Great video for people who would like to understand our fiat money system. Whether his predictions come true is another story, imo it wont be deflation first, as he does predict. I believe we will go straight into hyperinflation from here but I also believe it is going to happen within this decade.
In one word: SCARY !!!
Banks deleveraging ?
Private households were forced to deleverage , consumer credit is down ca. 4% from 2008, but otherwise nothing has changed! Banks ( and other financial institutions ) have actually increased leverage.
From Allan Newman’s Stock Market Crosscurrents :
If we are correct in our assessment of the threat to the financial system, at least $2.2 trillion is now at risk (!% of total notional values). The banks with the two largest derivative portfolios are JPMorgan Chase (JPM) and Bank of America (BAC), with notional values of $75.3 trillion and $48.5 trillion, respectively. These two banks alone represent 56% of all notional values.
The history of the Weimar Republic teaches that real estate prices offered only limited protection against hyperinflation and only if one was living in his own home. Maintaining a house during periods of high inflation becomes very expensive due to constantly rising material cost. Of course a house usually survives a currency crisis whereas cash in a bank account does not.
In 1922 apartment rental prices were capped by the government and adjusted for inflation, rentals were only a fraction of what they had been before WWI. Consequently house prices were falling. However, rates and taxes on real estate sales were raised.
- Berlin raised the capital gains tax on real estate sales to 30%.
- In July 1924 home prices had dropped about 80% since 1918.
- From about 1935 to 1950 rental prices were “frozen”
- In 1952 “debt profiteers” had to pay a “mortgage gains tax”
RE offers wealth preservation in a currency crises, albeit one must be able to pay for maintenance and government levies and taxes. Moreover I assume that RE prices in a hyperinflation scenario are not increasing as much as gold and silver, if at all.
Lew Rockwell wrote an excellent essay in connection with World Bank*s Zoellick recent mumbling about a new gold standard : The Gold Standard Never Dies
In the essay he is also describing the immediate negative reaction of pundits like Nouriel Roubini :
The absence of the gold standard has made possible the paper world they all love, one ruled by the state and its managers, a world of huge debt and endless opportunities for mischief to be made from the top down.
“One of the funniest explosions came from Nouriel Roubini, who listed a series of merits of gold without recognizing them as such: gold limits the flexibility and range of actions of central banks (check!); under gold, a central bank can’t “stimulate growth and manage price stability” (check!); under gold, central banks can’t provide lender of last resort support (check!); under gold, banks go belly-up rather than get bailed out (check!).
His only truly negative point was that under gold, we get more business cycles, but here he is completely wrong, as a quick look at the data demonstrates. And how can anyone say such a thing in the immediate wake of one of history’s biggest bubbles and its explosion, which brought the world to the brink of calamity (and it still isn’t over)? Newsflash: it wasn’t the gold standard that gave us this disaster. (more…)
Silver’s industrial applications are consuming the metal. There is currently a total of only 1,234,590,000 “investable” ounces of silver in above ground supplies. At US$ 26 per ounce, the total value of above ground silver comes to only about $31 billion.
By contrast, because pretty much every ounce of gold ever mined still exists, there are a total of 4,585,620,000 “investable” ounces of gold in above ground stocks. At US$ 1,380 per ounce, the gold stock is worth over US$ 6 trillion .
Thus, the silver/gold ratio is currently about 54:1, yet the total value of all the investable gold on the planet is about 235 times that of silver.
Mishkin never disclosed he was paid.
Former Fed Governor Frederic Mishkin was paid $124,000 in 2006 to write a glowing report on Iceland. He never bothered to disclosed that fact.
Moreover, the title of his report has since been change from “Financial Stability in Iceland” to “Financial Instability in Iceland”. What’s up with that?
Watch Mishkin squirm in this interview:
Age-related macular degeneration or ARMD is the leading cause of vision loss and blindness for those 65 and older. Now a recent study is providing some hope, along with a protocol that may halt or slow ARMD’s progression. The study, which appears in the Archives of Ophthalmology, shows a regular supplement programme including antioxidants and zinc (500mg vitamin C, 400IU of vitamin E, 15mg beta carotene, 80mg of zinc oxide and 2mg of cupric oxide); could reduce the progression of AMD by as much as 25%. The study specifically monitored people who already showed signs of ARMD and found evidence that this combination of supplements could stop or slow the path of this disease.