Edited to add: Here we go!
My Adolph A. Weinman signature
<< <i>At least when you're trading in cowrie shells, you still have some nice looking shells when all's done. Now all you get is some germ infested cotton rag to carry around. Now with gold used in exchange, you get a shiny piece of metal so that's not so bad either. >>
germ infested cotton rag
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>At least when you're trading in cowrie shells, you still have some nice looking shells when all's done. Now all you get is some germ infested cotton rag to carry around. Now with gold used in exchange, you get a shiny piece of metal so that's not so bad either. >>
germ infested cotton rag
Many have cocaine residue.
<< <i>I see it differently. First I think only a small % of people will view the dollar as worthless. Your explanation assumes that the Ponzi scheme can continue forever. I say it cant. Second, there is more debt than there are dollars. That debt is only supported by higher inflation expectations. If expectations reverse, then debt becomes quite cumbersome and will collapse. This will be massively deflationary. We saw a brief glimpse of the future in 2008, just before the FED jumped in and gave the banks back all the money they had lost. >>
The worthless token known as the US Dollar *IS* debt! If you have 1 FRN, the federal reserve owes you! This is why the Fed's balance sheet is so important, becaue they are our creditor.
If you had a business and you supplied food to restaurants, and one restaurant stops paying its bills, and let's say they owe you $5000. Once you start to realize they are in trouble, suddenly you'd be willing to take $4000 or $3000 or even less to settle their account because you know that once they declare BK you're not getting anything. Not only that, you'd cut them off and only deal with them on a cash basis going forward if they ever did pay off their balance. The restaurant's debt (your account-receivable) becomes more devalued by the day, and it's a race by all suppliers to cut ties and get paid while there's anything left.
How/when did I say I assume the ponzi scheme will go on forever? It is doomed and has maybe 1-2 years left. When the scheme implodes, those left holding FRNs will be screwed, not enriched as you suggest. When our debtor (the fed) either cranks up the printing press to levels we can't imagine (much higher than today), or becomes insolvent, no one will want to store purchasing power in FRNs. In this scenario it is the rush of people/businesses/countries trying to redeem their stored purchasing power (FRNs) for real goods that will cause hyper-inflation. Whereas in today's world, if I give you $50k you might hold onto it for a while or even put it in the bank until you find a use or the right investment - no rush. Once people see the ponzi scheme starting to collapse, no one will want to hold that $50k any longer than they have to. They would try to park it in a real asset (such as gold) as soon as possible to preserve the value, rather than hold devaluing FRNs.
If the US fails to raise its debt ceiling and as a result cannot pay off maturing treasuries, then the value of treasuries will drop/plummet (just like the creditors' AR of the failing restaurant), and there will be a stampede for the door to get out of them because the value is falling and there is uncertainty about getting your money back. I own a TON of silver, and when I watch the value fall from $50 to $35 I still am not worried because I know that there is a bottom because silver has intrinsic value. But when you hold the note of a failing restaurant or a failing federal reserve bank, the bottom is ZERO because there is no intrinsic value. Fear is more powerful than greed, and when treasury prices start sliding, panic will set in.
Maybe you should ask the people of Zimbabwe what happened to the value of their currency as their ponzi scheme imploded...