4 replies to this topic

[SuperCycleBear]

Quote

Worldwide, an incredible tower of debt has been under construction since President Nixon's 1971 default on the gold obligations of the US government. His decree severed the redeemability of the dollar for gold and thus eliminated the extinguisher of debt. Debt has been growing exponentially everywhere since then. Debt is backed with debt, based on debt, dependent on debt and leveraged with yet more debt. For example, today it is possible to buy a bond (i.e., lend money) on margin (i.e., with borrowed money).

The time is now fast approaching when all debt will be defaulted on. In our perverse monetary system, one party's debt is another's "money." A debtor's default will impact the creditor (who is usually also a debtor to yet other creditors), causing him to default, and so on. When this begins in earnest, it will wipe out the banking system and thus everyone's "money." The paper currencies will not survive this. We are seeing the early edges of it now in the euro, and it's anyone's guess when it will happen in Japan, though it seems long overdue already. Last of all, it will come to the USA.

The purpose of this article is to present the early-warning signal and explain the actual mechanism to these events. Contrary to popular belief, it will not happen because the central banks increase the quantity of money to infinity.  The money supply may even be contracting (which is what I expect).

To understand the terminal stages of the monetary system's fatal disease, we must understand gold.

http://www.financial...d-backwardation

[HYPERTlGER]

The tower of debt began to be reconstructed in 1945 following the 1933-1945 bankruptcy reorganization of the last one to collapse...

Anyone one that knows how credit systems work...know that it would have been impossible to sustain a fixed exchange rate monetary system based on gold if the gold supply does not inflate as quick as the money supply.

It was doomed from square one...fortunately very few people knew or know how credit systems worked or work...and still promote the evil Nixon screwed the world lie.

Nixon was just doing his job as puppet in chief...1971 is just when the point was reached where the rule change was made.

Because if the rule change was not made...The USA would have had to stop trading with the world...and the USA along with the rest of the would would have imploded to oblivion.

[SuperCycleBear]

HYPERTlGER, on 13 February 2012 - 12:07 AM, said:

Anyone one that knows how credit systems work...know that it would have been impossible to sustain a fixed exchange rate monetary system based on gold if the gold supply does not inflate as quick as the money supply.


Because if the rule change was not made...The USA would have had to stop trading with the world...and the USA along with the rest of the would would have imploded to oblivion.

No that's not true.

Having a convertible currency allows credit to expand and contract. Credit still exists just like today from banks only it cannot get out of control like it has done. Contraction happens far more often with a convertible currency, just not as calamitous with its impact.

When Nixon defaulted, it meant that debt could expand exponentially. As we have seen.

Now we get monetary collapse at a much larger, global scale.

A return to a convertible currency is inevitable as it becomes known that the business cycle cannot be managed through Keynesian macro economics.

[HYPERTlGER]

contraction happens when a debt is serviced...every debt payment causes the credit to contract and every new loan/creation of credit causes it to expand.

out of control?

The entire money supply is composed of debt with interest attached...That interest is a demand for growth...a demand anywhere within a system spreds throughout the system.

So there is a constant demand that needs to be supplied in order to sustain the existance and circulation of the money supply which is composed of credit that is debt with interest attached.

In 1945 the total credit market debt of the USA was 355 Billion Dollars...it inflated on average by 7.9% until 2008.

that's what you do when you attach interest or a growth rate to money or credit or anything...you are demanding it to grow exponentially.

from 1945 to 1971 that is what the credit system did...that's what demanding a yield does...

if you base the system on gold....you eventually reach a point where the supply/production of gold can not supply the demand.

in the case of the fixed exchange rate systam...It became impossible to acquire or produce Gold for 35 Dollars an ounce.

The fixed exchange rate was a barrier to continued economic expansion...if the rule was not changed...the economic expansion of the USA and the world 1945 to 1971 would have stopped or reached maximum potential...and the USA along with teh rest of the world would have had to contract to maximum potential.

leverage to maximum potential followed by deleverage to maximum potential

But no one wanted to collapse to oblivion...So the rules were changed...to sustain the continued economic expansion...to supply the demand of the compounding interest equation.

That is what the top does...lives off the yield from the bottom.

Well the system which the top own produces the yield the top lives off of...

The top or master lives off the yield of the bottom or slaves.

and when the slaves working in the gold mine either become exhausted and stop or the mine runs out of gold...that is the end of the gold based trade system.

When the demand for growth outstripped the Roman silver mines...they just began to reduce the content of the Denarius...and continued on...because they had plenty of all the rest of the resources to sustain economic expansion.

The USA and world had more than enough resources to sustain the USA and the world...the past 40 years is proof of that...the enterprise just ran out of Gold to supply the demand of the fixed exchange rate monetary system...

The default was inevitable...from the very first second of operation.

Keynes?

The credit system is centuries older than Keynes...

it was in operation long before he was born and became aware of it's existance.

[SuperCycleBear]

You can repeat fallacies as many times as you like, it doesn't make them true. You seem the only one capable of living without "taking more than you give", working out who is the "top" and who is the "bottom" and accurately dividing 100 by 3. We get that, but you don't seem to get it that we get it.

As far as I can tell from reading your posts, your position is there is only one source of truth in existence.... you!

Now that may well be the case, or it might be that you have delusions of grandeur. I guess we best leave that for others to judge for themselves.