I've put up a 'History Lesson' on my Saturday Morning Coffee post. I think it's accurate, but not a great forecast...

ron, where is the report posted? thx...........

Score22: Click on "RON" or

http://www.ronsen.blogspot.com/

Bill,
This week we got more evidence of a struggling economy. The Retail Sales and Industrial Production report attest to this.
I have posted charts illustrating that Industrial Production is approaching a critical level.

"Who is responsible for this mess?"

As laid out in Wikipedia [ http://en.wikipedia.org/wiki/Federal_Reserve_System ], I'd start my list with the New York Bankers & Brokers who met secretly at Jekyll Island, GA, to craft a plan (conspiracy?) for a centralized banking system. The scheme eventually was enacted by a fatuous Congress under prodding of Rhode Island Senator Nelson Aldrich (his daughter married John D. Rockefeller, Jr. to bring forth Nelson Aldrich Rockefeller) and signed into law by Woodrow Wilson. The list keeps growing, all the way down through Nixon, Reagan, Clinton to the present clay-headed figurehead fronting for the HB&B. It is a very long list. And because they *are* the power, no one is accountable.

Call me cynical . . . .

Happy Vacation Bill,
I'm writing this weekend from a Shilo Inn in Oregon.....big dog trial. BTW, these Shilo suites are awesome.

In short, it's our fault for not holding those we put in power, responsible.

Hope everyone is having a great weekend.

Ron,

Your blog's 'history lesson in charts' is a pedagogical work of true and economic beauty! Thank you.

craig (off topic)- "Shilo Inn in Oregon.....big dog trial." what's the story?

Gold Charts for 9-14-2007

part I:
http://www.mediafire.com/?1oiamnwx1kt

part II:
http://www.mediafire.com/?8wzmjnvcyg1

something extra:
http://jessel.100megsfree3.com/TRepos.jpg

Is the bank run on Northern Rock for real?
http://bullionmarketplace.com/buybullion/2007/09/15/uk-bank-runs-out-of-money-lines-grow/

If this is real this will sure put a lot of pressure on other UK banks to avoid negative news releases.

ALOHA !!

Sometimes I think that if the Powers-That-Be(politicians)and the HB&B crowd can hold out long enough all the classically trained Austrian School Of Economics professors and economists will just die off and that will leave the World with no real understanding of any true economic principle that dictates the production of "real wealth" over "false wealth". Then the Keynes and Greenspan doctorate of constant BubbleLand via credit and M3 expansion will be adopted as the only "real economics". The World seems to value that which is fantasy over reality much more as each day passes. This is the foundation of FIAT ... Way back when the USA went off the gold standard and closed the window that backed a US Dollar with gold it was said that the US Dollar was as "good as gold". The Keynesian central bankers at the time beleived that they could literally create a FIAT based monetary system that would emulate the gold standard yet be more flexible and provide for faster economic growth. This is purely monetary fantasy because under such a system you would have to start with the assumption that humans are not human! That humans do not have egos, do not possess greed and fear and have no ambitions of power. Then you also have to assume that politicians and bankers are honest and will act in a responsible manner towards the people they govern ... Hummmmmm???#$%>?*???

HUMANS ARE HUMANS and FIAT IS FIAT!! In the end it WORKS UNTIL IT DOESN'T !!

Another great economist has passed on. Who will replace these guys? If you have such an interest in learning the truth behind BubbleLand Fantasy Keynesian-Greenspanian economics then go to this website.

Link: http://www.mises.org/

READ ON:
REQUIEM FOR AN ECONOMIST

"Kurt Richebächer met his end with hardly an "ave" from anyone but friends and family. We pause to remember him here for both sentimental reasons and practical ones. On the sentimental side, we remember him as an old friend and fellow idealist."

by Bill Bonner

Kurt Richebächer died two weeks ago at his home in Cannes, France, at 88 years old. R.I.P.

One of our greatest complaints is the way the modern world pays homage to its dead. When a good man finally has the mud tossed on his face, he is almost instantly forgotten; so little notice is taken, it hardly seems worth dying. Meanwhile, those who are widely mourned and greatly regretted usually don’t deserve it. When Paris Hilton dies, for example, America will probably declare three days of national mourning and hang black crepe on the capitol.

Kurt Richebächer met his end with hardly an "ave" from anyone but friends and family. We pause to remember him here for both sentimental reasons and practical ones. On the sentimental side, we remember him as an old friend and fellow idealist. On the practical side he, and practically he alone, understood the worldwide economic boom for what it really is – a sham.

Kurt Richebächer was born at the wrong time, in the wrong place. He came into this life in the middle of WWI, on the losing side. He was a young man when another losing war got underway. He was one of the generation who were plucked up by the Wehrmacht in ’39...and lucky to still be alive by ’45. Kurt was lucky, in a way. He suffered a disabling accident while still in training. He spent the entire war in various military hospitals, unable to walk; the rest of his life he walked only with a cane. Doctors didn’t know exactly what was wrong with him; at one point German military officials threatened to prosecute him for malingering. Had Kurt’s father, a Nazi party member, not intervened, he might have been shot. Instead, in his hospital bed, he began to read economics.

The classical economics texts Kurt read made sense to him. They described not merely the world as it was, but the world as it ought to be. They emphasized discipline, hard work, and capital formation as the essential elements of wealth creation. And they warned against excess credit and inflation as if they were loose women and demon rum; both were sure to lead to ruin.

The war over, Germany threw off the bad advice of its American overseers. The deutschemark was made a rock-hard currency. Germans clove to the old economics. The country prospered. And Kurt Richebächer rose to be chief economist for Dresdner Bank.

But then, in the 1970s, classical economics – known as the Austrian School today – was going out of style, even in Germany. Economists – those in the United States and Britain – found they could upgrade their trade. Instead of merely reminding people of the old, un-yielding truths they began offering new tricks and innovations. They promised not merely to explain how the world works, but to make it work better...by taking the devil out of it and making it a more agreeable place. Using their new tools, econometrics and statistical analysis, they believed they could manage an economy, so as to achieve full employment and steady growth forever.

Kurt saw the new trends in his profession as dangerous; he regarded their proponents as quacks.

"You anglo-saxons..." he said to us once... "you just have no concept of financial discipline. Just look what you are doing – at every level. In Europe, we have high levels of state debt, but at the individual and business level, our balance sheets are pretty strong. But in almost every English-speaking country, people borrow for everything.

"All this emphasis on statistics and calculations...," he went on, rapping his silver-handled cane on the table for emphasis, "without a proper theory, it is all nonsense. And your economists seem to have no theory at all...they just think they can manipulate the system in order to get whatever outcome they want. They think economic growth comes from consumer spending and that they can control consumer spending by adjusting lending rates. It is unbelievable that anyone takes this seriously. It is capital formation that really matters. A rich society is one with a great stock of capital...one that builds capital and puts it to work to create more capital. A rich society is not one where people consume. Just the opposite. It is not what is consumed that creates wealth; it is what is NOT consumed. Yet, all the Anglo-Saxons focus on motivating consumers to consume. And now they are consuming more than they make. I tell you, in 70 years of studying economics, I have never seen such nonsense.

"I have always thought it was the duty of each generation to leave the next one a little better off. That means, each generation has to consume less than it produces. It has to leave a little something extra. The problem, you see, is not an economic one...what we are doing to our children with this use of credit and debt is deeply immoral. It is wrong. It is wrong to burden the future with our mistakes, our conceits, our ambitions. This is what we are doing, and it is shameful."

Kurt warned against the bubble in tech stocks in the late ’90s. Then, he warned against the great bubble in housing. In September 2001, he wrote: "The new housing boom is another rapidly inflating asset bubble financed by the same loose money practices that fueled the stock market bubble."

In one of his final letters, he concluded, "The recklessness of both borrowers and lenders has vastly exceeded our imagination."

He went on to predict "that the housing bubble – together with the bond and stock bubbles – will invariably implode in the foreseeable future, plunging the U.S. economy into a protracted, deep recession."

Paul Volker once remarked that the challenge of modern central bankers "is to prove Kurt Richebächer wrong." Instead, they are proving him right.

Hello,

Thanks guys for the great Excel RSI7-Tool. I've got a question about it. I'm not able to watch stocks from Euronext Amsterdam (like AGN.AS) in the Under the Microscope sheet. Can you tell me what to do ? Is the RSI7-data smoothed because there are some differences with the RSI data from Billcara2.com ?

Thanks

Who's to blame for all this mess?

We are.

Collectively.

What percentage of the population in the United States (and elsewhere too, but especially here) thinks they have a "right" to a 3,000 square foot house, two Lexus vehicles in the driveway, and $20,000 vacations every year?

Far more than earn the money necessary to pay for such things.

How does Wall Street get away with allowing the creation of derivatives traded on the OTC market - financial "products" which have no enforce margin requirements, no surveillance and no fiscal backing to wind up in regulated entities (banks, public companies, pension funds, etc)? And what's worse, how is it what banks and other entities are allowed to maintain "off-balance-sheet" entities like SIVs and ABCP conduits, where absolutely nobody can determine what the liabilities and assets of those vehicles might be?

How is it that Wall Street can take a "package" of tens of billions of DELINQUENT credit card debt (all unsecured and already in default!), slice and dice it, and get a credit-rating agency to post a "AAA" rating (equivalent in safety to that of the United States Government!) on 40% or more of that paper?

How is it that The Federal Reserve was allowed to waive [[BANKING REGULATIONS]] put into place after the Depression that prohibited more than 10% of a bank's regulatory capital from being deployed to "affiliated firms" - when the entire purpose of that restriction was to prevent the possibility of an affiliated firm's implosion from imperiling an actual depository institution? In short, how is it that we allow, DURING A CRISIS, the removal of CRITICAL safety mechanisms from the very financial system that is in trouble?

How is it that Our Government has allowed The Dollar to slice through critical support levels and threatens to allow it to go into total freefall on the back of irresponsible interest rate and credit policy in an intentional act of exporting inflation - an act that will not and cannot succeed. Proof that it has backfired and will continue to? $80 oil! Guess what? We've exported our inflation to China - they, recognizing this, have opened trade conduits to other nations, and are now sending that inflation back HERE. When this TRULY gets going (and it will, soon) you will see hideous inflation rates on virtually everything you buy. It has already started and will get MUCH worse. This, plus capital flight is going to cause both inflation and much higher REAL interest rates no matter what The Fed does.

In short we're in for some real tough times here in America. It is inescapable. Figure out how to trade it and make as much money as you can, because you're going to need it just to "stay even."

Jon Markman posted a good article which fellow Caraistas might find interesting

"What the Big Banks aren't telling you-yet"

"The Fed is now about to embark on a long series of interest-rate cuts in the face of a global economic slowdown, but it has no proof that cheaper money can, by itself, unwind the worldwide credit crunch. It could work if Bernanke and other U.S. financial officials are able to persuade the biggest institutional investors here and overseas that it will work. Or it could end up lighting an inflationary brush fire that combines with a recession to create the perfect storm of unending investor pain." Jon Markman

http://articles.moneycentral.msn.com/Investing/SuperModels/WhatTheBigBanksArentTellingYouYet.aspx

Anyone out there contemplating a trade ahead of the Fed meeting in the UltraShort Financials ETF
symbol SKF? Trading at $83.18.... 14% off its 52 week high. A risky bet for sure... as I imagine the PPT is locked and loaded for Tuesday.

When one looks at the level of damage caused by the first tranche(Jan-June 07) of overvalued mortgages at around $130 billion and then contemplate the financial chaos that will be created in the next 12 months when $800+ billion come to market,it would appear the financials will endure lower valuations in the near future.

Can Bennie pull the rabbit out of the hat and successfully paper over all the overvalued debt with his fleet of helicopters? If housing prices continue to fall,then the underlying debt must be repriced. Will truth ultimately prevail as assets get repriced to real market values instead of computer modeled ones?
If home prices would fall 20-30% over the next two years,lenders and homeowners will both feel the pain.Add in all the leverage and derivitive bets to this toxic soup which leads me to think we may be reaching a point where the Fed printing money option becomes impotent and real market forces take over. Perhaps the denial phase is near an end and the proverbial chickens may be coming home to roost.

By the way, Mr McGoo (alan g) was reported to have said this week that he didn't forsee the current financial problems developing when he issued his call for all to indulge in the full buffet of phony financing. He also blamed Bush for spending too much. His book comes out next week and he's on CBS 60 min tonight.

WOW !!!
Great commentary today gentlemen. Really makes me wish I had started studying Capital Markets in my 20's or even 30's instead of my Mid-40's. Oh well I'll just have to do the best I can. Thank you for all your help in my education

Kaimu,
I think that to be fair to Keynes, he did expect the government to repay its debts when times were good - naive perhaps, but I seem to remember reading that he was also a very successful trader.

astral25 - I'm currently long (underwater) SKF, not a huge position, but attempting to hedge my IRA, thinking I probably should have waited till Tuesday, when there will almost certainly be a big jump in the financials (possibly after a drop) when the fed news comes through.

BTW, I think we all need to remember its Federal Reserve BANK, just so we know where they're coming from

ALOHA !!

cyderman ... I diagree with your statement from the sense that his policies never allowed for that. I am sure he himself believed in paying back one's debt, but somewhere along the line it all got lost! As a matter of fact in the early 1960s Greenspan was a stout advocate for the gold standard and look what a little fame and fortune did to that! Luckily Greenspan was never appointed the title "Baron"!

Winston Churchill said of Keynes, "If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions."

Keynes essentially advocated interventionist government policy, by which the government would use fiscal and monetary measures to mitigate the adverse effects of economic recessions, depressions and booms. These monetary measures have led to inflation of the money supply. How can there be constant government intervention and debts be paid back? Sound familiar?

In 1942, Keynes was a highly recognized economist and was raised to the House of Lords as Baron Keynes, of Tilton in the County of Sussex, where he sat on the Liberal benches. During World War II, Keynes argued in "How to Pay for the War" that the war effort should be largely financed by higher taxation, rather than deficit spending, in order to avoid inflation. As Allied victory began to look certain, Keynes was heavily involved, as leader of the British delegation and chairman of the World Bank commission, in the negotiations that established the Bretton Woods system. The Keynes-plan, concerning an international clearing-union argued for a radical system for the management of currencies, involving a world central bank, the Bancor, responsible for a common world unit of currency. The USA's greater negotiating strength, however, meant that the final outcomes accorded more closely to the less radical plans of Harry Dexter White. In essence what we got from Bretton Woods and Keynes is what we have today ... Nobody pays their debt back but instead just keep increasing its size.

Frederick von Hayek was critical of Keynes ... "The application of Keynes policies gives too much power to the state and leads to socialism." Yeah ... and your point?

Finally I guess out of one of Keynes debates came these profound words ... "In the long run, we are all dead." Is that like Jim Morrison of The Doors ... "No one gets out alive!" Little comfort for those of us stuck in the abyss of his legacy!

Kaimu, Bush said the same before he plunged us into this assinine war. Why do we let IDIOTS with no sense of responsibility to the FUTURE or those who will inhabit it, make decisions that doom those who ARE responsible?

In other countries they solve these problems by putting lead in those people's ears BEFORE they act. We need to bring some lead back from Iraq....

2nd, I'm in Oregon judging the German Shepherd Dog Club of Oregon herding events this weekend.
The digs they put me up in are very nice. Newly remodeled, really nice beds, furniture and broad band. No financial interest, but Shilo Inn suites are pretty nice.

Kaimu -

Reminds me of a Japanese friend of mine, who said, "life's a bitch ... and then you die ... "

Sadly, he's already done it all ...

Kaimu and Bill independantly,

Do each of you have an economics 'recommended reading list'?

I have been taking economics classes at the University of Washington in Seattle including both 200 and 300 level macro and micro Keynesian econ. I have been unknowingly pointing out what I saw as flaws in Keynesian econ in the sense of controlling your economy through manipulation of the consumers. My intuition was that you could manipulate consumers through manipulating interest rates, but that this would be a hollow result. It's like heating your house by burning the furniture(I don't know where I read this).

I am now trying to do as much reading as I can into supply side econ. Which as a business owner, it makes much more sense that entrepreneurs(startup and growth) are the driving force that given strength and growth to an economy. Not the ability of consumers to spend past their means.

-Quentusrex

Examples Of Bull Markets

There had been some concern over whether Gold's bull market conforms with a theoretical three stage example. I posted a link to Institutional Advisors' chart works on the CPI deflated Dow vs. Gold. I also posted a long term nickel chart as another example of a three stage bull.

These examples might serve very well also, and make another departure point in comparing the various salient pivotal points on bull/bubble markets. The only thing is, we don't have the bubbles all lined up in a comprehensive chart, and unfortunately, I don't have the charting facility to create such a wonderful illustration:

http://www.nowandfutures.com/images/real_estate1.jpg

Quentusrex,

May I take the liberty of suggesting that if you care to explore 'Austrian' (classical) economics, a good starting point is the Mises Institute, online at http://www.mises.org/ It's near my alma mater, Auburn University. About the Mises Institute the Wall Street Journal Europe said,

"How does a world-class think tank end up in east Alabama? ...having such an outfit so far away from the country's usual hubs is in itself a rejection of the central planning and authority Mises spent his life fighting. He might never have visited Auburn, but something tells me he wouldn't have put this institute any other place." Kyle Wingfield, Wall Street Journal Europe, August 4, 2006

2nd,
"buy hope, sell despair"....i suppose that is why the market disappoints the most people most of the time...a paraphrase of something once that is the cornerstone of contrarian investing. Your point about human nature is indeed a point to reckon with. I sense that somehow you've come to know that there is always another "wave" out there that keeps you flexible. Not a bad investment disposition to carry anyone through the ups and downs.

Getting back to expectations on ytd returns, when I was goggling for past material by Bill on using rsi guidelines I vaguely recall that he spoke to this point. I think his percentages were close to what was mentioned by Fred. Anyone that used FXI/china etf as a buy and hold or traded the trendlines of energy etfs would have made all this look very simple.

I just finished scanning a lot of etf charts. So many have retraced to recent yearly highs, or retraced to the shoulder of an inverse H&S. There is nothing that looks like a coil ready to spring, but more like scary resistance ready to be tested.

ALOHA!!

Jock ... "Life's a bitch then you die!" was a popular bumper sticker in the 1980s. Another popular one was "He who dies with the most toys wins!" Only in a society of consumers could such nonsense be popularized!

Craig ... What did you expect from two Vietanm War era draft-dodgers? Valour and morality? I am always amazed that any self-respecting US military officers would even waste their time strategizing with those two 4F AWOLs much less salute them! The US voters have a very short memory or none at all! They even elected them twice! Unreal ... Don't get me wrong the Dems have nothing better! I plan to vote for Ron Paul ... I want the US Constitution and honor back in a smaller US government!

When calculating RSI for Deutsche Bank should we look at the NYSE listing or at the Frankfurt listing ? It makes a difference:
-DB (NYSE) RSI D/W/M = 48/25/42
-DBK.F (Frankfurt) RSI D/W/M = 41/18/38

RSI data is calculated with the Excel sheet. I am also wondering why the RSI data from the Excel sheet differs from the RSI data from Billcara2.com.

Thanks

ALOHA !!

At long last Alan Greenspan gets some balls!!!

From his recent book ... “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” Greenspan, 81, is understood to believe that Saddam Hussein posed a threat to the security of oil supplies in the Middle East.

What's next he says we should have never got off the gold standard?

I would be willing to bet one British Gold Sovereign that Alan Greenspan has a sizeable stash of gold in Switzerland or the Bahamas! You can't be a devout gold bug like he was and totally abandon ship for fiat ...

Its generally very bad form to blame the weather on old men.

Any time you have a regional conflict, that region becomes flooded with currency. So when they say democratization is successful, they are alluding to improving economics based solely on the flood of capital regardless of the political form.

The scope of such an operation is beyond most people's ability to grasp, since we now see a militarized zone completely surrounding Iran. Pakistan, Afghanistan, Khazakstan, Turkey, Iraq, Saudi Arabia, all surrounding Iran.

Yet nobody acknowledges that Caspian oil and Iranian reserves had been largely overestimated so that the strategy of occupation is really a moot point. Nationalized oil companies in any of these countries is simply out of the question.

But you know, as they say, revolutions aren't born in the very trough of a people's misery, its when things start to get better that problems arise.

I have just published my regular weekly article highlighting some memorable quotes from market commentators during the past week, and briefly reviewing the week’s market action on the basis of a few performance charts.

Please click on the following link for the "words from the (investment) wise":
http://investmentpostcards.wordpress.com/2007/09/16/words-from-the-wise-for-the-week-that-was-september-2-to-9-2007/

Kaimu
Good try in proclaiming in black ink "we" the people, elected "them" the draft dodgers not only once, but twice. When in reality the republican controlled voting software elected the draft dodgers not only once but again the second time.

If reality were to be made public about the corrupt actions of politicians we'd no longer be a nation under God.

Trivia question
Why would anyone spend 5, 10, 15million fiat dollars to get "software declared" president of the USA and collect a supposed $150,000 in yearly compensation???????
(a) makes no common sense
(b) someone is compensating under the table
(c) there is more going on behind those closed doors then meets the eye
(d) the money makers (puppeteers) need a willing puppet
(e) some or all of the above

Blame Game:

1) We are...behavioral finance principles dictate that we create bubbles

2) The Federal Reserve: price stability? Huh? Bernanke, the Prints-Ton professor has no honor and less spine (and he's the least of the worst)

3) The impossibility of funding guns and butter without a crooked and broken (4 dollars of debt required to generate 1 dollar of growth) system

4) Globalization. Chindia and the developing world fund our system in exchange for jobs in theirs. When they have adequate consumer economies, we are ...toast. The question becomes when not whether.

Ron

American peso !!!!!!!!!!

Check out the link below:

http://www.latimes.com/news/la-fi-dollar15sep15,0,7584722.story?coll=la-tot-topstories&track=ntothtml

I'm going to have to revisit tiny again ;)

Kaimu,
Wellllll, I kinda knew what to expect as I didn't vote for the draft dodgers.

I'm going to write-in Ron Paul, candiate or not.

I'm DONE voting for the lesser. I'm voting my conscience from now on, win or lose.

I think Bernanke is in a very compromised position, that if he doesn't tow the political line, he's committing an offense against the junta, and if he does tow the political line and takes away the punch bowl, he's likely to have condemned himself.

Here are some fairy tales. The Goldilocks bubble economy has three bears: Nasdaq, Housing Index, and Bric. Three little pigs had a straw house,(Nasdaq) a wooden house,(housing index) and a brick(Bric) house. The story is that the Bric house remains standing. Then there's the global arbitrage in ficticious capital, which is not unlike Humpty Dumpty. In attempting to maintain a balance, falls off and shatters into many pieces. A thousand broomsticks carrying water, flooding the markets. Killing the goose that laid the golden egg, the massive short of gold operations arrayed against bullion.

I could go on.

Iraq war was about oil: Greenspan

http://www.smh.com.au/news/world/iraq-war-was-about-oil-greenspan/2007/09/16/1189881318032.html
====================
The party's over for American consumers

Business should be brisk for bankruptcy lawyers, auctioneers, and mosquito-control technician.

http://seattletimes.nwsource.com/html/opinion/2003879888_harrop12.html
==========================

Billions over Baghdad - $9 billion has gone missing

http://www.vanityfair.com//politics/features/2007/10/iraq_billions200710?printable=true¤tPage=all
==========================

Does anyone believe the collapse of the UK's fifth largest lending institution will rattle the US markets next week?

I sympathize with the voting issue. Here is a link to an idea that might help the situation. Suggest this to your representatives in Washington if you’re so inclined.

http://media.www.dailytexanonline.com/media/storage/paper410/news/2000/11/28/Opinion/Automatic.Sg.Runoffs-701236.shtml

Great commentary everyone. Thanks

I read with interest Michael Kahn's (Barron's online) discussion of the gold carry trade and the discussion that Jim Puplava had. I'm embarrassed that I did not know about this: Central banks lease their gold to others (who sell the gold--they are essentially short sellers). Banks invest the lease money in other income producing assets. When the price of gold goes up, obviously they could be leasing it out at higher rates. Short sellers will have to cover the call from the bank to deliver the gold. To cover the call, they will have to buy gold to deliver back to central bank.

Hoosier,Quenturex,

I loaded all the zip files and spreadsheets, inc. v 1.2.

I then opened vs 1.2/tool/add-ins and made sure the two add-ins were there and checked,,,BUT,
All the fields came up with '#NAME", or "VALUE"(for rsi values).

I am totally perplexed by this stuff,,,lol.

I am not technically inclined.

tkx.

The missing 9 Billion is probably safe with the WMD in Syria or Iran.

Dear Kaimu,

Good afternoon my friend. You wrote:

"The Keynesian central bankers at the time believed that they could literally create a FIAT based monetary system that would emulate the gold standard yet be more flexible and provide for faster economic growth......"

Had we adhered to the gold standard, and I'm not an outright opponent of the notion just a skeptic; but had we done so, there never would have been enough "liquidity", to use common parlance, available to fuel the global expansion that we've in fact witnessed and you've participated in. But even if I'm wrong, and if the gold standarde had somehow created a better society/economy/government, which I believe......

Answer me this...As long as you personally are able to convert your personal fiat income into physical gold the very day that income is received by you, and all government coercion against physical gold and threats to safety-deposit boxes aside, (besides, Bill will be glad to sell you some and store it for you soon) then you are in practice able to go on your own personal "gold standard".

Which action, if you think about it, is much more advantageously accomplished in the absence of a gold standard, which would, undoubtedly, vastly raise the price of gold. You are better off, in other words, living in a fiat system under which you earn phony monopoly money (and in which gold's price is artificially supressed) and then converting the fiat into physical gold or an ownership in gold, thereby "going on the gold standard" personally. Under a fiat-only system, your income would be more constrainede than now, and the gold you seek would have a higher price tag. And when you think about it, we dont have "just" a fiat system...As I suggest, you can own whatever asset class you desire to. It's Capitalism, Baby.

By the way, update us, if you would... Where's the future price of gold, in your estimation?

Your friend Chris

dabonenose:

I had the same experience in opening the .xls file in Excel 2007. When I saved it as .xlsx (the default for 2007)the file opened properly.

ALOHA !!

Bigwad ... my point was not voter fraud via software but the absolutely abysmal choices American voters are offered! When was it that "draft-dodgers" became acceptable candidates for any office much less the top two spots? Ike would be rolling over in his grave!

Miadhach,,,tkx, that did the trick, however I think after I had the garbage in the collumns I didn't allow enough time for the updateb to load.

But it works now. Just for heck will try load again with regular named file.

tkx again.

Dab

ALOHA !!

Chris ... you miss the point. When was the US Navy's first global conflict and what was it over? The answer is 1805 the Barbary Wars of North Africa(Muslim) and it was over trade and trade routes. You see we have been having "global" TRADE forever even back in Roman days. The problem is these wankers(HB&B and elites)want more than a global trade they want a one global fiat currency because that way they can rape the entire World monetarily not just one country at a time! Remember what the founder of the Rothschild Banking Empire said over 200 years ago ... "Give me control of a Nation's money and I care not who makes its laws" ... Imagine that philosophy with one global FIAT dollar ... not the Euro or the Amero but the "Worldo"!

Yes I can go onto my own "gold standard" but to eat I have to convert that gold into a US Peso IOU. Last I looked not too many SafeWays accept GOLD unless its a GOLD American Express Card! Get a clue mate ... IT IS A FIAT ONLY SYSTEM! As long as any government in the World can print up money out of thin air on a whim or ego it is called FIAT! It's not about my own personal investments or what I can buy with a FIAT dollar its about the FAT CATS who are the really BIG SPENDERS(governments)printing too much money and causing the price of goods and services to rise above my income level! Isn't that why we are all here? If we were each making Steven Spielberg's income or Oprah's income we would not need to be at this blog! We are all here because FIAT is causing us to barely keep our heads above water or we are facing a retirement into scarcity and a "less than" lifestyle!

Chris, when was the last time you lived in a NON FIAT World? Buying GOLD is about hedging monetary inflation and all the evils that such a FIAT system spawns. Christ mate, the UK has a bank run starting and the USA already saw one(CountryWide). When the bank and currency "confidence crisis" arrives in your face what good is a paper IOU? Keep yours as long as you want but I don't trust a FIAT IOU! Owning FIAT is the same as owning "debt". GOLD has no "debt" ... When was the last time GOLD was insolvent?

POG
With the bank runs and CBs bailout, market turmoil, the POG may never break down significantly as I had expected. I still expect a major DOW downturn on 3rd quarter reports and of course bank runs would make that worse. I believe the mentality exists that if the DOW crashes so will POG and somehow Treasuries will prevail once more. Now I have moved my POG crash price up to $620USD and the HUI to 290. Yet I am hedging that bet by also buying gold at $651(my last big buy). I have moved a lot of cash out of US banks/brokerages to a Perth Mint cash account. Kind of the safest "bank" in the World right now! I have my Exxon and Chevron stocks in certificates and out of brokerages. Its called "safety first"!

ALOHA !!

re: How do I know a Perth Mint cash account isn't riddled with ABCP CDOs?

Its "non-interest" bearing and insured and backed by gold and silver and over 105 years of stability!

ALOHA !!

If those people in these photos at the link below had bought GOLD back in 2001 they would have had a 100% plus increase in their principal and would not need to be standing in these lines. Such a crisis hitting my bank ... BANK OF HAWAII ... you will not see my face in that crowd!

Link: http://goldmoney.com/en/commentary.php#current

Also note the following "domino effect" now taking place.

The Baltimore Sun reports: "Checks sent out by the troubled American Home Mortgage Investment Corp. to pay the property taxes of more than 70 homeowners in the Baltimore metropolitan area have bounced", which puts those properties at risk if the homeowners cannot manage to pay the taxes themselves. It goes on to quote one observer who "suspects that some lenders short on cash have dipped into escrow funds [held to pay taxes] to cover operating expenses." Clearly, the housing collapse is beginning to deepen.

Leisa,

I had a post in July on the gold carry trade:

>

You may wish to look at the article cited. I was surprised to learn that banks were capable of dumping 2900 tons on the market, which gets around their 500 ton limit on direct sales. Perhaps that has been instrumental in holding down the price of gold. By the way, I recommend to anyone to subscribe to Moneyweek's free daily email--lots of valuable stuff sometimes before we hear about it in the US or Canada.

Leisa,

I had a post in July on the gold carry trade:

I just read an interesting article on the "gold carry trade", something I knew nothing about. Basically, it allows CBs to dump huge amounts of gold into the market without accounting for it. Around 2900 tons in 2005. The article was in the daily email from Moneyweek Magazine, but was originally printed in Whiskey and Gunpowder. Here is the url for the Moneyweek version:

www.moneyweek.com/file/32734/the-gold-carry-trade.html

They are predicting that when this carrytrade ends, the price of gold will skyrocket. And the market will eventually cause this--similar to what Bill has been saying about the market prevailing in the longterm, despite CB interventions

Posted by: aucourant at July 26, 2007 10:50 AM

You may wish to look at the article cited. I was surprised to learn that banks were capable of dumping 2900 tons on the market, which gets around their 500 ton limit on direct sales. Perhaps that has been instrumental in holding down the price of gold. By the way, I recommend to anyone to subscribe to Moneyweek's free daily email--lots of valuable stuff sometimes before we hear about it in the US or Canada.

Sorry about the last post...

Bill,

I have a tough time understanding how you can be calling for a pullback in the price of oil and at the same time a big jump in the price of gold.

Don't these two commodities almost always move in tandem? If the dollar is devaluating, I would think oil would have to move up as well.

Thanks.

bb...not necessarily. In healthy economic times, both oil and gold may move up together as the economy expands in an environment of "healthy" inflation. But in a weak dollar and contracting economy scenario such as now, gold can rally based on the dollar weakness while at the same time a slowing economy and consumer (armed with 79-cent dollars) may result in less demand for/ability to pay for oil.

Johojo,

I'm sure Ron wouldn't want his work described as "pedagogical". He's no more a pedagogue than I'm a regurgigogue.

I've said it before, and I'll say it again: this market is technically weak. Look no further than the A/D line, or my favorite "tell", AAPL. One can examine either on a daily or weekly scale and compare them to broad market indexes to see what I mean.

omphalos,

I intended "pedagogical" in no derogatory sense, merely to acknowledge the characterization in his title for the piece, "History Lesson".

In some circles the phrase "a pedagogical work of true and economic beauty" would be understood as the highest of compliments, which is my intent.

In other circles, ascribing a commentary to a pedagogue would be an insult.

I'm sure you meant no harm, but I did want to point out the hazard of using big words without comprehending their etymology or significance.

And what about that A/D line?

Pedantically Yours,

O

omphalos,

"...I did want to point out the hazard of using big words without comprehending their etymology or significance."

That's funny--perhaps I wasted 36 years as a member of university faculty. Fortunately, though, pedagogy is not always the same as pedantry.

I just watched Alan Greenspan on 60 mins and I must say, he is quite possibly the dumbest mother F'er I've ever seen or heard.

While our host was calling the top of this fairy tale here on this very blog, Mr. Greenspan claims he "didn't get it" until late 2005/early 2006. Are you kidding me?
The so-called genius of minutia and professional balloon inflating "didn't get" the resulting problems of everyone and their bankrupt mothers getting interest only no down ninja loans?

He is either stupid, a liar, or both.

I also find it interesting that while he claims Bush Sr. "crossed the line" in pressuring him to cut rates, and that Iraq is about oil, the idiot would still vote for a republican. So he would choose honest but not so smart in Ford (who I think was an honest genuine guy) and over the line pressure from GHW Bush, and an oil war in W for trillions of dollars and Dick Cheney saying "deficits don't matter", over a Dem of which he worked for ONE and claims he was the smartest Prez he ever met. It simply supports the stupid diagnosis.

Chris: IE the gold standard and limits in capital to expand economies....what this does is limit government to go to war for idiotic reasons. Notice Nixon got us off gold around the time we had to pay for Vietnam, deal with stagflation, middle east oil crisis, cold war, etc.

Why pay the bills? Let's just get off gold and print our way out of this spot...temporarily.
Now it's like CRACK and it looks as if we will lose our teeth.

A gold standard would bring peace in large part because it takes real wealth to go to war.
See Sun-Tzu, "The Essential Art of War".
It will blow your mind when you read the rules of war of ancient China are as applicable today as then and if GW had followed those ancient rules we would have avoided all of the problems in Iraq. ALL of them.

It also speaks to Kaimu's response on draft dodgers: "No country has ever prospered from protracted warfare". "Those who do not thoroughly comprehend the dangers inherent in employing the army are incapable of truly knowing the potential advantages of military action." "The army values being victorious, it does not value prolonged warfare. Therefore a General who understands warfare is Master of Fate for the people, ruler of the State's security or endangerment."

"When employing them in battle, a victory that is long in coming will blunt their weapons and dampen their ardor. If you attack cities, their strength will be exhausted. If you expose the army to a prolonged campaign, the State's resources will be inadequate."

But as we know, W is not a reader. There you have it, no President left behind.

Omphalos,
I perceive the discourse taking place in this community to be pedagogy, not pedantic, and certainly not an insult to Bill or the other contributors.

I truly believe that to be a great leader one must also teach leadership!

36 years, eh? And you don't know what a pedagogue is or was? Let's hope it was spent in administration, where I'm sure your skills would have been put to great use.

At the risk of sounding pedantic, I do not think Ron's commentary is "pedagogical". I have the greatest respect for the man, his insight and commentary and I'm thankful he shares it with us.

Though I'm quite sure you meant no insult, I quibble only over an antiquated understanding of the term due to my own education.

To regurgitate, what about that A/D line vs. the broad market averages? Doesn't look good to this skeptic.

I found this site that has some interesting graphics relating US home prices vs GDP. And also graphs as to owners Equity vs Mortages.

http://www.housingbubblebust.com/Fed/GDPvsHSG.html#

This might fuel a discussion.