Tuesday, March 20, 2012

Yaaaaa Baby - The GOLD Standard



  1. That's gotta to be tough on Timmy. I bet he never saw that one coming.

  2. I love Denver, never really cared for Manning,and like him even less now.

  3. It's a business. He got paid up front probably 3x what any other coach/GM in the league would have paid when Josh "retard" McDaniels drafted him with the 25th pick in the draft.

    The odds of Denver winning a Super Bowl in Vegas went from 50:1 to 10:1 overnight.

  4. Hey Dave when you get a chance willyou wander over to Frankenstein Gov and read my piece on the zombie stock market. I trust your knowledge far more than my own...just check the piece for accuracy..thanks.

    I love that Peyton comes. He will come motivated. NFL owners can be real pricks.


    1. Can you post the URL? I can't find www.frankenstein.gov or www.frankensteingov.com


    2. Frankenstein Government is in your links, bottom page. *wink, thanks

    3. http://thecivillibertarian.blogspot.com

      Couple of nuances you should change. 1) Primary dealers are the designated market-makers of Government debt. They are also designated trading counter-parties of the Fed.

      2) Money is created (printed) when the Fed uses its balance sheet to buy Treasuries and hold them through the PD's. In this case, the Fed prints money and buys the Treasuries, increasing the size of its balance sheet. This is different than a Repo transaction, in which the money is "sterilized" because the Fed doesn't print up extra and the Treasury is used a "collateral" to borrow the money. In Europe, the LTRO "repos" are becoming more like a surrogate for printed money because the maturity is 3 years.
      3) Here's a nuance most don't realize about injecting funds into the system. And it's more powerful than outright QE because it's not acknowledged as printing, per se. The Fed decreases its reserve requirements for banks - all banks - thereby INCREASING the leverage of bank balance sheets. This means banks can borrow MORE money from the Fed against less equity. This was done in a big way in 2004. The reserve ratio at banks went from like 10:1 to nearly 40:1. That's what all the b.s. about level 1, 2 and 3 assets was about. It was a bullshit way to enable banks to borrow more money from the Fed. This has flooded the system with liquidity that's considered "printed" money or QE.

      And you are right, all this liquidity has flooded into the stock market. In fact, as money has flowed OUT of the housing stock, it has shifted in a big way into stocks and Treasuries. We have a big bubble in Treasuries and brewing bubble in stocks.

      By the way, your piece is very good!

  5. Dave, what's your take on Tinka Resources symbol tkrff?

    1. I looked at it about 8 months when a friend showed it to me and didn't care for it. That doesn't mean anything - it just means it didnt fit the criteria I use for juniors.

  6. Sometimes they do ring a bell near the bottom.....

    Ben Bernanke Just Murdered The Gold Standard



    Jim Grant On Gold-Backed Bonds And 'The Hope Leeches'

    Grant agrees with the odd premise that they do not but then goes on to
    what would be sounder policy. "Why not issue bonds backed by gold
    bullion? Gold is a better money and is grounded in something besides
    the power of the people that print the dollar bills."


    1. Antal Fekete Responds To Ben Bernanke On The Gold Standard

      In an unhampered market risk-free profits that may occur from time to time are ephemeral and therefore inconsequential. Hawk-eyed speculators immediately take advantage of them with the result that any further opportunity to make risk-free profits is eliminated on the spot. This is no longer true if the opportunity to make risk-free profit is not an infrequent aberration but the consequence of deliberate and well-advertised official policy as it is in the case of the policy of open market operations. When the central bank relies on open market purchases of government bonds in order to augment the monetary base on a regular, ongoing basis, then speculators can anticipate and pre-empt it. This policy, whole-heartedly supported by Keynesian/Friedmanite economics, is the most ill-conceived monetary policy ever concocted for the purpose of increasing the stock of money. The Federal Reserve Act of 1913, for excellent reasons, disallowed such a policy and imposed stiff and progressive penalties for non-compliance on the Federal Reserve banks if their balance sheet showed that government bonds had been used to cover Federal Reserve note or deposit liabilities. At first the Fed used open market operations illegally. It could get away with it because of the connivance of the Treasury in ‘forgetting’ to collect the penalty. The conspiracy created a fait accompli and, in the end, Congress was forced to legalize the corrosive practice retroactively in 1935 when it amended the Federal Reserve Act.

      The newly invented monetary policy of open market operations is responsible for much of the deflationary damage inflicted on the world economy during the Great Depression of the 1930’s. It started an avalanche of falling interest rates that soon went out of control. Falling interest rates destroy capital as they increase the burden of debt contracted earlier at higher rates. Perfectly sound businesses fail if their debt burden, through no fault of theirs, exceeds the profitability of deployed capital. The whole process was most insidious. Entrepreneurs did not know what hit them. From one day to the next they found themselves uncompetitive as competitors financed their business at lower rates. They had to lay off their employees. They went bankrupt in droves. Wanton destruction of capital was the main cause of deflation and the Great Depression in the 1930’s.


  7. If everyone (big and small) took their medicine, we'd be into an organic recovery already....

    The Age of Double Standards

    Robert Kuttner
    March 19, 2012
    American Airlines can declare bankruptcy and wipe away debt. But you can’t—and that’s just the beginning.

    Petty felons and 200,000 small-time drug users do prison time, while corporate criminals whose frauds cost the rest of the economy trillions of dollars are permitted to settle civil suits for small fines, with shareholders bearing the expenses. Ordinary families pay tax at a higher rate than billionaires. When fracking contaminates a property and makes a home uninhabitable, the homeowner rather than the natural-gas company suffers the loss. The mother of all double standards is taxpayer aid and Federal Reserve advances—running into the trillions of dollars—that went to the banks that caused the collapse, while the bankers avoided prosecution, and the rest of the society got to eat austerity.

    Linking all of these disparities between citizens and corporations is the political power of a new American plutocracy. Until our politics connects these dots and citizens start resisting, the financial elite will rule. Despite the Occupy movement, most regular people have yet to experience the sudden enlightenment of Captain Yossarian, who decided, unpatriotically, that he didn’t want to die. In the face of economic pillaging, we are behaving like damned fools.


  8. Here’s Gary Gensler explaining why he decided to throw MF Global customers whom he is supposed to protect to the wolves


    ..ex goldman, best of the best...sharpest guys in the room...yet he can't answer a simple question.

  9. what started out as a rough year for me (fan of colts, broncos and rams, in that order) has turned out to be a delight...let's hope those broncos can get another few SBs!!