Wednesday, June 15, 2011

Bernanke's Clownmanship Demonstrates Why We Need A Gold Standard

Yesterday Bernanke gave a speech in which he pontificated like a baffoon about how the Treasury debt limit was the wrong tool to force fiscal prudence.  This is, quite frankly, a stunning display of either baffoonery or complete ignorance, or both.  LINK

The ONLY means by which to systematically prevent the Government from perpetuating and exacerbating its reckless fiscal policies is to have a mechanism in place to put a boundary on the ability of any to Government to engage in spending that is in excess of an country's economic system to support that spending.  Greenspan, when grilled by Ron Paul a couple decades ago about this, arrogantly and proudly proclaimed that the checks and balances provided by well-schooled Central Bank would function in the same manner and impose the same rigid disciplines as would a gold standard.  Thus, according to Greenspan, a gold standard is not necessary and is archaic. 

Well, the record speaks for itself.  How well has Greenspan's statement held up under the test of time?  The answer to that question could not be any more obvious.  The truth is that IF the Fed were functioning in the way that Greenspan proudly announced that it could, we would have never had ANY of the systemic problems which were created and mushroomed like a finanicial nuclear cloud under Greenspand and are now being made worse - at a geometric rate of acceleration - under Bernanke.  In fact, the term "Quantitative Easing" would not be readily found anywhere, even using Google.  And if the gold standard has worked as a formidible economic regulator, then whey did we ever try to "fix" what wasn't "broke?"

And now I see the Fed wants to establish an "inflation target" as part of its policy procedure:  LINK  I'm not sure how they can even begin to talk about what constitutes inflation and how it should be measured unless they can present a credible "yardstick" by which to measure inflation and re-introduce the M3 money supply reporting.  The Government CPI is a complete and utter joke.  In fact, I just laugh whenever there is any discussion of inflation in the media.  It just blows my mind that well-educated, highly paid professionals can sit around their "Roundtable" and engage in serious discussions and offer market views when the very centerpiece of their conversation, inflation per the CPI, is absolutely 100% flawed.  And if the M3 metric was being used to report the money supply, and if every other industrial country uses M3 - or its equivalent - to report their money supply, how come we don't? (hint: that's a strictly rhetorical question because we all know the anwer...).

I know what the rest of the world thinks about the above policies of, and proclamations by, Bernanke:  "Tidal Wave of Gold Demand Coming From China, India as Economies Expand:"  LINK  Meanwhile, while the rest of the world hoovers up the gold and silver that this country is selling to them, our individual States are each looking more and more like Greece.  Add Minnesota to California, Illionois, New York and New Jersey:  LINK

I just never ceases to amaze me that everyone over here is looking at Greece, while our own system is rapidly collapsing...


  1. Chico,

    Rise UP! The Mighty USD is Back.

  2. (Dave)

    Well, if it can get up to 82, it can get back to where it was at the beginning of 2011...If the Greece thing is resolved, the dollar will drop like like a large piece of hardened poop falling from an elephant after it eats its way thru a Planter's peanut factory...

  3. Any thoughts on the 2 million ounce silver removal from the COMEX yesterday?

  4. (DAVE)

    Sure. The same thoughts as you have: smart money is starting to grab onto as much actual, unencumbered physical gold and silver as they can and GRAB YOUR BALLS AND HANG ON TIGHT CUZ THIS MIGHT GET UGLY!

  5. Hello Dave, I enjoyed your article today. I am writing from Colorado, so I hope you are doing all you can to enjoy our weather!

    I think it is becoiming evident that the table has been set and it has very little to do with protecting the average American and everything to do with protecting those with 1st access to the money supply. It is beyond reason that people in America don't realize what is happening right before their very eyes... All I can say is STACK PHYSICAL METALS while you still can! The Comex is the time bomb and the big red button has been pushed. For all those that still believe that Bernak is going to pull a Macgyver and save the day will soon have a big surprise when they find out it is really Macgruber at the helm... We truly shall watch the paper burn together soon.

  6. (Dave)

    Feels good to be holding physical gold and silver, right?

  7. Turk

    Is the ECB solvent or not?

    What about the Fed?

  8. This was on CNBC today. Amazed they still talk to Truth Tellers. Like your article today Dave, Rod's comments are spot on.

    Government Must Act Now to Avoid Fiscal Crisis: Fund Manager

    Wednesday, 15 Jun 2011 | 1:53 PM ET

    "Time is running out for the United States' fiscal problems to be fixed, said Robert Rodriguez, one of the mutual fund managers who correctly predicted the last two stock market crashes. Rodriguez's stock fund, FPA Capital [FPPTX] has returned 15 percent annually over the past 25 years. His bond fund, FPA New Income, has never posted an annual loss.

    Video clip:

    In addition, he will not "commit" to a long-term bonds economy. "The 3 percent [on U.S. 10-year Treasury bonds] is an illusion. It's a manipulated market...these are buyers that are not, shall we say, interest rate-sensitive. They have other agendas."

  9. As a postscript to the story, CNBC asked for a tour of Fort Knox to film the gold, since our only footage of Fort Knox is from 1974. An official at the Mint told us that not he was not aware that any member of Congress had toured the facility since that year. Fort Knox is "a closed facility," the official said.

  10. Amazing...1st they cry about the onerous $15 million they need to audit ft.knox gold but no one seems too concerned about the $6 billion stolen in Iraq...yet they'll talk out loud about the $3.5 billion they need for the Libyan rebels...and now this...I mean we bring banana republic to a whole new level!

    CFTC ...the cop car has no blow all the stops!!!

    (courtesy Dow Jones newswire)
    DJ CFTC's Gensler: Without Funding, Agency Can't Enforce New
    2011-06-15 14:06:43.656 GMT

    By Jamila Trindle

    WASHINGTON (Dow Jones)--Commodity Futures Trading Commission Chairman Gary
    Gensler said Wednesday that his agency wouldn't be able to effectively police derivatives markets without more funding, as the House of Representatives is scheduled to continue debate on the bill that includes the agency's budget for next year.
    Last year's Dodd-Frank financial overhaul assigned to the CFTC and the Securities and Exchange Commission the responsibility of writing dozens of new rules creating a new regulatory regime for over-the-counter derivatives known as "swaps," a much larger market than the futures market that the CFTC currently oversees.
    "Without sufficient funding for the agency, our nation cannot be assured of effective enforcement of new rules in the swaps market to promote transparency, lower risk and protect against another crisis," Gensler said, in remarks prepared for a Senate Agriculture Committee hearing.
    He said it would also hamper the agency's ability to seek out fraud, manipulation and other abuses in commodity markets.
    House Republicans have proposed a budget of $172 million for the CFTC in the12-month period beginning Oct. 1, substantially less than the $308 millionsought by President Barack Obama.
    The funding has been included in a wider $126 billion bill to fund theDepartment of Agriculture and related agencies that the House could vote toapprove as soon as this week.
    While the bill is expected to be approved by the House given the sizeableRepublican majority, it is almost certain not to be taken up by the Democratic-controlled Senate. Rather, like the other spending bills to fund thevarious departments and agencies of the federal government, it is more likelyto be included in a wider budget deal that is currently being negotiated byHouse and Senate leaders and senior officials from the Obama administration

  11. Hi again

    Came across this article. I am always wondering about "Fat Bottomed Girls" (by Queen) - I love them so much!!!

    On to the big fat bottom. I read many sites and subscription sites on TA on precious metals. The sense I get is that they are now mostly completely out and in cash - waiting. This tells me a lot.

    Here another article -

    pay particular attention to this paragraph....

    "My crystal ball is a little cloudy on that question. However, I can report that my own company has a surprising number of established customers who are waiting for a possible one more large price drop before they jump in to purchase. In some instances, customers have sent us funds in advance so that they can move quickly when the market hits their target price. In total, between established customers who have sent us up-front funds and those who are checking periodically to see if now is the right time for them to buy, we have the largest pool of potential demand in 40 years."

    Waiting for a 2008 event????

    So then don't we think the big fat bottom is in?? Or can the COMEX or the industrial complex really afford for the drop to happen because then all phyzz will be gone.

    Another note by Ted Butler - SLV has redeemed 55mill oz since end April - out of what 450mill - that's 12.2% - where has that gone. So under cover of darkness - the COMEX - all phyzz is leaving to where??

    I once listened to Lindsay Williams and he mentioned that the Elite are upset that people are waking up to what they are up to. This was when silver was on its way to $50. Now they have us by the curly's again and before we know what is going on - phyzz will be gone!!!!

    Another good analyst/TA guy who sometimes writes for Jim Sinclair has also mentioned that the retail investor is almost all out now and perhaps even shorting - very good setup for an explosion.

    Those who are out in cash now - may perhaps just be the bamboozled ones??? Or not.

    Go and appreciate your girls Big Fat Bottom!!!

  12. ..."and if you really wanted to insult called them a banker."

    Will history repeat?

    Fiat money inflation in France


    Classic Goldman Sachs Alchemy

    That appears bad enough; but Goldman seems to have misled its clients as to how these CDO’s were constructed. In a classic case Goldman Sachs alchemy, they scraped the shit off their own boots, i.e., junk assets on their own books they could not otherwise find a buyers for. That is not what they had told buyers

  13. This is crazy. Perhaps best to only get into phyzz. When you look at GDX - since 2006 - GLD has gone up 155% and GDX a mere 30%.

    So its really best to get into the commodity only?

  14. and by the way... that's the reward you get for higher risk????

  15. You're out of your mind to sell gold now, Sinclair tells King World News
    Submitted by cpowell on Thu, 2011-06-16 02:51. Section: Daily Dispatches

    10:50p ET Wednesday, June 15, 2011

    Dear Friend of GATA and Gold:

    Gold trader and mining entrepreneur Jim Sinclair gets practically apocalyptic tonight in an interview with Eric King of King World News.

    "The potential right now, right here, right at this point for an error in judgment that would set off a loss of confidence is present, clear, and in all probability something that we are going to be facing well into the summer," Sinclair says. "This is as serious as it gets. ... This has gone so far that there is no solution that can be applied and the only practical method is to continue to expand the Fed's monetary aggregates to continue to hold down interest rates. And hopefully kicking the can down the road until somebody else is in charge -- and that's exactly what they are doing."

    Sinclair adds that if you let go of your gold now, "You are out of your mind."

    Sinclair will speak at GATA's Gold Rush 2011 conference in London in August ( You can find an excerpt from his interview with King World News here: