Thursday, May 24, 2012
Bilderberg Meeting in Virginia to Reveal Whether Financier Elite Backs Obama or Romney
Webster Tarpley on Alex Jones Show Sunday May 20, 2012.
Bilderberg Meeting in Virginia to Reveal Whether Financier Elite Backs Obama or Romney; Romney-Netanyahu Axis Gives GOP Upper Hand to Carry out Sinister "White Horse Prophecy"; Support Alexis Tsipras and Syriza Bloc in Greek Elections.
Get source video and audio files of this interview at http://tarpley.net/?p=4084
Dollar Backwardation
From ZeroHedge.com
Original source
by Keith Weiner of the New Austrian School of Economics
Dollar Backwardation
The current financial crisis, may progress to a phase where people demand and hoard dollar bills but take electronic deposit credits only at a discount which increases until electronic deposit credits are repudiated entirely. The Federal Reserve would be powerless to solve the problem, because while they can create unlimited electronic deposit credits they can’t create unlimited paper dollar bills, “money you can fold” as Professor Antal Fekete calls it. There would be a glut of electronic deposits, but a shortage of dollar bills.
Before the financial crisis metastasized in 2008, Fekete wrote a paper that I think is underappreciated and under-discussed. “Can We Have Inflation and Deflation at the Same Time?” (http://www.safehaven.com/article/8507/can-we-have-inflation-and-deflatio...) In his paper, he discussed the “tectonic rift” between paper Federal Reserve Notes (i.e. dollar bills) and electronic deposits. By statute, the Federal Reserve cannot print dollar bills without collateral (e.g. Treasury bonds). Also, they have limited printing press capacity that is insufficient to keep up with a catastrophic crisis.
He discussed the inverted pyramid of John Exter. Gold is the triangle at the bottom, and then above is silver, dollar bills, and then the various kinds of electronic deposits, stocks, real estate, etc. In a crisis, people want to move from top to bottom of the pyramid, but of course there isn’t enough of the stuff at the bottom.
In a scenario in which desperate, panicky people are trying to cope with the enormity of a collapse that they don’t and can’t understand, I think this split between “physical” dollars and “electronic” dollars is very plausible.
Just as there is nothing to be accomplished by selling an underlying security as it becomes worthless, only to buy a derivative of it, selling Treasury bonds and buying dollars is equally nonsensical. The dollar is the Federal Reserve’s liability, backed by the Treasury bond as the asset. If you believe the Treasury bond is worthless, then you ascribe no value to the dollar either. This is why gold will go into permanent backwardation. Holders of dollars will provide an unlimited bid for gold that will not be reciprocated by holders of gold. The latter own the only safe asset, and the only monetary asset that is not ultimately backed by the Treasury bond or the dollar, and they will have no desire to give it up.
The concept of backwardation is simple. It is when people accept a future promise to deliver only at a discount to physical stuff handed over right now. This could be when there is a shortage, such as wheat before the harvest. Or in the case of gold, backwardation signifies a collapse in trust. But isn’t this the same phenomenon of a tectonic rift between paper dollars and electronic deposits?
In a certain sense, the “money you can fold” behaves like a physical commodity, a present good (I realize I am stretching the concept here more than a bit). The electronic deposit credit is most definitely a future promise. In my gold backwardation thesis, the action begins with the offer on the futures contract falling below the bid on spot gold. The bid-ask spread on spot gold widens, as the offer is relentlessly advancing, pulling the bid behind it. The bid-ask spread on the futures contract also widens, as the offer remains stubbornly high, but the bid withdraws and retreats as gold buyers don’t trust futures and buy physical gold instead. Eventually, there are no more sellers of physical gold and that is that (except for the dollar-commodities-gold arbitrage, a backdoor way for dollar holders to get a little gold before the end of the game).
If this split occurs in the dollar, I think it will play out the same way. At first, sellers of real goods may accept electronic credit money, but demand a higher price. The spread on the electronic dollar widens, with the bid from real goods falling. At the same time, virtually unlimited demand for the “real” paper you can fold causes the bid on the paper dollar to rise.
Who knows how long it could last? People could go on accepting paper dollars out of long habit. Obviously, this is an unstable situation that must necessarily collapse. Unlike gold, the paper dollar has no value other than the broken promises that back it.
I dub this “dollar backwardation”.
Original source
by Keith Weiner of the New Austrian School of Economics
Dollar Backwardation
The current financial crisis, may progress to a phase where people demand and hoard dollar bills but take electronic deposit credits only at a discount which increases until electronic deposit credits are repudiated entirely. The Federal Reserve would be powerless to solve the problem, because while they can create unlimited electronic deposit credits they can’t create unlimited paper dollar bills, “money you can fold” as Professor Antal Fekete calls it. There would be a glut of electronic deposits, but a shortage of dollar bills.
Before the financial crisis metastasized in 2008, Fekete wrote a paper that I think is underappreciated and under-discussed. “Can We Have Inflation and Deflation at the Same Time?” (http://www.safehaven.com/article/8507/can-we-have-inflation-and-deflatio...) In his paper, he discussed the “tectonic rift” between paper Federal Reserve Notes (i.e. dollar bills) and electronic deposits. By statute, the Federal Reserve cannot print dollar bills without collateral (e.g. Treasury bonds). Also, they have limited printing press capacity that is insufficient to keep up with a catastrophic crisis.
He discussed the inverted pyramid of John Exter. Gold is the triangle at the bottom, and then above is silver, dollar bills, and then the various kinds of electronic deposits, stocks, real estate, etc. In a crisis, people want to move from top to bottom of the pyramid, but of course there isn’t enough of the stuff at the bottom.
In a scenario in which desperate, panicky people are trying to cope with the enormity of a collapse that they don’t and can’t understand, I think this split between “physical” dollars and “electronic” dollars is very plausible.
Just as there is nothing to be accomplished by selling an underlying security as it becomes worthless, only to buy a derivative of it, selling Treasury bonds and buying dollars is equally nonsensical. The dollar is the Federal Reserve’s liability, backed by the Treasury bond as the asset. If you believe the Treasury bond is worthless, then you ascribe no value to the dollar either. This is why gold will go into permanent backwardation. Holders of dollars will provide an unlimited bid for gold that will not be reciprocated by holders of gold. The latter own the only safe asset, and the only monetary asset that is not ultimately backed by the Treasury bond or the dollar, and they will have no desire to give it up.
The concept of backwardation is simple. It is when people accept a future promise to deliver only at a discount to physical stuff handed over right now. This could be when there is a shortage, such as wheat before the harvest. Or in the case of gold, backwardation signifies a collapse in trust. But isn’t this the same phenomenon of a tectonic rift between paper dollars and electronic deposits?
In a certain sense, the “money you can fold” behaves like a physical commodity, a present good (I realize I am stretching the concept here more than a bit). The electronic deposit credit is most definitely a future promise. In my gold backwardation thesis, the action begins with the offer on the futures contract falling below the bid on spot gold. The bid-ask spread on spot gold widens, as the offer is relentlessly advancing, pulling the bid behind it. The bid-ask spread on the futures contract also widens, as the offer remains stubbornly high, but the bid withdraws and retreats as gold buyers don’t trust futures and buy physical gold instead. Eventually, there are no more sellers of physical gold and that is that (except for the dollar-commodities-gold arbitrage, a backdoor way for dollar holders to get a little gold before the end of the game).
If this split occurs in the dollar, I think it will play out the same way. At first, sellers of real goods may accept electronic credit money, but demand a higher price. The spread on the electronic dollar widens, with the bid from real goods falling. At the same time, virtually unlimited demand for the “real” paper you can fold causes the bid on the paper dollar to rise.
Who knows how long it could last? People could go on accepting paper dollars out of long habit. Obviously, this is an unstable situation that must necessarily collapse. Unlike gold, the paper dollar has no value other than the broken promises that back it.
I dub this “dollar backwardation”.
Quote of the Week
CHARLES CALEB COLTON, Lacon
UNCLE SAM BULLYING BROKERS OVER SILVER?
May 22, 2012 by SGTbull07
Woody O'Brien says that he's decided to do a "Barnhardt' and get out of the markets while the gettin' is good. O'Brien says he's been told by regulators that federally regulated brokers should not be giving advice about buying physical silver, so he's decided he no longer wants to be 'federally regulated'. Remember, physical silver really is the Achilles' heel of the corrupt fiat banking system.
We also talk about JP Morgan's now $7 BILLION derivatives blunder - and we cover what Woody calls the Facebook victory.
Woody's site:
http://www.abolishfiatslavery.com/
Woody O'Brien says that he's decided to do a "Barnhardt' and get out of the markets while the gettin' is good. O'Brien says he's been told by regulators that federally regulated brokers should not be giving advice about buying physical silver, so he's decided he no longer wants to be 'federally regulated'. Remember, physical silver really is the Achilles' heel of the corrupt fiat banking system.
We also talk about JP Morgan's now $7 BILLION derivatives blunder - and we cover what Woody calls the Facebook victory.
Woody's site:
http://www.abolishfiatslavery.com/
Wednesday, May 23, 2012
Keiser Report: Scatological Finance
May 22, 2012 by RussiaToday
In this episode, Max Keiser and co-host, Stacy Herbert, discuss naked short selling by Goldman Sachs and piling on JP Morgan all while being hounded by a Fox News helicopter. In the second half of the show Max talks to Francine McKenna of reTheAuditors.com about Jamie Dimon, London whales and MF Global.
In this episode, Max Keiser and co-host, Stacy Herbert, discuss naked short selling by Goldman Sachs and piling on JP Morgan all while being hounded by a Fox News helicopter. In the second half of the show Max talks to Francine McKenna of reTheAuditors.com about Jamie Dimon, London whales and MF Global.
Alex Jones - A philosophy of Liberty
Alex discusses stories like posted earlier today, amongst other issues.
May 22, 2012 by TheAlexJonesChannel On the Tuesday, May 22 edition of the Alex Jones Show, Alex talks about the continued outrages of the TSA as its goonish Gestapo gropers and sexual molesters are now trained to feel up crotches for terrorist bombs following yet another zany al-Qaeda bomb plot. He also takes a look at the video of a school teacher who launches into an irrational tirade after a student dares to make a mild criticism of Obama. Alex updates the latest on Obama's Kenyan birth and covers cops gone wild as they confiscate money from motorists and other shakedown operations.
May 22, 2012 by TheAlexJonesChannel On the Tuesday, May 22 edition of the Alex Jones Show, Alex talks about the continued outrages of the TSA as its goonish Gestapo gropers and sexual molesters are now trained to feel up crotches for terrorist bombs following yet another zany al-Qaeda bomb plot. He also takes a look at the video of a school teacher who launches into an irrational tirade after a student dares to make a mild criticism of Obama. Alex updates the latest on Obama's Kenyan birth and covers cops gone wild as they confiscate money from motorists and other shakedown operations.
Third World USA - Beggars with Guns
Cops confiscate cash on Tennessee highways
I can only imagine what would have happened to the poor bugger in the following story if he had said he had a "monster box" of US Silver Eagles in the car (value: $15,645)? Tasered to death no doubt for daring to carry Constitutional Money. Although he might have got lucky and the cop, only every being paid in fiat paper tokens wouldn't have recognised that silver is money and assumed it was some worthless industrial metal.
This story typical of all Third World countries.It reminds me when I was traveling in Thailand in 2004. I was driving on a 4 lane divided highway in Southern Thailand about 2am, I was the only car on the section of road that I was on and in the distance I saw a person standing the middle of my lane with a red torch wand (like cops use in NSW to pull you over for drink driving checks). I wasn't speeding (well not by Thai standards), but like a good citizen I took my foot of the accelerator and started slowing down. My Thai relative in the passenger seat turned to me aghast and said "คุณกำลังทำอะไร? คุณกำลังชะลอตัวลงทำไม? ตำรวจเพียงต้องการที่จะหยุดคุณจะเรียกร้องเงิน ให้ไป ความเร็ว" (What are you doing? Why are you slowing down? Police only want to stop you to demand money. Keep going. Speed up!), being a well educated country girl she no doubt added some colourful adjectives and references to penned farm animals, but you get the picture. As we passed the cop doing about 160km/h (100 miles/hr), he had the good sense to no longer be standing in the middle of my lane, she exclaimed "พวกเขาเป็นเพียงขอทานที่มีปืน" (They are just beggars with guns). At which point I hoped she was right as I was not sure my Thai made Honda could have outrun the cop's old Australian made General Motors V8 Commodore.
From RT.com
Original source
A New Jersey man was recently pulled over for speeding in the state of Tennessee. Although George Reby drove off without be charged with a crime, he was instantly $22,000 poorer.
"If somebody told me this happened to them, I absolutely would not believe this could happen in America,” Reby tells Tennessee’s News Channel 5 during an interview earlier this month.
Once you hear his story, you might say the same thing.
Reby was traveling across state lines with 20 grand in cash because he was looking to purchase an automobile he saw on the online auction site eBay. That cash was in his possession when Officer Larry Bates of the Monterey Police Department pulled him over for speeding. According to the cop, having the money just didn’t seem right.
When Officer Bates asked Mr. Reby what he had in the car, he told him the truth: there was $20,000 in cash in a bag.
“Then, at the point, he said, 'Do you mind if I search your vehicle?' I said, 'No, I don't mind.' I certainly didn't feel I was doing anything wrong. It was my money,” Reby tells the station.
Bates didn’t believe Reby’s claim, though, even though the driver offered to show proof on his computer.
“I had active bids on EBay, that I was trying to buy a vehicle. They just didn't want to hear it,” says Reby.
Bates explains to News Channel 5 that, during training, police officers are told, "common people do not carry this much U.S. currency." Under those alleged instructions, he took it upon himself to confiscate all $20,000.
"The safest place to put your money if it's legitimate is in a bank account," Officer Bates lectures the station." He stated he had two. I would put it in a bank account. It draws interest and it's safer."
(Tears: LOL, if US banks are so safe why do they have to be insured by the FDIC against collapse? So safe that 22 US banks have already failed this year. As for US interest rates, cash management accounts are paying a huge 0.8%. Yes that is $8 per $1,000 invested (less taxes and inflation), that should set you up nicely for retirement).
Reby, however, doesn’t operate like Bates. Not only was Reby never charged with a crime, but it took him four months and another trek to Tennessee to eventually recover his money.
When News Channel 5 caught up with the officer, his explanation for the seizure seemed as ridiculous as Reby claimed.
Prompted for a reason for not arresting Reby, Bates told the network, "Because he hadn't committed a criminal law.”
Bates extrapolated by saying, "No, it's not illegal to carry cash," but, “…it's what the cash is being used for to facilitate or what it is being utilized for."
The cop decided that the money could have been tied to drugs, but Officer Bates willfully admits to News Channel 5 that he couldn’t prove it.
And for Reby’s defense? Bates tells the station, “He couldn't prove it was legitimate.”
"You live in the United States, you think you have rights – and apparently you don't," says Reby. Luckily for him, he was able to pursue the case with the help of an attorney. Drivers in Tennessee and other states aren’t necessarily as lucky, though.
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