“Inside, Outside…. Leave me alone!
Inside, Outside … Nowhere is home!
Inside, Outside … Where have I been?
Out of my brain on the 5:15…”
— The Who
There’s been a massive reaction to Credit Suisse analyst Zoltan Poszar’s note about the birth of a new Bretton Woods agreement.
Every investor in the world should read it. Zerohedge posted (behind their paywall) a lengthy analysis of Poszar’s musing along with some reactions from Wall St. It is well worth your time.
The people most freaked out about this note are the Keynesians who worship at the altar of what Poszar calls Inside Money — money that only exists inside the financial system, bonds, credit, dollars, euros, etc.
Austrians, like myself, have always understood that eventually Inside Money fails because it is ultimately nothing more than a Ponzi Scheme built on top of Outside Money — money that exists outside the financial system, like commodities and bitcoin.
Poszar makes his early case and then goes through the mechanics of what is happening in the financial plumbing of the world economy right now to prove the stresses are real and building quickly towards an implosion of Inside Money and an explosion of Outside Money.
Again, anyone with a passing acquaintance with Austrian business cycle theory and Mises’ Theory of Money and Credit always knew this day was coming.
Today’s “Inside Money” standard, known colloquially as the Dollar Reserve standard, is actually what I like to call “Milton Friedman’s Nightmare.” It is nothing more than a system of competitively devalued and inflated debt-based scrips running around drinking each other’s milkshakes until everyone’s glass is empty.
FYI, there are a lot of empty glasses around the world right now and more are being created everyday as the financial system turned predatory after the Lehman Bros. collapse in 2008.
It was then that the Central Banks and governments turned fully against the people sucking up more and more outside money by inflating inside money egregiously to control more and more of the real wealth of the world.
There is only one problem with that, however. Eventually, you run out of property to squeeze out of people’s hands. The more you take, the less people are restrained by little things like laws.
Eventually two things happen. The first is what we’ve been seeing from Russia and China for the past twelve years — steady accumulation of gold and other hard assets, outside money, including the building of real manufacturing infrastructure as well as the financial infrastructure to house it.
The second is just over the horizon — the moment where all the legal claims to controlling outside money mean nothing when enforcement of those legal claims gets exposed as a bluff because there aren’t enough enforcers capable of keeping the looters from taking it.
Look, I’m as much a private property guy as you can possibly conceive of but I made my peace a long time ago with what those claims of private property actually mean in the very real sense to me personally and my limits of defending them.
I can lay claim of ownership to hundreds of acres of land. I can even have a deed that proves I bought it from someone else who had a legal document to ownership. That’s legal ownership. Now, real ownership is actually being able to defend that claim by constantly applying your time and energy.
I live rural, folks. I can tell you that where the roads lie and where the legal property corners are do not square with each other. And the reality is that when you live like that, little things simply aren’t worth your time.
But, if you are a stickler for this stuff, that means, for example, rousting squatters, pressing claims of borders if people cut the corner driving along the public easement, etc. But it’s your money you have to spend, your time. You have to put up the fence, or the pole or the sign. You have to ‘police’ that claim.
And if you don’t, do you really still have that ‘claim’ to that property? Legally yes, but de facto? Be honest with yourself.
Libertarian theorists have juggled this question around for years and it naturally comes down to as Hoppe would put it, “the private production of defense.” Are you willing to continue pressing that claim over property that you are not actively ‘mixing your labor’ with?
If not, then let it go and let someone else make better use of it.
I know this opens up a massive can of philosophical worms. That’s exactly the point I’m trying to make. When civilization breaks down, legal claims tend towards zero value. Civilization breaks down through the systemic subversion of the agreed upon rules to the advantage of some at the expense of the other.
And what bigger subversion of the rule, “thou shalt not steal” could there be than a debt-based Ponzi scheme of inside money being used to suck up legal claims to most of the world’s valuable resources while actively suppressing the value of the competing outside money to defend people’s claims to it?
This is what Poszar is implying when he says we’re moving away from inside money to outside money. Inside money is created through rules and laws, not markets. Outside money is created through labor, time and human ingenuity. It is tokenized human capital.
This is the real implication of Poszar’s note that we are approaching a new Bretton-Woods where outside money will replace inside money as the reserve asset of the financial system.
The West has stupidly picked a fight with the one country, Russia, that has the commodities needed to run the world and bring about this return to an outside money based system.
Poszar rightly argues that the inside money system only works if commodities trade within tight spreads, ie. almost zero geographic arbitrage. This is another way of saying, this shit money is ,only worth using if everyone has confidence of the system because commodity prices are not under real systemic stress.
It works because everyone still believes (wrongly) that the rules of civilization are mostly equitable and it’s possible to defend your property through its institutions.
Individual commodity markets can be subject to the vicissitudes of living — boom/bust cycles, weather, etc.. But when the entire commodity complex is under stress like it is now, that’s a ‘no-confidence’ vote against the inside money system.
That’s what we witnessed breaking last week with the London Metals Exchange shutting down futures trading in nickel.
Now let’s think through what we now know about this situation which has come to light since it first occurred and Poszar wrote his little note. We found out that the LME was shut down because one Chinese tycoon was caught massively short and his counter-party was one of the most systemically-important banks in the world, JP Morgan Chase.
Moreover, the LME didn’t reopen because he didn’t want to cover his short, but double down. And now the LME is trying to reverse all the trades that occurred on Wednesday.
Rules for thee and not for me. Oh look, someone thought all that inside money was actually worth something to claim outside money in the real world. How quaint.
I’m sure this situation will eventually work itself out. But, let’s be clear here, the LME is now effectively done as an exchange. Just like Black-Faced Hitler destroyed the concept of private savings in Canada a few weeks back because some truckers made him look like the little bitch that he is, the LME undermined global confidence in it as a way to coordinate supply and demand for important commodities through price and time.
It is also just like the US State and Treasury departments making a mockery of the concept of foreign exchange reserves and the value of anyone’s savings held in something other than their deplorable, little hands?
Now let’s connect some other dots shall we?
Because here’s the thing everyone has forgotten going back 10 years….. Who owns the LME?
It ain’t London. It ain’t New York. It’s China. And they bought it 10 years ago.
For those wondering when China was going to make its move to support Russia in this financial war, I think it happened on March 8th when they shut down the LME. What do I mean by this?
Let’s set the Wayback Machine to last year shall we? Do we all remember Archegos Capital? Bill Hwang’s ridiculous one-way portfolio of CFD’s for momentum meme stocks which pulled in nearly every Western Prime Broker into a vortex so powerful it shook the entire financial system to its core?
Back I noted that just prior to Archegos blowing up, Ukraine had “declared war on Russia by making it Ukrainian security policy to retake Crimea.” and prominent members of the US State dept. calling Taiwan “a country.”
So I asked this question:
“If you were the Chinese and you were now in a hybrid war with the U.S. how would you send a message back across the Pacific?”
By blowing up a test financial nuke like Archegos was my conclusion.
So, now here we are a year later with a real hot war in Ukraine. The West is screaming at Russia for abrogating legal agreements and the UN Charter. The Russians watched the US and NATO unilaterally pull out of such treaties previously under the last three presidents, knowing full well that ‘legal claims’ to anything at this point aren’t worth anything if they cannot be enforced.
The war in Ukraine is a manifestation of my second effect of stealing real wealth through inside money.
Ukraine is steadily, inexorably being swallowed up by Russia’s Special Operation there, establishing new facts on the ground which make a mockery of all of these previous legal arrangements to property. Russia just pulled up the boundary markers and said, “They are here, now.”
And the question everyone has been asking is, “What are the Chinese going to do about all of this?”
Well, I think, they just did.
Why would the LME allow this guy to amass this insane position in Nickel futures when he’s clearly not interested in taking delivery of the metal (the whole purpose of commodity futures trading in the first place). He’s just a speculator. So, position limits don’t matte all of a sudden? But, if I’m China I allow this to get out of control, knowing all it takes is the application of a pittance of newly-minted inside money to blow up the whole nickel market.
And with it the validity of the LME as a futures exchange.
I’m having a hard time not seeing this as China just fucked the West completely by destroying the validity of the LME.
It could just be, like Archegos, an initial round of financial system blackmail. Today nickel, tomorrow…. gold?
Regardless, tt just broke the confidence of the LME as a clearinghouse for commodity traders.
This means that we’ve seen the peak of the LME/CRIMEX control over the gold and silver markets as capital will now shift away from London to Shanghai. Remember, Shanghai has a well-established futures exchange for what? Gold and oil. And what does that oil contract represent? Medium-sour oil, the most plentiful of which is {drumroll please!}… Russian Urals grade.
And now the global financial markets, which are dependent on the fiction of paper gold (‘inside gold’) as the real reserve asset of the system inflated to extreme numbers, >200 oz paper to every 1 oz of physical reserve, are vulnerable to the worst kind of deflationary shock we’ve ever seen.
Poszar gave us the clues with his note. The Petrodollar is the M0 of global trade. Paper Gold is the M0 of the financial markets on which the current asset pricing system is based. Inside money is deflating, outside money inflating.
Wall St. realized the petrodollar was dead ages ago and that the move for them now was to get ahead of the game and into the other outside money worth considering, bitcoin. Of course, they want to recreate the old paper gold trade with bitcoin to keep their inside money games going. But, I don’t think that’s going to be enough to save them.
The FOMC is staring at an existential choice this week. How much do we raise rates in the US knowing the deflationary shock it will have on asset prices, especially since the ECB just signaled it’s getting on the tightening bandwagon?
Because if the Fed is aggressively hawkish on Wednesday that is your signal that Congress’ new spending blackmail will not be funded with cheap inside money anymore. The cost will be higher than the US can afford and stay solvent. If they aren’t then they caved and it’s time accelerate personal plans of de-dollarization to defend what property you have left.
Russia and China should control the Gold and Oil trades now. They will be the price-makers. We will be the price-takers. They are about to change the denominator in the global forex markets from the USD (inside money) to gold/oil (outside money).
What we have to realize now is that real price discovery for gold and oil are going to shift quickly away from London and Chicago and towards Shanghai and Moscow. Expect announcements from Russia and China deepening the relationship between the MOEX and Shanghai for coordinating metals and energy futures trading to improve liquidity on both exchanges.
It’s the right play, honestly.
Biden going it alone against Russia on banning imports of Russian oil is a move to destroy the U.S. energy markets and our economy. It is pure scorched earth policy.
Now Biden et.al. are looking for ways to freeze Russia’s gold so they can’t spend it. What these congenital morons do not realize is Russia isn’t going to SPEND ITS GOLD, it’s going to ACCUMULATE EVEN MORE OF IT.
Freeze it all you want guys, you won’t be in power in eight months. Right now Wall St. and the Fed have to step in and demand a change at the top of the US government to oust these insane Davos vandals or the US is toast along with the smoking hole that Europe is already.
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Move to Russia, Tom. You obviously love them more than us.
Find a different analyst, worm
I was just going to write that!!
The debacle will raise memories of the LME’s darkest period, the “Tin Crisis” of 1985, which saw the exchange suspend tin trading for four years and pushed many brokers out of business. That was driven by the collapse of the International Tin Council, a body backed by 22 governments when it could no longer keep propping up the tin price.
Can’t handle reality? Just because the MSM is telling you 2+2=5, doesn’t make it so. It’s easier to say what you said then to face the reality that our Govt sold us out many years ago…no matter how many American flags you wrap yourself in.
Bunch of anti-democrats in here haha
Go to Russia or China if you like dictatorships, please!
You value autocracy way more than democracy.
Why are you here then?
Also, by this logic if an NFL analyst says Tom Brady made an amazing play and the other team has a bad game plan, he has to be a Patriots fanboi. How dumb can you be?
Dear Anonymouse,
There are a lot of your type around and that is exactly why we are in all the mess we are today. Suggest you rodent types get a real job and struggle with the rest of us in trying to solve real world problems.
And take me with you, please.
Understanding & forewarning that the sewer, currently backed up 18 inches to your knees, will soon be up to your ears because your landlord is an idiot… doesn’t mean it’s wrong to have a healthy disdain for your landlord…
You mean he is on the ball and you are a poor ignorant leftover!!
Amazing how much emotion is assigned to changing realities in everything (markets, energy, commodities). Ru, Ch and others are authoring moves towards a world based on real values, which the west could follow, or deny. The denial could well bring down the entire house of cards our (I live in Poland) is based upon (largely engineered .. I would even go so far as to say “fake” values). It has absolutely nothing to do with loving someone more than others.
There’s a question about that? It is the government’s and they let you use it, sometimes.
…Biden going it alone against Russia on banning imports of Russian oil is a move to destroy the U.S. energy markets and our economy. It is pure scorched earth policy…
The US oil purchases from Russia are funding Putin’s war, right? So theoretically everyone in the US shares in the pain. Wasn’t that the explanation?
Biden didn’t want to ban Russian oil, he had to. Putin has so much dirt on the Biden crime family that Joe doesn’t want to come out. But Congress was about to hand him a bill to ban everything Russian. He did it to look as if he had stones (which we all know Democrats haven’t had for decades). And there was probably a phone call to Vlad to explain the move before he did it.
Yes, the Davosians fear outside money. They hate the idea that people can earn, spend and save outside their control. Freely storing our time must be stopped if their technogulag is to work.
Which is why they developed cryptocurrency in 1996, pumped it out into the world via an NSA cutout for it to be improved and popularized by enthralled and credulous cryptopath dreamers.
They have read their Sun Tzu – they turned their enemies’ energy against themselves.
Once the Davosians take crypto into public ownership and use it as the global currency inside their technogulag, perhaps the cryptopaths will finally understand the role they have unwittingly played, and will bitterly regret their naivety using Oppenheimer’s words.
Having become the death of freedom, and the destroyers of our monetary world.
You can ignore reality, but you cannot ignore the consequences of ignoring reality. Any Rand
Seems appropriate. Great Analysis.
Love that quote……and now I believe we are at the climax of ignoring reality for decades. Gonna be a bumpy ride!! Prepare accordingly!!
Tom, sorry, but I’m not following your argument with respect to Archegos. Hwang is of south korean origin and apparently a practicing christian of the south korean variety, for what that is worth. I don’t see the connection at all between Archegos blowing up and chinese maneuvers unless you’re saying he’s some sort of crypto-chinese or has chinese loyalties. Did i misunderstand you or is that what you’re saying?
Bill Hwang is a criminal who was a known quantity within Wall St. who was barred from trading for years and who only recently was given the green light back into the business.
Every time I bring his name up someone tries this disinformation crap about him being South Korean and not Chinese.
Try harder.
appreciate your reply, Tom, but i don’t appreciate the gratuitous insult at the end
I don’t mean to beat a dead horse but i don’t understand why i’m being accused of disinformation. not that i rely on wikipedia a lot but the man’s background is pretty clear: https://en.wikipedia.org/wiki/Bill_Hwang
Look to use the “Bill Hwang is South Korean therefore he can’t be a Chinese Agent, is a bad argument and one I ran into multiple times last year over this article.
Clearly someone seeded that idea into the zeitgeist to counter this idea. So, please if you’re going to comment or make arguments, make arguments that have something behind him.
The guy is a known scam artist, busted for insider trading who could easily be compromised to pull off what he did with Archegos. Where is he today? And the wikipedia page looks like a resume he wrote FFS
Messages are more effective when the intended recipient can actually connect the dots. There is zero evidence for the view that Archegos was a shot across the bow. It makes little sense and as a consequence, nobody in the US thinks Archegos was a message from the Chinese. Pretty stupid (and costly) way to “send a message”.
What you’ve done here is weave an unrelated event into your kooky analysis that “nobody else sees” (because it doesn’t exist, not because you’re just that much more observant than the rest of us) and act like a pompous jerk about it when someone makes a perfectly legitimate challenge.
Used to think you had some decent analysis, but it looks like you’ve gone off the deep end.
I’m grateful for the analysis Tom. I’ve never been a technician on economics and quite frankly, I don’t have enough time on my hands to read the fine print. So the perspective is much appreciated.
My opinion is that everything economic right now is part of a multi-phsed, tightly integrated global strategy that fundamentally involves mass formation of the public in many forms, as part of each phase. Some initial objectives in recent phases that we’re experiencing include modifying/altering the human genome, creating broad distrust in government and cultural foundations, initiation of global conflict and associated creation of strong protagonist/antagonist characterization on both sides of the conflict, and the deconstruction of the current economic system.
Another way of stating the same thing is that we’re in the midst of planned chaos. Many smart people will be so far down in the weeds within their perspective and discipline that they won’t see the forest for the trees before its too late. The common citizen who doesn’t understand the globalist big picture will suffer most mass formation exercises and will be taken for the ride.
Out of this planned chaos, a new global system, diabolical in nature, has already been fundamentally mapped out. Each aspect of chaos will then be manipulated to bring the common citizens into acceptance and alignment to the new system.
You can think of it as boot camp for humanity. Everyone gets broken down, everyone must comply, and then everyone must align. The World is now in the breakdown stage, with mass formation towards compliance in full swing.
Agreed – humanity is being neuralyzed.
Most will become Brownshirts. The rest, Browncoats.
The tsunami we ( the awake) have been expecting for years is finally visible from shore. March madness is here, and its just the beginning. The globalist tyrants ( the globalists, not Putin, silly) are out of control and fighting hysterically to retain control. They are flapping around like beached whales now. Zero hour is here.
Tom, I’m an Austrian guy like you, but the Davos crowd has a 20 year head start, and the central banks and Wall Street are running the show. The timing of this war was too perfect. Putin’s regular meetings with Kissinger, his ties to Schwab, having to get approval from Rothschild….though it seems the “west has picked a fight”, I’m not convinced that Putin is going rogue. Also, as we discuss property rights, we need to mention that 75% of the adults in Europe, USA, New Zealand, Canada, and Australia has just been poisoned with vaccines. It seems to me there is going to be a glut of housing in the coming years because the owners will be dead. Will property rights even be relevant?
You are assuming that a 20 year head start means competency and an ability that no computer program (not even ECM/Socrates) has–that is to predict NOR control the insanely complex economic system humanity created. Big assumption on Davos’s part.
You don’t cease to amaze me Tom. I had to read the article very carefully and also had to read the links about CFDs, Bill Hwang’s Archegos and the LME story with the Chinese Tycoon. As an engineer myself I have found your analytical approach connecting all the dots superb. Yes there is a WW3 going on and the financial front is where the real action takes place. Yes there is a tectonic shift from west to east and from the ‘inside money’ to the ‘outside money’ and yes the “money out of thin air” Ponzi scheme is exposed and falling apart. Hope that North America can get rid of those destructive “Davos Vandals” for the sake of everyone. Thanks for your efforts to make the average Joe like myself understand the things cooking behind the curtains. Your work is highly appreciated. Keep up the good work, sincerely.
Tom, not just the truckers in Canada, British banks have just frozen the accounts of leaders of Patriotic Alternative, even though no law was broken. https://www.patrioticalternative.org.uk/banks_engage_war_freedom
Of course. These are police state tactics. Europe is quickly descending into authoritarian madness
CIA …..Criminally Insane America. The Bio Labs in Ukraine, financed and run by the US Army did it for me. Reading Tom confirms I am not the one that is insane…it’s the freaks in suites over there.
Tell us all how the Gold Oil system works.
Yes, never hurts to say – “bravo Tom”. But then, it is a bit like thanking the doctor for an aggressive terminal cancer diagnosis. It truly feels like we are entering your “post-apocalyptic” world, for me, with my absolutely minimal exposure to sci-fi, P.D.James – Children Of Men world. For Davos, I would tend more towards Ballard’s High-Rise…..
Yeah, feels like a Pyrrhic victory doesn’t it?
I believe, Tom, you are stating that JPM were the beneficary of the other side of the Nickel squeeze and consequently lost out when trades were cancelled. Could it be possible that JPM engineered the short squeeze and the Chinese owned LME stepped in to prevent them benefiting?
I don’t think so Jess. It seems that JPM was the actual beneficiary of the bailout by the LME from what I’ve seen this morning.
And if that’s so, then it even further underscores my conclusion because it would track with China working with JPM and The Fed to radically destabilize the commodity markets right before the pivotal FOMC meeting this week.
JPM gets to screw with its competition, China sacrifices the LME, and it creates a mess for everyone else trying to secure metals.
Remember, I’m thinking in terms of the FOMC V. DAVOS here. JPM is definitely not Davos. China is not Davos. So, protecting JPM while destabilizing the LME is the right play here if I’m right
Jamie Dimon is about as Davos as they come.
As CEO, he is supposed to balance the needs of shareholders, employees, and customers. We can all argue (with our own biases) about which of those three things should be most or least important, but if we are honest all three are important to some degree.
Jamie Dimon has put 100% focus on Washington DC and global politics. That is where he spends all his time.
Larry Fink (Blackrock) has been busy shooting his mouth off about CRT, climate change, and wealth inequality for years. He even dedicated his annual ego trip letter to the peons to a lengthy diatribe on his political views. Subjects like asset management were all but ignored.
You can go back and substitute the CEO of Goldman, BofA, Citi, or Wells Fargo — and the statement would be equally true. They focus on politics and bailouts, they ignore banking.
It doesn’t stop there. RBS, SocGen, Deutche Bank, Unicredito, Nomura…. they are all in the business of politics and bailouts. They wouldn’t know banking if it kicked them in the ‘nads they do not have
Perhaps you meant to say the trading floor employees of JPM have run out of patience or confidence in Davos. But Jamie Dimon hasn’t visited the trading floor in years and doesn’t have a clue what is happening there.
Total neglect for the business while harping on politics like pompous windbags. That is not banking. That is Davos.
Tom
I think your podcast with Alex last week was the most crystal clear explanation of what is going on.
Q: What is Money?
A: Tokenized Energy. (The ability to store, transfer and do work.)
And that is the best definition I have ever heard. And that “umbrella definition” covers and includes the other economic, social and physical/scientific definitions. Brilliant! IMHO
So, the way this presents itself in today’s world is as follows:
1] Russia has the oil & natural resources. (the actual energy)
2] China has the factories. (the industrial capacity to do the work)
3] The West has the “tokens”. (stock certificates & paper money)
So, when this all comes apart, it is obvious what is going to happen. If Russia & China don’t like West’s tokens, the tokens will be changed.
I now see it like a Super Tanker, with Biden/Davos/Schwab and all of the rest of the West in the bridge fighting to run the ship, while the Chinese and Russians are below decks cutting the bridge off from the engine room and rudder.
That is what I got out of your talk with Alex Mercouris last week.
Did I miss anything?
Not really
Kind of amazing how you (Austrian School of Economics) and John Mearsheimer (Realist School of Foreign Policy) are about to return from the dead.
I would like to say congratulations, but it is too bad we had to play this argument out in real life. I can only imagine what Mearsheimer thinks right now.
And as this unfolds, I imagine a whole lot of other “realist” schools will also be making a comeback… if we get that far. (sigh)
You called this all before Zoltan Poszar, so I almost felt like he was plagiarizing your stuff after reading the piece in ZH. It was all here on GG&G months ago.
Thanks for putting this all together, as so few people can.
Your insights never cease to amaze me! The Lord blessed you with a brilliant mind!
THANKS!!!
Another good article by ZH, shedding light into the LBMA, COMEX,CME physical gold manipulations in western vaults. If true, the Gold fraud (using non-existent physical precious metals to justify derivatives and ETF paper trading) is massive. Will the ban on Russian Gold/Silver bars in western vaults finally expose the ongoing fraud on gold manipulations of the west? https://www.zerohedge.com/news/2022-03-13/will-russian-gold-sanctions-finally-reveal-emperor-has-no-clothes
So assuming the Russians start trading gold for oil and the Saudis sit back and wait to see which way the wind starts blowing (looks like they are already doing so tbh) how does the west retaliate or at least move to counter act the re-pricing of commodities in gold? Is the idea of issuing a U.S. backed crypto currency (retarded because most dollars are already digital and based on fiat anyway) meant to replace the current dollars in use? Do they plan on issuing crypto dollars for USDs at a ratio sufficient to keep the serfs eating but ultimately impoverish them? Is there a real plan?
Russia announced it was de-dollarizing around June last year and increased it’s gold reserves, did that give anyone in the west a hint? It seems pretty clear to me it was a preparation to do what they now appear to be doing.
There are crypto currencies like Bitcoin (decentralised, permissionless, bearer tokens in the same way gold is), and then there are CBDC’s and other centralised things like XRP that confuse people by pretending to be crypto currencies. The USA and others are trying to use the 2nd type and will be rejected. Gold and gold parallels (BTC,XMR etc) don’t need ‘backing’
Well of course. The USD is essentially already functioning as a CBDC would. Even the elimination of cash wouldn’t do too much, people would find some basic commodity that would replace cash which could be bought with digital dollars and could then be traded as a hard currency. Prisoners manage to create their own alternative currencies, society at large certainly could.
My question centers around how the west would react to a re ordering of global prices. They could use it as a way to attempt rolling out a new digital dollar domestically but internationally that would be laughed at.
How many “next Hitlers” have we heard about in recent years? The governments of Iraq, Iran, Syria, Egypt, Libya, Algiers, Saudi Arabia, Qatar, UAE, Pakistan, Taliban, India, Malaysia, North Korea, China, Russia, Bosnia, Venezuela, Bolivia, Nigeria, Sudan, Somalia, Zaire, South Africa. More Hitlers in al-qaeda, ISIS, Taliban. Every week it seems the US military claims to have killed the number 3 guy in al qaeda, who was going to be the next Hitler very soon.
Then a bunch of poorly organized idiots who stormed the US capital in silly costumes were labeled insurrectionists. Some of these idiots committed vandalism. Most just wandered around aimlessly. Questioning how a dementia patient could be elected is not permitted.
Next we were told that parents in NC looking out for their own children were all terrorists. Or white supremacists. Or both at the same time. Federal Stasi need to monitor these parents protecting their own kids.
Then we started hearing that evil Canadian truckers, the ones who deliver our food, are all a bunch of terrorists / white supremacists, or whatever absurd label would allow the rule of law to arrest them all and seize every penny they ever touched without so much as a sham trial.
While you are ritual condemning the truckers, the talking head on the TV now commands you to hate Putin. Get this: Putin is the next Hitler. Yup, another one
Are there really that many “next Hitlers”? Or is it just a convenient way for corrupt western politicians to steal anything they want?
We need to start WW3 in Ukraine because Hunter Biden’s paintings aren’t selling, and its not like he is qualified to hold an actual job. Sacrifices need to be made people!!!
The US dollar and the Euro are no longer fungible currencies. They are accepted in as few places as American Express cards, and merchants are dropping acceptance every day. Why carry dollars or euros in your pocket if they might not be accepted tomorrow?
WITCH!!! Every single woman in the colony is a witch. TERRORIST!!! Every single political opponent is the next Hitler.
If real people weren’t being killed over this crap, it might make for a funny Monte Python skit.
Important history…Schwab early connections…
https://unlimitedhangout.com/2022/03/investigative-reports/dr-klaus-schwab-or-how-the-cfr-taught-me-to-stop-worrying-and-love-the-bomb/
Brilliant Tom. So many separate complex factors you tie into a reasonably simple to digest thesis. Love it and scared of it at the same time.
What we have to realize now is that real price discovery for gold and oil are going to shift quickly away from London and Chicago and towards Shanghai and Moscow…
Does real price discovery of gold mean paper gold funds or physical backed paper funds (GLDM, SGOL) blow the issuing banks up when the Ponzi is exposed? Would this event render this type of ETF essentially worthless as an investment or would they inflate like a short squeeze?
What about miner ETF’s like GDX and SGDM?
Great insights Tom. With western paper metals markets leveraged to >200:1 is it fair to say that the current paper price represents the “market” price of the paper, and that when physical pricing takes over (determined primarily in the eastern markets) we might see the gold price in western fiat to be revalued by >200 times?
Seems inconceivable but if the paper markets have bloated “supply” by this much then why not? $400,000 gold eagles anyone?!
Tom-
Brilliant neutral analysis. I’ve always enjoyed your essays, but my lord, you very neatly described the skeleton of the global financial system. Almost everyone argues about the soft tissue, forgetting that it is all useless without bone. Unless you are a jellyfish.
Not sure what is meant by “ it’s time accelerate personal plans of de-dollarization to defend what property you have left“. Could someone please explain what this means – does it mean to try to get to zero debt, or just sell real property (like land, housing) ? Thanks!
Yes. If the Fed fails its independence test this week. Get out of dollars
Tom:
So much of what you are saying seems to be visible through the smoke: that they are trying to wrest control of the economy from the Fed. seems very clear now.
The sanctions seem designed to strangle the “private sector economy” while they mitigate that by opening the “government economy” with that 1.5 trillion dollar spending bill they passed in the wee-hours of the night.
I remember the days when you just needed to look at the prime lending rate to understand what the economy was going to do. Now they seem to think they can control it through sanctions and government spending?
Did the Fed pass its independence test? “.25” seems like a face-saving joke with the inflation we have now?
I am not sure how to interpret that?
The fed passed the test….6 rate hikes this year is a lot more than they wanted to see. And it could get worse quicker
Got it. A shot over the bow. So, whatever the WEF has planned to reshape society and the environment it is going to be have to done with real money. However, I am worried the WEF crowd might be unreachable? Putin tried every avenue without success … and Feb. 24th was the breaking point.
I like Dexter a lot in these podcasts… but I think that “unreachable” mindset has also colored his thinking and point of view. That is how I was until I started carefully reading Wikileaks. Beyond all of the top-level corruption that was exposed, to my surprise, there was a climate scientist in there, whose group I had collaborated with on research, being explicitly targeted by John Podesta. And that forced me to do a year-long independent review climate science, after which I decided to never teach it at the University again. It was this line in your bio: “Those are data sets so dirty I wouldn’t feed them to my dogs.” …that compelled me to hit play on my first GG&G podcast.
It will be interesting to see if Dexter’s position comes more into line with yours as events unfold… but I completely understand where he is coming from, as I would have thought the same thing not too long ago.
Thanks,AnonX
I’ll say this, for my part, my perspective on this has evolved over time. But, the basic thesis has always been that there is a level of corruption that we can only glimpse over the horizon unless we devote our entire lives to it.
Keeping the big picture in play and realizing people’s action mean something is what’s important, not WHAT that thing is that is motivating them.
People act based on fulfilling needs, knowing that metaphorically Davos NEEDS to remain in power means they will act in a particular way to achieve that, it doesn’t matter that we know precisely what it is they are trying to protect.
Their opponents at that level of the fight likely know it and we can infer what what they know from how they act in response.
But you have to be clear on who is aggressing who along what vector, however.
Tom, doesn’t this throw a monkey wrench into any plans for the Fed to defend the dollar/fight inflation? Rate hike or no rate hike, is it relevant if it’s an all out war on dollar reserve currency?
I was following what you were saying about the Fed vs Davos (IF I understand it correctly), but things have changed drastically. It makes any play by the Davos crowd to take over world currency (or anything) seem idiotic. Was that ever even a possibility? I don’t think so, US has the nukes/military to force our dollar on others. Our military budget is insane, and we were never going to accept a foreign power to control us in my opinion. Yes, Biden (handlers) are corrupt, but, “come on man!!!”
So, what does the Fed do now that the game has changed so drastically? This seems way bigger than most people are realizing. If Russia succeeds in setting up a new payment or currency system, WHAT HAPPENS NEXT? Does half the world switch to that, because they hate us anyway, and the US is screwed? We would no longer have control over inflation as it relates to trade goods, correct? (Legitimate question). I assume if Russia succeeds in changing the current economic order, then we are in for a world of hurt since we import basically everything. Massive inflation?
So, any ideas on how the Fed tries to fight this takeover? US government is another story, I don’t know what’s going on there, and maybe you’re right that they are Davos stooges, but right now they couldn’t find their ass with both hands. There’s a lot of NATO and EU stuff that could happen, but my question pertains to Fed currency offense/defense. Unless you think the Fed and government are on the same page now, and Fed and gov actions will align to defend the dollar hegemony even though the gov has been trying to destroy it by printing trillions? In that case, is US military destined to fight this currency war? Is that the only tool in the tool shed for the Fed to defend the reserve currency status? Thanks for the great articles BTW.
1. Fed rate hikes, are they still relevant?
2. How does Fed/US gov fight reserve currency takeover, and how will this affect average person?
3. What happens if we lose reserve currency status?
4. Am I wrong in thinking Fed and Government have 2 separate agendas? Unlike Russia where the central bank and government are basically the same thing right?
1. Yes. Think USD liquidity , eurodollars
2. Retaining confidence and forcing fiscal discipline with 1.
3. Massive inflation of commodities and deflation of assets tied to gov’t spending. Depends on entitlement reform
4. No. That is THE MOST IMPORTANT DIVISION now
Excellent piece!…Regarding land, the law of adverse possession in the US and UK provides that if another party openly occupies or uses part of your land, like an easement, for 20 years, then they gain ownership or use of it legally…So if you don’t enforce your ownership rights, you lose them to that extent…
That’s similar to what we have here in Florida, but the process is painful and expensive.
Thank you. It appears we are in uncharted territory. God help us.
And we won’t get fooled again!
Been reading your fascinating articles for a while and love the comments section as well. To many intelligent, non-specialists the finance system can seem overwhelming. All this scheming seems to take place at levels that are completely out of the realm of experience for non-psycho/sociopaths. Is there anything that average work-a-day guys can do financially to minimize the damage to their families? I know ‘Tom’s advice like ‘get out of dollars’ seems obvious to Tom and others here, but it is not entirely clear what that actually looks like in real life (at least to me). E.g. what does one do with a 401k account? Cash it out and take penalties and taxes up the ass to buy land and gold and plant wheat? What are any of us supposed to do to defend ourselves from these vultures? I am actually asking these questions seriously, because I believe the accuracy of the of the analyses of LME/the end of the dollar as reserve (etc.) but the implications seem unpredictable and possible solutions/hedges unclear to those unversed in international finance. Thanks.
If you have equity in your house, you can do a 5%ish HELOC and get a lump sum of cash to buy PM metals. Then instead of paying into your 401K you payback this HELOC. But any sort of loan would do, so long as the rate isn’t too onerous. This at least gets you a decent amount of assets outside of the system ASAP. The joke is that socially its totally OK to leverage up on a 30 year mortgage on an overpriced house, but not OK to take a HELOC to buy massively undervalued gold. The joke is on the bank. You get the cash, convert to gold, then payback loan with ever decreasing dollars.
Thank you RagnarD. Where/How can we buy PE like gold…I wouldn’t know where to start and am concerned about being conned and end up holding worthless paper gold, instead of real bullion.
Kay,
I think all the major names are reputable. You can’t stay in the business if you’re not. Blanchard & Co, Miles Franklin, there are others. Call and for Andy Schectman at Miles Franklin. He or they will set you up. You can listen to Andy get interviewed on Palisades gold podcasts. He gives great answers to my emails, so…Top notch guy, IMO.
Regards getting conned. Imagine if a major gold seller was found to be selling fake gold? Poof goes their business. So that’s why you want to with a supplier who has a lot to lose by losing their reputation.
Scomo, I have the same question for Tom – any advice on how we (regular working people) can defend ourselves from these vultures?
Simple analysis of a world in which oil trades for gold.
How much gold is there in the world?
Globally there are 205,000 above ground tons of gold, which = 2,200 lb x 16 oz = 7,120,000,000 oz gold
How much oil does the world economy consume?
Global oil consumption is 100,000,000/day = 36,500,000,000 bbl. / yr
What this means at current market rates:
$2,000 oz gold
$100/bbl. oil
$2,000 gold / $100 oil = 20 bbl oil per oz gold
Thus 7,120,000,000 gold oz x 20 = 144,000,000,000 bbl. oil.
144,000,000,000 bbl of oil/ 36,500,000,000 = 3.95 years
So at the current rate of oil consumption, it would take under 4 years for
ALL GOLD IN THE WORLD to be spent on oil.
But realistically, how much gold is actually liquid/tradeable for oil? I don’t know,
let’s optimistically call it 25%. If that’s the case, then all of the tradeable gold would
only buy 1 years worth of oil consumption.
So what is the real price of gold relative to oil?
1:100, 1:200, 1:1,000,1: 2,000, 1:5,000, 10,000, 1:100,000?
One thing we do know, it’s not 20:1.
Thus, going with 1:100, that makes 1 coin = 100 x $100 = $10,000. At 1:1,000
we are at $100,000.
I’m curious as to how Davos will handle the relatively poor gold hoarders in India and China becoming over night millionaires. Will shall see.
As many have said above, excellent work Tom.
Thanks,
RagnarD
What demons have confiscated everything (outside money) with nothing (inside money)? All our wealth has been slowly siphoned off when you have nothing backing it. 1913 & 1971 – sorry I was asleep.
It looks like the US has deliberately sanctioned Russia to the max, to create the impending collapse of the dollar as a way to coerce China. The implied threat being that unless China falls into line on the sanctions, and puts Russia in the hospital waste incinerator of history, the dollar collapses. But the Chinese are not accepting the financial blackmail, and simply point out the obvious – we didn’t create the sanctions, and as a matter of fact, we wholly deplore sanctions – kind of like when someone threatens suicide at the break-up of a relationship….”well go on then….” And of course once China digs in it’s heels, the tide turns and everyone else can follow suit.
This puts the US in one hell of a hole. Added to which, mini-nukes keep exploding in their narrative, like when they find out that their CIA off-grid operations include a global chemical warfare program.
But as it stands, the $ is toast isn’t Tom. It may take a few days or weeks to register, but all of a sudden there will be a mass exodus out of the dollar.
Actually no. You have it backwards. What the US is threatening the world with is a STRONG USD, here. Go look at Chinese Equities, the Hang Seng in HK, the potential break of the HKD peg.
Capital is draining out of the world right now…. but the counter here is the formation of a separate currency zone in the Global South. The Saudis just announced taking Yuan for their oil.
They will break the Riyal peg finally.
So, lots of changes here, but the real threat right now is the instability that comes from taking the Russians out of the global commodities market and the resultant capital flight into the US because of instability.
If the Fed is really hawkish tomorrow, all hell breaks loose completely.
Long term, the USD is toast. Not in 2022.
I am sure you are right Tom. All I am saying is that I think they’re playing dollar chicken on the train track. Their primary objective in all this is simply to sever the Russian Chinese alliance, after all, for weeks they were begging the Russians to invade.
So I see them going full throttle at the Russians. Scorched earth, dead livestock, burnt bridges, throw granny off the cliff. Hence the freezing of FX reserves, the nuclear option, all of which I think was intended to scare the Chinese. I think the goal was to get the Chinese to fall into line. Sever Russia from the global community, à la Iran, divvy up the dividends (with prejudice no doubt) with China, and keep the dollar as head honcho.
Now if China fell into line it would be no problem. Everyone else would take their stations, and the Russians could be cast as the egregious villains who needed to be amputated from the global consensus. Small matter if half the world doesn’t believe, as the reality is created as you go along anyhow. Next week something else wopuld be on the agenda.
Now I think their dollar chicken has just got decapitated. I’ve thought this for the last two weeks, but I am not an economist so I lack the confidence to propose this idea.
Listen to the podcast with Alistair Crooke, he makes a compelling argument that China will do nothing drastic to upset the balance of trade, but has the tools to reorient it, from a currency perspective, over the long term.
From the Saker, highly eventful news if true:
“Economic News: Translation from http://smoothiex12.blogspot.com/2022/03/this-is-important.html#disqus_thread
Translation: YEREVAN, March 14 – Sputnik. The member states of the Eurasian Economic Union (EAEU) and China will develop a project for an independent international monetary and financial system. This was agreed upon by the participants in the economic dialogue “A New Stage of Monetary, Financial and Economic Cooperation between the EAEU and the PRC. Global Transformations: Challenges and Solutions”, which was held on March 11 via videoconference. It is envisaged that the system will be based on a new international currency, which will be calculated as an index of the national currencies of the participating countries and commodity prices. The first draft will be submitted for discussion by the end of March. As Sergei Glazyev, Minister for Integration and Macroeconomics of the EEC, emphasized, China was the first in the world to move to the stage of national economic recovery.
The background here is bigger. This was noted by Godfree Roberts:
In two weeks, China, Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan will reveal a new, independent, international monetary and financial system.
It will be based on a new international currency, calculated from an index of national currencies of the participating countries and international commodity prices. [Mar. 14, 2022, Sputnik News].
Russia and China will also reveal their Unfriendly Nation Lists.
Reliable links are still hard to come by in general.
Splendid overview. However, added to the overall financial and economic picture are the superior military power of Russia and China together.
US/TPTB have been fighting a hybrid war of unipolar “Full Spektrum Global Dominance”.
Thus the money side should be seen together with an equal “Full Spectrum” multipolar response from China and Russia.
“When you dig a grave for others, be careful not to fall in it yourself”. Nemesis!
Lies and fakes have limited time. Sooner or later the real world will prevail and rebalance.
But it has been long overdue. Finally there is a little light at the end of the dark usury tunnel, and with two 1000 year old ancient cultures taking the bait and leadership, maybe mankind still can make it a step forward and upwards.
The short on nickel was by one of the world’s largest nickel PRODUCERS. Not speculator.
Sounds like all is not well in Russia’s financial model, according to the commentators. Fascinating article about Russia’s gold and foreign currency……
https://thesaker.is/what-happened-to-russias-gold-and-foreign-currency-reserves-will-there-be-a-default/
Saker is another limited-hangout, they are 100% COMINTERN, so everything is from that perspective;
None of their writing staff have ever built a business, they’re just processional marxists that conjure opinions about war.
If you want to know the Bolshevik opinion about what’s going on in the world, then thesaker.is is a good source.
Want to make them crazy, just remind them that Rockefeller brought Hitler, Mao, and Stalin to power; They’ll spontaneously combust; They really believe that Mao&Stalin are organic communism.
In & Out is just a new name for old shit
A known-known is that there are some $600 Trillion USD in derivative bets that can never be paid in a collapse, so the ‘house’ wants a reset to clear; Why call these ‘derivative bets’ inside money, its all the same USD accounting system in&out,
I will agree the derivative-bets are all OFF-BOOK, that is somehow all these liability’s are kept on corporate books, hidden; So your 300 to 1 on gold sales, sure everyone of those gold buys is ‘insured’ with derivative insurance, so its impossible, when world GDP is say $50 Trillion, to make good on $600 Trillion insurance claims
IMHO Posner is an apologist for the system, there is only one system the account ‘financialization racket’, or as Buffet calls it the ‘weapons of mass financial destruction’, so now you rename it to inside money, versus outside;
The problem is when the system goes down say more than 10% they can’t cover insurance so yes, in theory they can ‘print’, e.g. pull $500 Trillion USD out of their ass, which is probably why they want to go CBDC where all this new liquidty would be easy to hide in crypto.
The entire reason for all the wars, and to destroy EUROPE & USA I think is to purge these debts, so the houses where POSNER works don’t have to pay, they can say all the claimants died in the war, the houses already got paid in premiums over the years; The houses have been selling these derivative bets to city/county/state pension funds for years, the big houses got the cash, and the GOV pensions got the debt-bet; So when it goes down so does the entire public ponzi system, which is why they want to destroy the system, before it implodes and the gov comes after the rich;
Money is Money, if all these Insurance Debt Claims are called the entire world x20 goes down, which is why they want to reset. Lot’s have been written about this human tendency where all debt get’s washed every few generations, because allowed to go on ‘forever’ the entire system would be destroyed.