OLD THREAD:Gold will plummet: the dollar will strengthen.

[YumYum]

Since when did it become a give-in that a thriving business needs to borrow money to make pay role?

Have we been operating at a level of default for so long that that sort of concept has become common place?

Most businesses operate on a line of credit because in today's environment a business may wait 60 to 90 days for account receivables. Employees need their pay either weekly or bi-weekly.

 

[YumYum]

Every time I read the dollar will strengthen I am just not seeing it.

The only way I see that happening is to regain control of the spending. I think that will take force. Like the force of a collapse.

When credit is contracted, the dollar deflates. The upswing in gold is tied to oil. Please read this article.

http://seekingalpha.com/article/167060-the-greatest-depression-is-coming?source=article_sb_popular

 

[krazy kaju]

I doubt there will be a pullback to the $600 range. I do think, however, that there will be a pullback closer to the $900 range, as a second financial crisis hits the US. A second financial crisis will mean a second wave of credit destruction along with a falling velocity (rising demand) of money, causing the USD to strengthen. Since much of gold's strength relies on the dollar's weakness, gold prices will fall as a result of dollar strengthening.

 

[YumYum]

I doubt there will be a pullback to the $600 range. I do think, however, that there will be a pullback closer to the $900 range, as a second financial crisis hits the US. A second financial crisis will mean a second wave of credit destruction along with a falling velocity (rising demand) of money, causing the USD to strengthen. Since much of gold's strength relies on the dollar's weakness, gold prices will fall as a result of dollar strengthening.

You may be right. I provided a link where the author agrees with you. He says that if oil hits a $100 a barrel gold will settle around $950. He thinks that gold is overpriced right now. The point of my OP was that the central banks have a pattern in these economic crisis, and at some point the central banks will cut off all credit; leading to a huge deflation of the dollar. People are going to loose their shirts going long in gold.

http://seekingalpha.com/article/168632-roubini-hates-gold-is-he-wrong-again

 

[jon_perez]

When they contract credit the dollar will deflate due to the scarcity of cash, the banks will make another fortune watching the dollar climb in value. They did it to the farmers in 1920-21, they are doing it again. Nobody knows how much gold the central banks possess. We don’t know anything about what the central banks are doing. We can only look to the past to determine what they will do. Why do you think we are pushing HR 1207?

I think someone who reads up on history like you do should make better investment decisions and fare better than many of the one-track minds I see here...

This is not to say that the Fed can necessarily control the QE it has let loose out of the bottle, but if you look at Japan, hyperinflation was not the end result of QE. Also even though Gary North thinks the deflationists don't have a sound thesis, he believes - and with good reason - the Fed WILL NOT let hyperinflation happen (or at least try not to let that happen). Recent history such as the chronic inflation of the 70s shows us that *politics* WILL ensure that inflation will become an issue that will at least try to be fought.

 

[Blueskies]

I doubt there will be a pullback to the $600 range. I do think, however, that there will be a pullback closer to the $900 range, as a second financial crisis hits the US. A second financial crisis will mean a second wave of credit destruction along with a falling velocity (rising demand) of money, causing the USD to strengthen. Since much of gold's strength relies on the dollar's weakness, gold prices will fall as a result of dollar strengthening.

I disagree.

Last year was an anomaly.

If there is another financial crisis (perhaps the better statement is 'when') gold may fall in relation to other currencies, but the dollar will not strengthen.

Why? All the chips are on the table. We're all in. The Fed has fired all its bullets, the government has pretty much done everything it can. If the US economy still collapses, then theres no hope that the Government debt can ever be repaid--and the currency will collapse.

 

[YumYum]

I disagree.

Last year was an anomaly.

If there is another financial crisis (perhaps the better statement is 'when') gold may fall in relation to other currencies, but the dollar will not strengthen.

Why? All the chips are on the table. We're all in. The Fed has fired all its bullets, the government has pretty much done everything it can. If the US economy still collapses, then theres no hope that the Government debt can ever be repaid--and the currency will collapse.

The debt cannot be paid back. Even if the government goes into bankruptcy, it is the American people left holding the bag, not the Fed or the Federal Reserve Notes. The Reserve Note is an issue of debt for the American people, not the Federal Reserve. The government and the Federal Reserve are separate entities and the Fed has no liabilities; only the government. People think that if the government collapes that the dollar will collapse, and that is not true. Just look at my post on Germany and its currency. The reason the Reichsmark did not collapse with the collapse of Nazi Germany government, was not because it was on the gold standard, but it was because the Reichsmark was backed by the Central Bank of London. This demonsrates the enormous power that the central bank has. If the dollar collapses, that could cause the collapse of the U.S. government. But if the dollar collapses, the central bank can manipulate its assets and paper to actually profit from its collapse, since it doesn't have to pay back the U.S. debt, and as I said, it has no liabilities.

The sole purpose of the central bank is to rob the people of their wealth and it will do this with a deflated dollar.

 

[Truth-Bringer]

Exactly. The United States; its industries and people will be bankrupt, but the central banks won't be. The central banks don't care if the U.S. goes bankrupt, in fact, they are counting on it. That is how they "reclaim their wealth"; by buying everything up; a penny on the dollar when the dollar is scarce. The American citizens have to pay back the national debt; not the central banks. That is the genius of the central banks. They have done this over and over. They are doing it again.

You mean "that is the deceptive, fraudulent evil genius of the central banks."

No doubt about it - those cunning, greedy demons are the worst criminals on the planet.

 

[Truth-Bringer]

You may be right. I provided a link where the author agrees with you. He says that if oil hits a $100 a barrel gold will settle around $950. He thinks that gold is overpriced right now. The point of my OP was that the central banks have a pattern in these economic crisis, and at some point the central banks will cut off all credit; leading to a huge deflation of the dollar. People are going to loose their shirts going long in gold.

http://seekingalpha.com/article/168632-roubini-hates-gold-is-he-wrong-again

There still is a chance for hyperinflation though. That chance comes from the fact that we have 3 to 6 trillion (or more) FRN's floating overseas. China could spark a run by failing to prop us up and purchase our debt. Or multiple countries could announce they'll no longer buy oil with FRN's. The velocity (rate at which dollars exchange), which I haven't seen anyone speak about, could get out of control.

I grant that hyperinflation is unlikely, but it is still a possibility.

 

[YumYum]

You mean "that is the deceptive, fraudulent evil genius of the central banks."

No doubt about it - those cunning, greedy demons are the worst criminals on the planet.

They go beyond evil. I did not know that civilized humans could be so vile.

 

[Truth-Bringer]

thats a scary thought, but ultimately our dollar is backed by our military power.

That's definitely a huge factor. But also the petrol recycling - the agreement whereby most Arab nations signed up to restrict oil purchases to dollars / FRN's - that helps the U.S. float its debt. So, there's a de facto backing of oil and military might.

 

[Blueskies]

The debt cannot be paid back. Even if the government goes into bankruptcy, it is the American people left holding the bag, not the Fed or the Federal Reserve Notes. The Reserve Note is an issue of debt for the American people, not the Federal Reserve. The government and the Federal Reserve are separate entities and the Fed has no liabilities; only the government. People think that if the government collapes that the dollar will collapse, and that is not true. Just look at my post on Germany and its currency. The reason the Reichsmark did not collapse with the collapse of Nazi Germany government, was not because it was on the gold standard, but it was because the Reichsmark was backed by the Central Bank of London. This demonsrates the enormous power that the central bank has. If the dollar collapses, that could cause the collapse of the U.S. government. But if the dollar collapses, the central bank can manipulate its assets and paper to actually profit from its collapse, since it doesn't have to pay back the U.S. debt, and as I said, it has no liabilities.

The sole purpose of the central bank is to rob the people of their wealth and it will do this with a deflated dollar.

On paper (no pun intended), the Fed and the government are separate, but in reality they are one entity.

You're saying that the Fed would allow the US government to go bankrupt. I disagree. The Fed will print money to bail the government out. I would be everything I own on that fact.

If there is another financial crisis, investors will lose all faith in the US. The Chinese, who have been supporting us, will finally cut their loses and run. There will be no one left to buy the debt but the Fed--which will destroy the currency. As the Fed becomes the sole buyer of government debt, foreign central banks will dump their dollar reserves, which will contribute to the inflation.

I don't believe in doomsday scenarios. What I think will happen is that there will be a crash, which will destroy all confidence, but it will not happen for a few years. At that point, the Fed will agree to buy the debt to prevent outright bankruptcy, but the government will significantly reduce its expenditures. Foreign central banks will dump a large portion of, but not all, of their reserves. This will create very, very high inflation for years, but not hyperinflation.

 

[YumYum]

On paper (no pun intended), the Fed and the government are separate, but in reality they are one entity.

You're saying that the Fed would allow the US government to go bankrupt. I disagree. The Fed will print money to bail the government out. I would be everything I own on that fact.

If there is another financial crisis, investors will lose all faith in the US. The Chinese, who have been supporting us, will finally cut their loses and run. There will be no one left to buy the debt but the Fed--which will destroy the currency. As the Fed becomes the sole buyer of government debt, foreign central banks will dump their dollar reserves, which will contribute to the inflation.

I don't believe in doomsday scenarios. What I think will happen is that there will be a crash, which will destroy all confidence, but it will not happen for a few years. At that point, the Fed will agree to buy the debt to prevent outright bankruptcy, but the government will significantly reduce its expenditures. Foreign central banks will dump a large portion of, but not all, of their reserves. This will create very, very high inflation for years, but not hyperinflation.

If the Fed and the U.S. government are one entity, are you then saying that the Fed is just as liable as the American taxpayer to pay off the national debt? This is hardly the case. The Fed put the liability on us, the taxpayer. The government can go bankrupt and the bankers who control the Fed will walk away unscathed. You think the central banks will dump their reserves? Think again. They are buying up treasurys; just as I said they would. You should read this article.

http://online.wsj.com/article/SB125545754084882895.html

 

[LibForestPaul]

Central Banks vs
International banking cartel...

i.e. The Fed...
No.
Just one subsidiary of IBC.
Does it matter if the Fed, or the FRN or the US government "collapse" to the IBC?

 

[LibertyEagle]

The sole purpose of the central bank is to rob the people of their wealth and it will do this with a deflated dollar.

How would a deflated dollar rob us of our wealth?

 

[YumYum]

How would a deflated dollar rob us of our wealth?

It isn't so much a deflated dollar, but the actions of the Fed and other central banks that bring about the deflated dollar, which robs us of our wealth. We live in an economical system that depends on debt. If debt is not created by the Bank of Issue, there is no new money. When the central banks buy up treasuries, as they are doing now, it strengthens the dollar. Couple that with higher interest rates and tighter lending regulations and you have contraction of credit.

What the central banks do is go into a country and they lend money at low interest rates to stimulate the economy. Small businesses, large corporations and other institutions benefit from all this money available and they grow. Even though they are all in debt with the bank they have added value because of labor and production. Jobs are plentiful, wages are high and the people’s standard of living is getting better. But everyone, organizations and individuals alike, are strapped with debt. During this period bubbles are created by the Fed for the purpose of having everybody jump in, using credit, to make a killing in the frenzy. Once the market is saturated, the central bank pulls the plug by tightening credit and upping interest rates. The bubble burst, companies’ lines of credit are cut off, people are laid off, and society cannot pay back their loans. They then lose everything they bought on credit, along with losing the equity they acquired from their labor. There is more and more people laid off, and companies go under. There is no new money being loaned out, and the majority of people are broke, so they are not buying anything. This causes the price of goods to drop and because there is a shortage of money the dollar deflates. In the meantime, the central banks are flush with all this deflated money, and they buy up everything of value at a penny on the dollar. That is how they rob you and I of our wealth with a deflated dollar.

 

[Blueskies]

It isn't so much a deflated dollar, but the actions of the Fed and other central banks that bring about the deflated dollar, which robs us of our wealth. We live in an economical system that depends on debt. If debt is not created by the Bank of Issue, there is no new money. When the central banks buy up treasury's, as they are doing now, it strengthens the dollar. Couple that with higher interest rates and tighter lending regulations and you have contraction of credit.

What the central banks do is go into a country and they lend money at low interest rates to stimulate the economy. Small businesses, large corporations and other institutions benefit from all this money available and they grow. Even though they are all in debt with the bank they have added value because of labor and production. Jobs are plentiful, wages are high and the people’s standard of living is getting better. But everyone, organizations and individuals alike, are strapped with debt. During this period bubbles are created by the Fed for the purpose of having everybody jump in, using credit, to make a killing in the frenzy. Once the market is saturated, the central bank pulls the plug by tightening credit and upping interest rates. The bubble burst, companies’ lines of credit are cut off, people are laid off, and society cannot pay back their loans. They then lose everything they bought on credit, along with losing the equity they acquired from their labor. There is more and more people laid off, and companies go under. There is no new money being loaned out, and the majority of people are broke, so they are not buying anything. This causes the price of goods to drop and because there is a shortage of money the dollar deflates. In the meantime, the central banks are flush with all this deflated money, and they buy up everything of value at a penny on the dollar. That is how they rob you and I of our wealth with a deflated dollar.

Banks, in a deflationary environment, lose more than the average person.

The banks take on more debt than the average person, especially during a bubble. They make their money by borrowing money at low rates and lending it at higher ones. Deflation kills debtors, therefore it kills banks, which is why you always have a wave of bank failures following a boom period.

Inflation benefits the banks, which is why the Fed has done nothing but inflate the money since its inception.

Also, the idea that there is this nefarious group of bankers going around creating bubbles is just unfounded. No one understands what causes bubbles. They have been shown to occur with or without the free market, and with or without central banks.

 

[YumYum]

Banks, in a deflationary environment, lose more than the average person.

The banks take on more debt than the average person, especially during a bubble. They make their money by borrowing money at low rates and lending it at higher ones. Deflation kills debtors, therefore it kills banks, which is why you always have a wave of bank failures following a boom period.

Inflation benefits the banks, which is why the Fed has done nothing but inflate the money since its inception.

Also, the idea that there is this nefarious group of bankers going around creating bubbles is just unfounded. No one understands what causes bubbles. They have been shown to occur with or without the free market, and with or without central banks.

First of all, when I refer to "banks" or "bank", I am talking about the central banks, which are banks of issue. They all are under the authority of the Central Bank of England. They are known as "The London Connection". To help you better understand how debt is issued please watch this video titled "Money as Debt."

Money As Debt

Also, to show you that there is without a doubt evil men who do create bubbles and then collapse them to "take back the wealth", please read this book online "Secrets of the Federal Reserve System" by Eustace Mullins. It will change your views. It will also shock you.

http://www.apfn.org/apfn/reserve.htm

 

[Blueskies]

Also, to show you that there is without a doubt evil men who do create bubbles and then collapse them to "take back the wealth", please read this book online "Secrets of the Federal Reserve System" by Eustace Mullins. It will change your views. It will also shock you.

Mullins kind of lost all credibility with the whole occult thing.

Sorry, I don't subscribe to the tinfoil hat theories. People are not that smart.

 

[tremendoustie]

Mullins kind of lost all credibility with the whole occult thing.

Sorry, I don't subscribe to the tinfoil hat theories. People are not that smart.

Yes, especially bureaucrats. I really don't get how people think they're evil geniuses. They're giant egoed morons on the public dole, who screw up everything they touch.