Aureus, Argentum Atque Oleum

by Richard Daughty

  












***Paranoia Alert: Enemies Everywhere, With Precious Metals Our Only Friends***

Okay, I admit I was, you know, kind of "over the edge" a little bit the other morning, but my wife interrupted me just as my raging madness was peaking, almost out of control, I mean really cranking loud and long that "Anyone NOT buying gold, silver and oil, Right Freaking Now (RFN), especially at these bargain-basement prices when the evil Federal Reserve is creating So Freaking Much (SFM) currency and credit that inflation in prices will rage out of control, is a complete and utter butthole who ought to be dragged in here, kicking and screaming, so that I can yell in their faces that they are, as previously stipulated earlier in this very same sentence, buttholes!"
That – that! – was when she gently tapped me on the arm and asked "Dear, did you take your pills this morning?"
Well, that’s the pivotal moment when I really lost it. Suddenly, in a kind of weird, out-of-body experience, I could see myself saying "No, I didn’t take my damned pills this morning! Why else would I be acting like this, you moron?"
Now, there are a couple of things that my wife doesn’t like, and one of them is me calling her a moron. Although I liked it when the kids snickered and tried not to laugh, so it wasn’t ALL bad, because usually they laugh when my wife is reminding me, with overwhelming embarrassing evidence, how I have, personally, been a moron.

Why central planning fails

 by Bill Bonner 

The Dow is still rising. It rose another 125 points yesterday… hitting a new record high.
Gold is dawdling.
We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Bernanke — all seem to have a simpleton’s view of how the world works. They believe they can manipulate the future and make it better. Not just for themselves, but for everyone. Where did such a silly idea come from?
Aristotelian logic came to dominate Western thought after the Renaissance. It was essentially a forerunner of positivism — which is supposedly based on objective conditions and scientific reasoning. “Give me the facts,” says the positivist, confidently. “Let me apply my rational brain to them. I will come up with a solution!”
This is fine, if you are building the Eiffel Tower or organizing the next church supper. But positivism falls apart when it is applied to schemes that go beyond the reach of the “herald’s cry.”
That’s what Aristotle said. He thought only a small community could work at all. Because only in a small community would all the people share more or less the same information and interests. In a large community, you can’t know things in the same direct, personal way. So it’s hard for people to work together in the same way.
In a large community, you have no idea who made your sausage or what they put in it. You have to rely on “facts” that are no longer verifiable by direct observation or personal acquaintance.
Instead, the central planners’ facts usually are nothing more than statistical mush, wishful thinking or theoretical claptrap — like Weapons of Mass Destruction, the unemployment rate and the Übermensch.
Large-scale planning fails because the facts upon which it is built are unreliable, frequently completely bogus.
And it fails because people don’t really want it.

Hidden Agenda

In a small community the planners and the people they are planning for are close enough to share the same goals. In a large community the planners are a small minority.

Forget Cyprus, Japan Is The Real Crisis

Forget Cyprus. A much bigger story in the coming weeks and months will be in Japan, where one of the greatest economic experiments in the modern era is about to begin. A country where government debt even dwarfs those of Europe’s crisis-ridden nations, Japan will attempt to inflate its way out of a 23-year deflationary spiral.

The overwhelming consensus among the world’s economists is that quantitative easing (QE) has saved the day in the U.S. and that Japan needs to follow suit, on a larger scale. I beg to differ and suggest this policy will almost certainly lead to a hyperinflationary disaster in Japan. If that’s right, it will have serious ramifications for other countries, dragged down by an acceleration of the so-called currency wars. More broadly though, it is likely to destroy the myth pushed by today’s economists that QE is a cure-all for downtrodden economies. It isn’t and Japan will become the template to prove it.

Monster stimulus on the way
The new Bank of Japan (BoJ) Governor, Haruhiko Kuroda, started work on Thursday and his first day on the job disappointed investors.

A Retort to SocGen’s Latest Gold Report

by David Franklin and David Baker

Société Générale (“SocGen”) recently published a special report entitled “The end of the gold era” that garnered far more attention than we think it deserved. The majority of the report focused on SocGen’s “crash scenario” for gold wherein they suggest that gold could fall well below their 2013 target of US$1,375/oz. It also included a classic criticism that we’ve heard so many times before: that the gold price is in “bubble territory”. We have problems with both suggestions.

To begin, the report’s authors appear to view gold as a commodity, rather than as a currency. This is a common misconception that continues to plague most gold market analysis. Gold doesn’t really work as a commodity because it doesn’t get consumed like one. The vast majority of gold mined throughout history remains in existence today, and the total global gold stockpile grows in small increments every year through additional mine supply. 

Banking and the State

by Thorsten Polleit

“It had come to be accepted that the pigs, who were manifestly cleverer than the other animals, should decide all questions of farm policy, though their decisions had to be ratified by a majority vote.”
Orwell, G. (1989 [1945]), Animal Farm, S. 34.

The Starting Point: Civilization Begins

The founder of the Medici banking dynasty, Giovanni di Bicci de' Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.”[1] His words raise the question, "How much do bankers know about the truth of modern money and banking?"
To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.
Civilization denotes the development through which man substitutes the state of the division of labor and specialization (that is, peaceful and productive cooperation) for the state of subsistence (that is, a violent hand-to-mouth existence).
In his magnum opus Human Action (1949), Ludwig von Mises (1881–1973) put forward a praxeological explanation of the process of civilization, which helps us understand the course of its evolution.[2]
To Mises, two factors are at the heart of the process of civilization: (1) There must be an inequality of wants and skills among people. This is a necessary condition for people to want to seek cooperation.

The Biggest Bubble in Human History?

by lewrockwell.com

Dow up 125 points yesterday, to a new all-time record.

Why? What's behind it? The economy is not so hot. Why the red-hot stock market?

China is back in the news. A new report from CBS's "60 Minutes" documents the extent of the ghost cities in China – miles and miles of empty highway, office towers, apartments and malls. Analysts are talking about the biggest real estate bubble in history!


Is China a bubble? We don't know.

Does it matter? Well... yes... maybe. If China melts down or blows up the demand for oil and other resources goes down. The Chinese have pumped vast sums of money into development projects. That money helped to keep people on the job... and also kept the ships full of stuff, going back and forth across the world's oceans.

The Money-ness of Bitcoins

by Nikolay Gertchev

Bitcoins have been much in the news lately. Against the background of renewed concerns about the integrity of the euro zone and the imposition of capital controls in Cyprus, the price of a bitcoin has tripled over the last month and reached more than $141 for 1 BTC. Are we witnessing the spontaneous emergence of an alternative virtual medium of exchange, as some would put it? This article offers an answer to this question by considering three aspects of the economy of bitcoins: their production process, their demand factors, and their capacity to compete with physical media of exchange.

The Production of Bitcoins

A bitcoin is a unit of a nonmaterial virtual currency, also called crypto-currency, by the same name. They are stored in anonymous “electronic wallets,” described by a series of about 33 letters and numbers.

Jim Rogers: The Yen will be the First to Collapse in the Currency Wars

by Jimrogers1.blogspot.it



Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.
Wall St for Main St interviewed legendary investor and the author of Street Smarts, Jim Rogers. In this podcast, we discussed the global currency wars and why the Yen will be the first to collapse. Jim will discuss why the situation in Cyprus is a big deal and why Americans should be concerned about it! Also, we discussed gold,silver,copper and the agriculture market. Plus much more!
Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%.

The Chess Game of Capital Controls

by Jeff Clark

 

The best indicator of a chess player's form is his ability to sense the climax of the game.

–Boris Spassky, World Chess Champion, 1969-1972

You've likely heard that the German central bank announced it will begin withdrawing part of its massive gold holdings from the United States as well as all its holdings from France. By 2020, Bundesbank says it wants half its gold reserves stored in its own vault in Germany.
Why would it want to physically move the metal from New York? It's not as if US vaults are not secure, and since Germany already owns the gold, does it really matter where it sits?
You may recall that Hugo Chávez did the same thing in late 2011, repatriating much of his country's gold reserves from London. However, this isn't a third-world dictatorship; Germany is a major ally of the US. So what's going on?

Why Cyprus Matters (And The ECB Knows It)

by zerohedge.com

WHEN THE RED QUEEN IS AFTER YOUR HEAD
When Zig turns to Zag and the Red Queen is after your head then extraordinary care is necessitated. To quote Holmes, "The game is afoot" on the Continent.

I have been asked, with some frequency, why the bondholders have not been tagged in the Cyprus fiasco. That answer is simple. Most of Cyprus's bonds are pledged as collateral at the ECB or in the Target2 financing program. Then one may also ask why the bonds of the two large Cypriot banks are not being hit. The answer is the same; most are held as collateral at the ECB or Target2. In both cases, remember uncounted liabilities, the government of Cyprus has guaranteed the debt. Consequently if the two Cyprus banks default it is of small matter as the sovereign has guaranteed the debt. However if the country defaults and leaves the European Union then it will matter and matter significantly as the tiny country of Cyprus would wipe out the entire equity capital of the European Central Bank. While it is not a matter of public record it is estimated that Cyprus has guaranteed about $11.6 billion of collateral at the ECB.

Preparing for Inflationary Times

by Jeff Clark
 

"All this money printing, massive debt, and reckless deficit spending – and we have 2% inflation? I'm beginning to believe that either the deflationists are right, or the Fed's interventions are working." – Anonymous Casey Research reader
The CPI, in our view, does not accurately measure inflation, which accounts for some of the discrepancy our reader is pointing out. However, the proper definition of inflation is "an increase in the quantity of money," which we've had in spades. We've not experienced the concomitant increase in prices, which is what we're addressing in this article.
It's logical to assume that when you create more of something, you dilute the value of what's already in existence. That's exactly what has happened to the US dollar since the 2008 financial crisis hit. Economics 101 says this should lead to higher inflation – yet official Consumer Price Index (CPI) levels remain benign.
It's this unexpected development that led a reader to pen the above quote. Is the inflation argument dead? If so, does that mean gold's big run is over? It's a timely question since the current selloff in gold is largely attributed to low inflation expectations.

‘BRICS Development Bank would shift the tectonic plates of geopolitics and geo-economics’

by rt.com
 

The BRICS Development Bank is the beginning of the end of the existing monetary management system, Asia Times correspondent Pepe Escobar told RT.

RT: There’s no doubt about it, these countries that form the BRICS, they haven’t got a lot in common have they? They’ve all got different styles of government indeed some of them are economic rivals. Are they really a group to be taken seriously?

Pepe Escobar: From now on yes, let’s say until this summit in Durban, there was a lot of political talk of course and the BRICS are basically an economic group in the making. Now it’s different, now they have clear sound, actual policies to be implemented.

Want To Understand Money?

by 24hgold.com24hgold.com This was published on January 2, 2013, in Ron Paul’s Monetary Policy Anthology: Materials From the Chairmanship of the Subcommittee on Domestic Monetary Policy and Technology, US House of Representatives, 112th Congress. The scholarly contributions of Murray N. Rothbard span numerous disciplines, and may be found in dozens of books and thousands of articles. But even if we confine ourselves to the topic of money, the subject of this volume, we still find his contributions copious and significant. As an American monetary historian Rothbard traced the party politics, the pressure groups, and the academic apologists behind the various national banking schemes throughout American history. As a popularizer of monetary theory and history he showed the public what government was really up to as it took greater and greater control over money. As a business cycle expert he wrote scholarly books on the Panic of 1819 and the Great Depression, finding the roots of both in artificial credit expansion. And while the locus classicus of monetary theory in the tradition of the Austrian School is Ludwig von Mises’ 1912 work The Theory of Money and Credit, the most thorough shorter overview of Austrian monetary theory is surely chapter 10 of Rothbard’s treatise Man, Economy and State.

Cyprus and the Unraveling of Fractional-Reserve Banking

by Joseph T. Salerno

[Originally posted on Circle Bastiat, the faculty blog of the Mises Institute. Read Circle Bastiat for Austrian analysis of current economic events from today’s top Misesian and Rothbardian economists.]

The “Cyprus deal” as it has been widely referred to in the media may mark the next to last act in the the slow motion collapse of fractional-reserve banking that began with the implosion of the savings-and-loan industry in the U.S. in the late 1980s.
This trend continued with the currency crises in Russia, Mexico, East Asia, and Argentina in the 1990s in which fractional-reserve banking played a decisive role. The unraveling of fractional-reserve banking became visible even to the average depositor during the financial meltdown of 2008 that ignited bank runs on some of the largest and most venerable financial institutions in the world. The final collapse was only averted by the multi-trillion dollar bailout of U.S. and foreign banks by the Federal Reserve.

Jim Rogers Says No Paper Currency Will Be Worth Much Of Anything In 2014/5

JIM ROGERS - All FIAT CURRENCY will be WORTHLESS in 2014. Dont SELL GOLD or SILVER
Legendary investor Jim Rogers sees now as a great time to load up on gold and silver coins - and he's not alone.

A record 7.5 million ounces of silver coins were sold in January as investors hunted for a safe haven investment.

"You can't get [silver coins]. They sell out," Rogers, who owns a rare 2013 silver coin, said on Yahoo! Finance's "The Daily Ticker." "Several mints have run out of coins because everybody's worried about the future of the world."

And 150,000 ounces of American Eagle gold coins were sold in January, the highest monthly total since July 2010.

Anatomy of the Bank Run

by mises.org

It was a scene familiar to any nostalgia buff: all-night lines waiting for the banks (first in Ohio, then in Maryland) to open; pompous but mendacious assurances by the bankers that all is well and that the people should go home; a stubborn insistence by depositors to get their money out; and the consequent closing of the banks by government, while at the same time the banks were permitted to stay in existence and collect the debts due them by their borrowers.
In other words, instead of government protecting private property and enforcing voluntary contracts, it deliberately violated the property of the depositors by barring them from retrieving their own money from the banks.

Tenured Austrian Economists vs. Murray Rothbard

by Gary North

 
















The Austrian School of economics in the twentieth century was dominated by Ludwig von Mises. He died in 1973. His followers have divided into two main camps: the Rothbardians and the Lachmannites. They have adopted rival philosophies and rival strategies.
The main strategy of the Lachmannites is to get tenure at a university. The main strategy of the Rothbardians is to persuade the general public of the truth of economic liberty.
A college teacher who is granted tenure need not publish anything ever again. He will be paid for merely showing up to class. The number of classes that he teaches declines. He is immune from dismissal. This is the bureaucrat's dream come true.

Jim Rogers: Never In History Has This Been Seen

by jimrogers1.blogspot.it




"I don't trust the data from any government, including the U.S., Jim Rogers said. "We know that governments lie to us. Everybody's printing money, but it cannot go on. This is all artificial." Rogers, who for years has been an outspoken critic of the Feds policies of "Quantitative Easing" says all the money printing is creating false hope that we are in the middle of some kind of super bull market. But in reality, he says, "we're living in a fool's paradise."

What's Supposed to Happen, and What Might Happen: 3 Baseline Scenarios

 by charleshughsmith.blogspot.it

What might happen: printing money and issuing propaganda lose their effectiveness.

We all know what's supposed to happen in the global economy: we get more of everything: more stuff manufactured, more coal dug up and burned, more "aggregate demand" i.e. insatiable desire for more of everything, more innovation, more wealth, more money printed, more debt taken on to buy more stuff and more education, more tourists occupying more beaches sipping more drinks, more strip malls built, more airports expanded, more jobs created, more taxes collected-- more "growth" of everything, in every way and every day.

Beneath this expansive more-of-everything splendor, the power structure is supposed to remain unchanged: a small political-financial Elite holds all the reins of power, a manufacturing-consent propaganda machine (a.k.a. mainstream media) persuades the masses all is well, wealth continues to accumulate in the top 1/10th of 1%, money is printed/created and distributed to the State-financial partnership's fiefdoms and cartels, moderate inflation eats away at the value of wages but makes debt cheaper to service, and the Upper Caste of technocrats continue their well-paid enabling of the Aristocracy's dominance.

After Cyprus, Who Is Next?

 by zerohedge.com

Short answer: we don't know.
We do, however, know something we have been pointing out since early 2012 - when it comes to the funding structure of European banks, there is a dramatic difference between the US and Europe. In the US, as we showed most recently two months ago, the Big Three depositor banks (JPM, Wells and Bank of America, excluding the still pseudo-nationalized Citi), have a record $858 billion in excess deposits over loans.