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ARCHIVED DISCUSSION FROM 7/13/2001 All times are U.S. Mountain Time (Yesterday's Discussion.) Solomon Weaver (07/13/01; 22:48:32MT - usagold.com msg#: 58052) Comparative Advantage http://www.prudentbear.com/credit.htm "It is not my desire to be an alarmist and I certainly take no satisfaction from "crying wolf." I began writing the Credit Bubble Bulletin specifically because of our view of the historic nature of the unsound boom and the inevitability of a major subsequent adjustment. My goal is to try to bring some understanding and perspective to what will be extraordinary financial and economic developments. And the more I work and study, the greater my conviction that we have experienced a highly unusual period where sound economics were tossed aside by a powerful wave of dubious and dangerous notions of "New Age" finance. Granted, history has other examples of such folly, but not many that compare to what we have witnessed." Doug Noland---------This weeks update out tonight.By the way.....welcome again Aragorn....all that is gold does not glitter.Poor old Solomon Just waking up (07/13/01; 22:42:07MT - usagold.com msg#: 58051) @ Camel msg#58047 Camel (07/13/01; 21:07:38MT - usagold.com msg#: 58047)Inflation/deflationInflation or deflation ? If a foreigner is holding 100,000 shares of IBM as part of their reserve and wishes to convert to Euros, they would sell the shares and the proceeds would go into a dollar cash account. The dollars would then be used to purchase Euros on the FOREX and the Euros would be used to purchase some sort of European stock or bond.In the process the share price of IBM would go down incrementally and the dollars would disappear completely because the wealth they represented had been tranferred into the Euro. The value of the Euro would increase relative to the dollar and the value of the European security would go up.Me: Wrong. The dollars would NOT disappear completely. They would be held by whoever sold you the euros. He would have to do something with them. They become part of "the big float" that may someday come surging back upon us, causing some horrific inflation.Bob Gandalf the White (07/13/01; 22:07:16MT - usagold.com msg#: 58050) < ; - )>> WOWSERS !!! THE "KING" Aragorn III has returned !! The Wiz shall swallow his pride and ask for the forgiveness of all, just to be able to come back to the chair at the end of the TableRound. YES, SIR Goldfly, I quickly found that there is nowhere outside the Castle to go, as all eyes are looking toward the Castle. May I ask only one favor of all ? PLEASE, please let us all be Gentlemen and Ladies at this TableRound, as truly the eyes of the world are "listening" to these postings. There are no good reasons to even "kid" or "josh" at others thoughts. If you can not agree with the poster, and wish to post your defined reasons why you can not agree with his/her thoughts in an amiable fashon, simply do not post !!Age has given me a chance to evaluate many of my early years errors and I have sincerely regreted many things that I have said and done before. However, now that my hourglass sand is flowing swiftly, I try to not repeat my younger exuberant reactions, and think more about my actions. BUT, sometimes I slip.----Now SIR Aragorn III, the Hobbits are ready for your tales of travel from your long sojourn ! Was it not Moridor that you visited ?----<;-) megatron (07/13/01; 22:04:26MT - usagold.com msg#: 58049) Canuck A perfect example is Franco Nevada. the exchange of Normandy for Ken Snyder is to me a bad sign, a sign they believe POG is sideways, at best, for at least another year.They must believe they can unwind the 'book' in time to cash in on Normandy's outstanding assets. Or they believe the US gov't is going to nationalize gold mines, or...... Goldfly (07/13/01; 21:16:20MT - usagold.com msg#: 58048) Aragorn III !!!!!!!!! Hey Brother! Where you been??? And Gandy,.... Where you gonna go? Camel (07/13/01; 21:07:38MT - usagold.com msg#: 58047) Inflation/deflation Inflation or deflation ? If a foreigner is holding 100,000 shares of IBM as part of their reserve and wishes to convert to Euros, they would sell the shares and the proceeds would go into a dollar cash account. The dollars would then be used to purchase Euros on the FOREX and the Euros would be used to purchase some sort of European stock or bond.In the process the share price of IBM would go down incrementally and the dollars would disappear completely because the wealth they represented had been tranferred into the Euro. The value of the Euro would increase relative to the dollar and the value of the European security would go up. Of course this would be a disaster for the U.S. All the sales of stocks , government and corporate bonds, would crash the various markets as they could not withstand all the selling , hence Anothers famous phrase, "All paper will burn". ,and it would be differant than before , because all the money would not be " on the sidelines" waiting to jump back in , it would have been permenantly transferred out of the dollar system into the Euro system so as to maintain the reserve.This sounds like deflation to me. Not more dollars chasing fewer goods. The dollars would have been destroyed in the switch to the Euro and the inflation would be occuring in the Euro zone. Aragorn III (07/13/01; 20:44:08MT - usagold.com msg#: 58046) Fellowship, and words of remembrance Alas! that you were not Gandalf the Grey, who passed only briefly, to return enlightened as Gandalf the White.The anger of the good is like a line drawn on the surface of water, which does not last long. Canuck (07/13/01; 20:43:46MT - usagold.com msg#: 58045) Last post That one is for you Aristotle. Canuck (07/13/01; 20:41:40MT - usagold.com msg#: 58044) When Took another stash of silver to the bank today, watched the teller drop the safety deposit box on her foot again; must be starting to hurt now. (grin)On the way out the 12 year old son says, "You said gold would go up 2 years ago""I was wrong""You said gold would go up last year""I was wrong""You said gold would go up this summer""I was wrong""So why are you still buying gold?""Because I'm not wrong" Canuck (07/13/01; 20:34:35MT - usagold.com msg#: 58043) Placer Dome No opinions regarding Placer's selling of Las Cristinas?Heard at least 3 minors fighting over rights, KRY seemingly in the front row.I am a little puzzled why PDG would let this go. I would have bet, if they believed in higher prices, that the 'operation under care' scenario would have played out. Mind you I also heard that Las Cristinas is only viable with gold approaching $400. Maybe PDG views the Venezualan headache not worth it?Kind of has a little of the Barrick-Homestake twist, can be read either way. Does ABX believe higher prices therefore the 'unhedged' acquisition or a new source of 'hedge' to prolong the agony?Physical remains safe bet, IMHO, difficult to slam money down on these producers when their backdoor activities are a guess. Canuck (07/13/01; 20:16:36MT - usagold.com msg#: 58042) @ KarenSue You are welcome.The forum is at times emotional, success in monetary affairs does not allow that.You watch movies......you have seen 'The Last Boy Scout'?Mr. Willis's inference of logic upon discovering his 'dry' showered wife is most amazing, yes? "The door remains closed!"You evade my ponderance of a), b) or c) with a non-response? Back to the topic of gold...........are you a PGA Ms.KarenSue? auspec (07/13/01; 20:15:13MT - usagold.com msg#: 58041) Rich Hard to contemplate a Forum w/o the Wiz. Much like my desk without a bottle of gold and quartz on it. Tree in the Forest (07/13/01; 19:50:00MT - usagold.com msg#: 58040) Predictions of an advanced robotic web scanning quantum model http://urbansurvival.com/week.htm This website has some very interesting predictions produced by a rather sophisticated computer model. Quantum mechanics is a probabilistic predictive system. It doesn't always make sense on an intuitive level but is very successful at predicting real world phenomena. What follows are the kind of events that would cause gold to blow! A snippet:Special Friday Morning Update:Extreme Caution Urged!Summary:A software company think tank using an advanced quantum model that includes advanced web-scanning robots has shared with me an output that predicts a major market turning point in the next few weeks. Major market effects may be seen as early as Monday of this coming week. The quantum model has outputs showing the highest event probability centered in the time frame spanning from Saturday night U. S. time through Monday. July 14th PM to July 15 mid-day. This model predicts a Dow of 6,000 by September.Probabilities:The quantum model outputs are focused in several areas. In the mid-section of the U.S.,South America and Asia. The "entities" that show up in this advanced model (discussed in the Wednesday article below) have been developing since March of this year. Other areas highlighted by the model include weather and high profile business/government personalities (leaders).Quantum predictive models are not precise. Rather, theyindicate potential for events to occur. The chances ofsomething significant occurring and being visible are on the order of 85% in next 45 days. Within that 45 day window there is a 65% chance of something being obvious in 14 days. The odds of a "direct hit" for this weekend, though small, are significant enough that I feel an obligation to share the model outputs with you.Perception Level:A major problem with complex systems models is that a tipping point event may be above or below our perception levels. For example, something very small may occur this weekend below our perception threshold that may only become obvious two months from now. Above the perception level? Well, you may see that Sunday on CNN.Multiple Events:Similarly, there is no way of knowing in advance whether thepredicted tipping point just ahead this weekend will involve a single event or multiple events. It may be an aggregate of many small inputs scattered geographically as one "fitting" to the model, or it may be a single huge event. The robot scans see all kinds of potential series of eventsthat could lead to the tipping point this weekend: the Argentine currency crisis, the president of Bolivia is leaving his country for cancer treatments, a flare up between India and Kashmir, and Israeli push into the West Bank, a reported dogfight between UFO's over the Urals in Russia, an increase in quake activity worldwide, and the death of a high profile political leader are all in the mix of the 1500+ data points the model plots. Singular events that would meet the model predictive parameters could involve something as horrible as a weapon of mass destruction set off in the central section of theU. S. or two hundred-meter class meteor entering the atmosphere of the middle U.S. and impacting South America causing mass destruction and the death of fourteen million. That's the estimated death toll that could occur from a 200 meter meteor depending on trajectory and which populated areas it devastates. But that's not a model output, that's my estimate of what would "fit" the predicted range.(Thanks for the link aspro) R Powell (7/13/01; 18:56:05MT - usagold.com msg#: 58039) Fleckenstein http://www.bearforum.com/cgi-perl/bbs.pl?read=159866 This prints out at six pages. I haven't read it yet so I can not offer any comments other than I always looked for and enjoyed this man's work until it joined the pay-per view status. This one is free! Hope it's good. I feel as though someone with mystical vision is no longer watching out for our collective welfare. You will be missed Wizard, as will so many others who have departed. Rich Max Rabbitz (07/13/01; 16:30:49MT - usagold.com msg#: 58038) Deep Storage "Deep Storage" could mean it is still in the mines. The Treasury may indeed own it but just hasn't mined it yet. CoBra(too) (07/13/01; 15:20:38MT - usagold.com msg#: 58037) - Go Gold, Blondie ... As I have no wish, nor do I want to get entangled in discussions, where the "absolute truth of whatever is "money" or the concept of 'real' money may be defined in an absolute way, I'd have to say, I only believe in the relative valuation - not value - of the perception of 'make believe' that one currency is a better bet than the next. Under this pretext, I'd underwrite Bill Buckler's definition of a 'medium of exchange' as anything else can be derived from this simple 'premonition'. So, in the end todays money is a concept, based on the relative strenght of and towards the issuers economic 'contempt'. Ah yes, and that is where we get inflamed, since some may feel, relativity is to be blamed if one of the contestants has an advantage of a hundred yards, frontrunning the rest of us toads and telling us to use the same yardsticks - As there is - enhancement of Productivity, Proficiency and Profit - a proclivity to profligacy! And as everything is relative to - a fitting definition - and as all currencies have been cut off from reality, or the absolute long term stability of a gold standard, which we may never again see - I personally find it mute to discuss the real meaning of money. ... Which shouldn't keep you, Honey, from saving money in reality ... go gold, Blondie ... cb2 megatron (07/13/01; 15:09:56MT - usagold.com msg#: 58036) Inflation/Deflation I wonder why people and economists constantly compare the deflation of the 30's and stagflation of the 70's with today's scenario. Is it because we need a reference and those are the only 2 which we have quantitative data on? As an analogy, the discovery of the phenomenon of supernovae and the subsequent mathematics and astophysics that followed, gave a very simplistic picture of the process' going on deep inside a star. As more were observed and their light spectrum analyzed, it was, and is being revealed that each 'general type' has unknown variations that occur, to our surprise. I believe that there are things that you 'don't know that you don't know' in both cases and they will be revealed to the surprise of EVERYONE.This is why it is confusing people as to whether we are in a deflation or a inflation. This particular pattern may have NO observable historical precedent, and thus it is pure speculation on the outcome.Maddening, of course! escapethematrix (07/13/01; 14:02:21MT - usagold.com msg#: 58035) RossL ....re: #58033 Hi there, Ross. I don't mean to butt in on your post directed to Randy, but your thoughts seem to reflect the P.O.V. of many of the "hard money" posters here. Frankly, I'm sure that many of you know a vast amount more in regard to economic theory than I. Your post just seemed like a good opportunity to show an opposing view of your interpretation of TG and Randy's view from someone with no preconceived views on the subject matter.----Your comments are first---------Randy also said:"Only an innocent fool attempts to save money over time."----Perhaps, a more accurate explanation might read: Only a person, who cannot conceive of the ever-depreciating nature of our modern fiat system, attempts to save money over time.----How about Trail Guide's prior use of the term "hard money socialists"? What exactly does that mean----I believe that what he means is that central banks intertwine gold credit in our system in a manner not to reflect it's true value and/or worth, but in a way to foster an ever-expanding"socialistic" system to allow our society to continue to live beyond it's real means.----These are attempts to redefine words, these are attempts to impugn motives. These are attempts to silence critics. They are a typical tactic of those who would attempt to obscure truths about central banks, governments and paper money. Is anyone still wondering why people are dropping off the trail?----I disagree with your interpretation. It seems to me that many ‘hard money" posters here, are too caught up in the past to see the future. It's a case of tunnel vision blinding their economic perspicacity. TG has said that basically, in a perfect world not dominated by "political will", and crony capitalism that Oro's system would be best. Unfortunately, we don't live in that world.----I respect all the attempts to foretell events that may happen in the near future, and all the effort by everyone involved in participating at the forum. However, the elaborate justifications and all this obfuscation just isn't going anywhere with me. Call me blockheaded, but I have no respect for people who know the truth (or should know it) and try to obscure it for personal gain or just to satisfy their inflated ego. ----It would seem that your words don't reflect that respect or tolerance very well.----This "freegold" plan for the Euro is just another go-around of governments and central banks forcing a new constantly depreciating fiat money on the masses. As far I am concerned, manipulation of the gold price to a high one is just as bad as manipulating it down. It is still a big ripoff of those 'innocent fools' who place trust in their leaders. Let us not pretend that this trail being described is the solution to all the monetary problems in the world.----When did either Randy or TG ever say that the Euro system would be such a "solution"? They simply say that it is the future, like it or not, and try to help us understand the coming paradigm shift in our financial landscape. Perhaps no better, perhaps no worse than what we have now.----Some day, free market money will evolve because it is superior to forced fiat money. Some day, the civilized world will cure the common cold, we will walk the streets without fear, we will conquer cancer, and we will have a money that is based on free choice, integrity,and not a paper forced on us by a government with an army----Such a perspective is a nice sentiment, but a very naïve view of human nature.Welcome back TG. Thanks for remaining on the Trail, for those of us that want to prepare for the future, and watch this New Gold market together. Good Luck and peace to all. Econoclast (07/13/01; 14:00:13MT - usagold.com msg#: 58034) R Powell, justamerebear, ORO: Thanks for the responses Inflation or Deflation?This is a tough subject for me. Everytime I start to write something, I am confounded by a contradictory thought and erase what I wrote. I am really starting to look at this as a personal challenge to deliver something worthy to myself and the Forum on this issue.I feel this will take time, but it is becoming an exercise that I feel I "need" to undertake. RossL (07/13/01; 12:48:25MT - usagold.com msg#: 58033) Randy #57993 In your post 57993: "And he'd be justified in that view, if that's indeed what he meant. But because the money supply (read "credit") is destined to grow with man's economic development and expansion, this form of "robbery" is unavoidable. That is why we must all look toward tangible assets (such as gold) as the avenue into which we direct our savings. Only an innocent fool attempts to save money over time."Snip:"this form of "robbery" is unavoidable". I guess we are going to have to agree to disagree on this. The form of robbery foisted on us by centrally planned banking and fiat money is destined to collapse. It always has in the past and it always will. This form of "robbery" is not unavoidable. I find your position very pessimistic. Bad credit may be unavoidable, but having it forced on the populace certainly is avoidable. Some day, A free market money will evolve because it is superior to forced fiat money. Some day, the civilized world will cure the common cold, we will walk the streets without fear, we will conquer cancer, and we will have a money that is based on free choice, integrity,and not a paper forced on us by a government with an army. Fiat money is based on a lie, and if it is inevitable, then civilization will not survive.Randy also said:"Only an innocent fool attempts to save money over time." Again, we are going to have to disagree on the definition of money. I will stick with the classic Austrian definition. Money is a store of value. I view thisas as a contradiction of your statement. You are of course referring to currency.Yesterday we were presented with Trail Guide's attempt to depict a person with the hard money view as the cartoon character going over the cliff with feet scrambling. Trail Guide has it all backward. Hard money is on a solid foundation and paper money is the one floating in air, is it not?How about Trail Guide's prior use of the term "hard money socialists"? What exactly does that mean? These are attempts to redefine words, these are attempts to impugn motives. These are attempts to silence critics. They are a typical tactic of those who would attempt to obscure truths about central banks, governments and paper money. Is anyone still wondering why people are dropping off the trail?I respect all the attempts to foretell events that may happen in the near future, and all the effort by everyone involved in participating at the forum. However, the elaborate justifications and all this obfuscation just isn't going anywhere with me. Call me blockheaded, but I have no respect for people who know the truth (or should know it) and try to obscure it for personal gain or just to satisfy their inflated ego. This "freegold" plan for the Euro is just another go-around of governments and central banks forcing a new constantly depreciating fiat money on the masses. As far I am concerned, manipulation of the gold price to a high one is just as bad as manipulating it down. It is still a big ripoff of those 'innocent fools' who place trust in their leaders. Let us not pretend that this trail being described is the solution to all the monetary problems in the world. Sierra Madre (07/13/01; 12:07:51MT - usagold.com msg#: 58032) Netking: your 58017...pulling the plug on Argentina... The danger of allowing Argentina to "twist in the wind", as O'Neil proposes, is that the whole ball of wax may fall apart.In the early '30's, that's what happened. There was no lender of last resort. Each country "looked after itself". And so they all went down, like dominoes.If O'Neil wants to turn a blind eye to the problems of Argentina, which are intrinsic to the dollar reserve system, and not- fundamentally - attributable to good or deficient administration in Argentina, that contradicts the perpetuation of the dollar reserve system. He can't have it both ways. So now what?The Argentinians are linked to the dollar through a Currency Board. So now, they practically have the dollar as their currency. But there is no trust in the Currency Board, so interest rates - in pesos which are disguised dollars - are high, very high.There seems to be a panic going on, people turning in their Currency Board pesos for the "real thing" - green dollars.The strong Currency Board peso and high interest rates, are killing exports. Tax income must be falling sharply. It is impossible to print Currency Board pesos to cover the deficit. Borrowing abroad is already excessive. Wages and expenditures must fall drastically. Massive cutbacks of state expenditure and employment of bureaucracy are required. Massive collapse of economic activity as internal market shrinks. If that sounds like DEFLATION, it's because it IS deflation.Net/net/net: Are we approaching the final conclusion to the modern conception of the welfare state? Old Yeller (07/13/01; 11:49:35MT - usagold.com msg#: 58031) Slip slidin'away http://www.dismal.com/economy/releases/release_2k.asp?r=usa_ecriwli Contagion is spreading.Sounds ominous,time for another 50bps.?Thanks to amarksp for the link. Sierra Madre (07/13/01; 11:46:38MT - usagold.com msg#: 58030) Netking...Your 58017..."unpluging" The danger of allowing Argentina to "twist in the wind", as O'Neil proposes, is that the whole ball of wax may fall apart.In the early '30's, that's what happened. There was no lender of last resort. Each country "looked after itself". And so they all went down, like dominoes.If O'Neil wants to turn a blind eye to the problems of Argentina, which are intrinsic to the dollar reserve system, and not- fundamentally - attributable to good or deficient administration in Argentina, that contradicts the perpetuation of the dollar reserve system. He can't have it both ways. So now what?The Argentinians linked to the dollar through a Currency Board. So now, the practically have the dollar as their currency. But there is no trust in the Currency Board, so interest rates - in pesos which are diguised dollars - are high, very high.There seems to be a panic going on, people turning in their Currency Board pesos for the "real thing" - green dollars.The strong Currency Board peso and high interest rates, are killing exports. Tax income must be falling sharply. It is impossible to print Currency Board pesos to cover the deficit. Borrowing abroad is already excessive. Wages and expenditures must fall drastically.(massive cutbacks of state expenditure and employment of bureaucracy) If that sounds like DEFLATION, it's because it IS deflation.Net/net/net: its seems we are approaching the final conclusion to the modern conception of the welfare state? megatron (07/13/01; 10:34:46MT - usagold.com msg#: 58029) These are a few of my favorite things..... I guess it's fairly obvious why 'beurocrats' and liberals don't like gold or guns. Centennial Precious Metals, Inc. / USAGOLD (07/13/01; 09:47:35MT - usagold.com msg#: 58028) Hard assets... Easy access! http://www.usagold.com/gold/coins/st_gaudens.html
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