Toto deVeer

Well here's one. Purely from a trader's perspective. Gold is really only at about a 50% move from inflation adjusted historical low to high. As any trader knows, there is always a retest; it just depends on timing. Gold performs well in conditions of sovereign uncertainty, but not at times of illiquidity. We are reaching another position of illiquidity at the moment, and I expect a pull back, but the sovereign uncertainly is going to be with us for some time. For this reason, I agree with Nenner, that we are in a significant pull back phase before gold makes the next push for the retest, which will be over $2000. We could go, in the near term, back to 700 or so, depending upon liquidity conditions in the coming months.

The huge drop in volumes and price action to me fully illustrate the reason prices have not fallen. Banks are being allowed to park losses off balance, and interest rates are at 350 year lows. Action starts when rates rise...

And are they all going to sign up to the contract?

GBP, like the Yen could be good for the carry trade...total debt levels are almost identical...

Dollar swaps. And for those Americans who thought they weren't going to be involved in the bailout; well the FED has just outflanked Congress again, via exchange rates... Don't ya just luv those banksters...

Have they succeeded? It's only on paper at the moment. Personally I can't see the Greeks or the Italians signing up to this...dunno about the other 25 or so...

How about just not using a fractional reserve system? Stops the banks from pumping out the credit...

There are two things to note about this period. The first is that deflation is not a bad thing. A modest increase in the money supply to keep the (P = P + I) relationship functioning and productive investment will permit bad debts to be destroyed and allow growth. The second thing to note is that the US Note was the currency and was a fractional reserve fiat currency at the time. So this flies in the face of those who claim there has never been deflation with fiat currency. Indeed there has been several times at least in the US. According to Rothbard, it is not possible to have deflation with gold coin, or with government fiat paper unless a budget surplus is run and the surplus is returned to the treasury. Rothbard specifically notes that it is fractional reserve currency that is most subject to deflation. Precisely what we use today. As to the 'paradox of thrift'; it is a Keynesian thing and I'm not a big fan of his, I'm afraid, so I can't help there.

Perhaps, but it all depends upon whether the people, especially the German people, will accept it. And then it depends upon whether the market believes anyone in Europe will follow it (further political and fiscal integration, I mean) Top down without the consent of the people, I still think that Europe is about a fragile as the USSR was in 1989... That Merkel's a little coquette; I fancy her...

It's just human psychology. And I don't see much difference between the old USSR and the EU. Both were imposed top down against the will of the people. Big mistake to have a common currency. Will they revert back to their original currencies?

Nice charts though...thx!

It wouldn't matter if she impaled G-Pap on Kaiser Wilhelm's Helmet, the German people are not going to buy into it...

Good 'ol Peter Schiff. I'm 100% dollar, but looking at gold as the next step, later this year. I'm scared to death, though, that we'll get another 'emergency' G20 meeting soon...and QE2...

Has the herd been spooked? Yes.

That is a serious complication, as the world becomes more urbanized. For the USA, in 1900, 90% of people lived on farms, by 1970, only 7% were living on farms. An interesting question is, what would have been the pattern over those 70 years if a land tax had been in force?

Yes that makes good sense.

Yes, it is logical for today, and tomorrow. But longer term, the goal is the transition from the FIRE economy to an economy that creates real, not paper, wealth. That's where I think Mish misses the point. And I don't think that the Coalition is too bothered about the GBP declining against the USD.

Which begs the question, if price inflation is a tax, is deflation a tax rebate?

Sorry it took me a while to dig this up, I read a lot of Rothbard's stuff... Here's a link for a free download. The ref is "The History of Money and Banking in the United States", Rothbard, pp 154-155: http://www.mises.org/books/historyofmoney.pdf Price deflation isn't such a bad thing, according to Rothbard. [Edit: Sorry I got my stats mixed in the previous comment, prices declined about 3.8% per year, not 5...was thinking of GNP numbers. ]

Here we go with the 'isms. Chill. As I mentioned in many posts, I would get rid of all forms of income tax. How is that contained in any 'ism? Get the government to just butt out, except for capping the extremely wealthy. Go and study history. Real history. It will blow your mind. What we are being taught today about the various 'isms simply isn't right, and in fact is simply intended to trap you and I in another so-called 'ism. We live in a world where private money controls government. That is the 'ism you should really fear. A world with 15,000 lobbyists in Europe, 24,000 lobbyists in the USA. A military-industrial complex. A Prison industry. In 1980, there were 600,000 total prisoners in the USA, today there are almost 7,000,000. It has become a money making machine, and a manufacturing industry using free labour. How do you think this happened, and do you want to be a slave to those interests? Well, we already are, and it is because they have more wealth than our government does. Our taxes go to feather their interests. You should realize that we have just witnessed the greatest theft in history, the movement of private debt to sovereign debt. This means that, whereas the debt could have previously been written off, it will now live forever, and you and I and our future generations yet unborn will be paying for it. And how did this happen. Go and ask the lobbyists. You will never stop this until you realize that the money of our nation is ours, and that no individual should be allowed to accumulate too much of it.

Reading this thread makes me realize just how utterly screwed up the entire UK property market and mortgage system is. It's all just a mirage. Right, I'm off to the 'What is Gravity' thread where the subject is more sensible....

During the long depression, the money supply (US Notes) was increased by 2% or more each year. Technically, that is inflation, by some definitions. But on the street, most people consider deflation to be where prices drop. And they did, for an extended period, about 5 to 6% per year. Rothbard has published stats on this period. That's where I got the info. So there was a modest increase in the money supply, and a decline in prices at the same time.

Things can turn sour in a flash. In late 2008 Volvo trucks went from an order book of over 100,000 and a 6 month fulfilment period to an order book of less than 15, and a begging bowl. I was in Saudi in November when they called up a gentlemen who, only a month before, had been told that they could not fill an order for 6 months. Volvo were begging him to take some trucks. Looks like it could happen again.

Indeed, this is the problem. The burden is borne by the poorer elements of society under this system. Particularly when you consider how much the mix of properties has changed over the last 10 years... But to take this to extremes, there is a house on the west coast US (Washington or Oregon), that has dropped in price from $1.4 million to around $700,000, but it has not been purchased, because the property taxes are more than $60,000/yr. Even developers have not been interested.

Well, I am generally against taxation, in principle. However, if a service is provided for the common good of society, then I am prepared to accept it. Taxes blur the boundary between crimes against the state (that I think are political) and crimes against individuals (that I think are crimes). Taxes are at the heart of this issue. In this regard I am very much aligned with Thoreau. But anyway, if a common service is provided such as fire, police, infrastructure (roads, bridges) then a tax can be justified. Then it is a matter of the best way to apply them. That is why I'm being a devil's advocate...