Though For The Day:
Wouldn’t you say it is interesting that $1156 is one of the Gold Angels?
My Dear Friends,
The following note preceding the excellent article written by Ambrose Evans-Pritchard is from the man who I consider the "Dean of Gold," Harry Schultz.
This is what the Goldmans of the world are in the process of positioning themselves for at your expense.
At the same time many in the gold community are in the bathtub with their razor blade kit. Please, no cutting yet.
Regards,
Jim
Dear CIGAs,
Hyperinflation will come overnight as Jim predicts. Forget gradual.
How do you protect assets and food? Hide stuff. Avoid medium profile. The following article describes how bad it got in German hyperinflation and how dangerous it was to even own a painting. Read it all, then plan appropriately.
Harry Schultz
The Death of Paper Money
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974.
By Ambrose Evans-Pritchard
Published: 7:05PM BST 25 Jul 2010
Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699 (shipping free.. thanks a lot).
The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation — whether the early 1920s in Germany, or the Korean and Vietnam wars in the US — starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.
People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.
"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".
Some might smile at the Bank of England "surprise" at the recent the jump in Brtiish inflation. Across the Atlantic, Fed critics say the rise in the US monetary base from $871bn to $2,024bn in just two years is an incendiary pyre that will ignite as soon as US money velocity returns to normal.
Morgan Stanley expects bond carnage as this catches up with the Fed, predicting that yields on US Treasuries will rocket to 5.5pc. This has not happened so far. 10-year yields have fallen below 3pc, and M2 velocity has remained at historic lows of 1.72.
As a signed-up member of the deflation camp, I think the Bank and the Fed are right to keep their nerve and delay the withdrawal of stimulus — though that case is easier to make in the US where core inflation has dropped to the lowest since the mid 1960s. But fact that O Parsson’s book is suddenly in demand in elite banking circles is itself a sign of the sort of behavioral change that can become self-fulfilling.
As it happens, another book from the 1970s entitled "When Money Dies: the Nightmare of The Weimar Hyper-Inflation" has just been reprinted. Written by former Tory MEP Adam Fergusson — endorsed by Warren Buffett as a must-read — it is a vivid account drawn from the diaries of those who lived through the turmoil in Germany, Austria, and Hungary as the empires were broken up.
Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.
"In the cart I saw three slaughtered pigs. The cowshed was drenched in blood. One cow had been slaughtered where it stood and the meat torn from its bones. The monsters had slit the udder of the finest milch cow, so that she had to be put out of her misery immediately. In the granary, a rag soaked with petrol was still smouldering to show what these beasts had intended," she wrote.
Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to undertand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.
Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. "Times made us cynical. Everybody saw an enemy in everybody else," said Erna von Pustau, daughter of a Hamburg fish merchant.
Great numbers of people failed to see it coming. "My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice," said one well-connected woman.
"You used to see the appearance of their flats gradually changing. One remembered where there used to be a picture or a carpet, or a secretaire. Eventually their rooms would be almost empty. Some of them begged — not in the streets — but by making casual visits. One knew too well what they had come for."
Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.
A conspiracy theory took root that the inflation was a Jewish plot to ruin Germany. The currency became known as "Judefetzen" (Jew- confetti), hinting at the chain of events that would lead to Kristallnacht a decade later.
While the Weimar tale is a timeless study of social disintegration, it cannot shed much light on events today. The final trigger for the 1923 collapse was the French occupation of the Ruhr, which ripped a great chunk out of German industry and set off mass resistance.
Lloyd George suspected that the French were trying to precipitate the disintegration of Germany by sponsoring a break-away Rhineland state (as indeed they were). For a brief moment rebels set up a separatist government in Dusseldorf. With poetic justice, the crisis recoiled against Paris and destroyed the franc.
Jim Sinclair’s Commentary
The Fat Cats are big golfers.
If the FIDC would consider a 105% loss sharing arrangement, I am sure they would have a buyer.
Las Vegas golf course taken over by FDIC to go on auction block
Stallion Mountain Golf Club to be auctioned Aug. 16
By Buck Wargo
Tuesday, July 27, 2010 | 4:39 p.m.
A Las Vegas golf course taken over last summer by the Federal Deposit Insurance Corp. when it seized Community Bank of Nevada will be auctioned off to the highest bidder.
The Stallion Mountain Golf Club, located 6.9 miles east of the Strip on East Flamingo Road, was closed in July 2008 when a group of investors who bought it in 2006 from developer Billy Walters for $24.5 million gave it back to the bank when they could no longer afford their debt service payments.
The FDIC took over the bank in August 2009 and has maintained the course to prepare it for public auction.
The course, originally known as the former Sunrise Country Club, was built by former PGA player Jim Colbert and was the site where PGA Tour pro Chip Beck shot a record-tying 59 in the 1991 Las Vegas Invitational.
The auction is set for Aug. 16 and will be done through sealed bids, said Keith Cubba, a broker with the Land & Investment Group at Colliers International Las Vegas. Once the bids are received, it will be whittled down to a group of finalists who will be asked to make their final offer, he said.
Jim Sinclair’s Commentary
The Age of Miracles is not over. Oil is biodegradable in the Gulf according to the media.
I swear I just heard the following on F-TV: "Government says a large amount of the Gulf spill oil is under the water and that is good because you cannot see it."
Jim Sinclair’s Commentary
Be prepared, as Eric says, to get the heartwarming news that whales are now adapted to eating the oil under the water that you fortuitously cannot see.
The whales are advised to eat fast because the oil is miraculously biodegradable. The whale bodies that have floated up on shore have all died of old age. The dead farmed oysters were planted dead.
Now think about the media reporting on economics.
Gulf of Mexico Oil Slick Appears to Vanish Quickly
The oil slick in the Gulf of Mexico appears to be dissolving far more rapidly than anyone expected, a piece of good news that raises tricky new questions about how fast the government should scale back its response to the Deepwater Horizon disaster.
The immense patches of surface oil that covered thousands of square miles of the gulf after the April 20 oil rig explosion are largely gone, though there continue to be sightings of tar balls and emulsified oil here and there.
Reporters flying over the area Sunday spotted only a few patches of sheen and an occasional streak of thicker oil, and radar images taken since then suggest that these few remaining patches are quickly breaking down in the warm surface waters of the gulf.
Jim Sinclair’s Commentary
The key word today was used by the MOPErs. The Durable Goods Orders decline was UNEXPECTED.
That means it was an anomaly, a mistake and not a trend because the "Board of Economic Wizards" did not anticipate it in their deed deliberations.
Jim Sinclair’s Commentary
There is nothing dollar positive here.
- Restated Downturn Should Be More Severe
- Nonsense Home-Sales Reporting
- Roughly 144,000 Census Jobs Lost in July
"No. 312: Durable Goods, Home Sales, Upcoming GDP Revisions"
http://www.shadowstats.com/
