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Gold Breaks Out Again, Hits $1,185 As Rising Channel Anticipates DXY 70
Zero Hedge
Wednesday, November 25, 2009
Gold now at $1,185. What happens when the DXY hits 70 in a few days?
And the diagonal, soon to be vertical channel
DXY at 70?
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November 25th, 2009 at 11:40 am
LESSONS FROM THE JAPANESE:
TIME TO STOP BORROWING MONEY AND START PRINTING IT
Ellen Brown, November 23rd, 2009
http://www.webofdebt.com/artic.....panese.php
“We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon.”
–Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, 1934
The more likely explanation for gold’s rise is that foreign central banks are looking for something besides U.S. government bonds in which to park their money. They no longer want our bonds, so fine. We should tell them that no more are for sale. We will in the future sell our bonds to our own central bank, which will rebate the interest to the government after deducting its costs, making its credit the best deal.
The Constitution authorizes Congress “to coin money [and] regulate the value thereof.” A former chairman of the House Coinage Subcommittee once observed that Congress could solve its financial problems just by minting some very large-denomination coins and paying off its debts. This solution is invariably rejected as dangerously inflationary; but when the “shadow money” is factored in, it actually wouldn’t be. Government bonds already serve as a medium of exchange, trading in massive quantities around the world just as if they were money. Paying off government bonds with newly-printed dollars and then ripping up the bonds (or voiding them out on a computer screen) would not significantly affect the size of the overall money supply, since “shadow money” would just be replaced with dollar bills (paper or electronic).
http://www.WebOfDebt.com
the most important subject intelligent persons can investigate
bob Reply:
November 25th, 2009 at 1:01 pm
nice lie, dude. Go talk to peter schiff AKA god.
Susan Reply:
November 25th, 2009 at 2:22 pm
I campaigned for Ron Paul here in Southern Florida and I contributed more money than I had. Ron Paul and Peter Schiff always talk about inflation and I agree that inflation is very destructive. I graduated college in 1973 and mortgages were 18% in the early 80’s.
There is something even more destructive than inflation and that is deflation.
In light of the present financial crisis, it’s interesting to read what Thomas Jefferson said in 1802:
“Banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”
Doesn’t this sound eerily familiar to what is happening in America today?
http://www.democracycellprojec.....banki.html
We must learn from the Jpanese . . .
“. . . Tokyo’s price index fell 2.4% in October, the deepest deflation in modern Japanese history. . . . The government could stop this . . . . It could print money à l’outrance to stave off deflation. Yet it sits frozen, like a rabbit in the headlamps.
“Japan’s terrible errors are by now well known. . . . Quantitive Easing was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy. Does Downing Street understand this? Does the White House? . . . Clearly not.”
In case you too have forgotten your high school French, “a l’outrance” means “to the uttermost.” The solution to our crisis is that the government needs to quit borrowing money and start printing it.
More Funny Money? Please!
Your response is liable to be that we are doing that already, in spades; and it does not seem to be working. The Federal Reserve is madly printing money (or writing it into electronic accounts), increasing the money supply to the point that pundits are screaming about hyperinflation. Yet the nation is just plunging further into debt, while the credit crunch continues to get worse.
And that is true, but it is only half the picture. M1 is shooting up, but M3 and bank lending are both shrinking. (M1 is readily spendable money – coins and dollar bills, (or M0, plus checkbook money). M3 is the broadest measure of the money supply, including savings deposits, money market funds, and other forms of liquid assets that are traded as money.) The Fed is creating money as fast as it can find federal and bank borrowers to take the money off its hands, yet it can’t keep up with the rampant deflation in the real economy. Bank lending has dropped by 17 percent since October 2008, when the credit crisis was already in full swing. “There has been nothing like this in the USA since the 1930s,” says Professor Tim Congdon of International Monetary Research. “The rapid destruction of money balances is madness.”
The reason the level of bank lending is so important is that virtually all our money today originates as loans created by private banks. Most people think money is issued by the government, but the only money the government creates are coins, which compose less than one ten-thousandth of the money supply – about $1 billion out of $13.8 trillion (M3). Dollar bills are issued by the Federal Reserve, a privately-owned banking corporation, and lent to the government and to other banks. And coins and dollar bills together make up only about 7% of the money supply. All of the rest is simply written into accounts on computer screens by bankers when they make loans.
Contrary to popular belief, banks do not lend their own money or their depositors’ money. Every time a bank makes a loan, it is brand new money, simply written into the account of the borrower. As explained on Wikipedia:
“The different forms of money in government money supply statistics arise from the practice of fractional-reserve banking. Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created. This new type of money is what makes up the non-M0 components in the M1-M3 statistics. In short, there are two types of money in a fractional-reserve banking system: (1) central bank money (physical currency, government money); and (2) commercial bank money (money created through loans) – sometimes referred to as private money, or checkbook money. In the money supply statistics, central bank money is M0 while the commercial bank money is divided up into the M1-M3 components.”
If there were no banks, we would have no money except pennies, nickels, dimes and quarters. Money created as bank loans does not stick around, since loans eventually get paid back. When old loans get paid off and new ones aren’t taken out to replace them, the money supply shrinks; and lately, new loans have fallen off dramatically.
Why? Banks insist that they are lending as much as they are prudently allowed to. The problem is that they have reached the lending limits imposed by the capital requirements set by the Bank for International Settlements. In the years of the credit boom, banks were able to leverage their capital into far more loans than are being created now. This was because loans were taken off the banks’ books by investors, allowing the same capital to be used many times over to generate new loans. These investors, called “shadow lenders,” have now exited the market, and they are not expected to return any time soon. They left after it became clear that the credit default swaps allegedly protecting their investments were only as good as the solvency of the counterparties (typically AIG or hedge funds), which had a bad habit of going bankrupt rather than paying up. An estimated $10 trillion disappeared from the money supply along with the shadow lenders, and the Fed has managed to get only a few trillion back into the market as replacement money.
See more at
http://www.webofdebt.com/artic.....panese.php
http://www.themoneymasters.com/
November 25th, 2009 at 11:59 am
any one care to explain to me (and possibly others) what DXY is? I am not a noob to what is going down here ( or up as the case may be lol) but these days language is filled with more unexplained acronyms than I can keep up with AND still live a life.
thanks in advance.
November 25th, 2009 at 12:31 pm
DXY is an index, created by JP Morgan bank in 1973, that purports to show the overall sentiment regarding the dollar whereas lower numbers mean sentiment is against the dollar. 70 is considered very bad. Funny thing about these index numbers is that the lower this one goes the harder it is for the currencies making the basket upon which the index is based to “sell”. By this I mean that the countries which use these currencies find it hard to sell products on the international markets because they are relatively expensive when the dollar is lower.
pine snake Reply:
November 25th, 2009 at 5:55 pm
thank you for the inservice, greatly appreciated!
November 25th, 2009 at 6:38 pm
WARNING: However economical it may become, wiping your arse with dollars could lead to cocaine addiction.
James Reply:
November 25th, 2009 at 7:08 pm
TFF! I don’t like Bill Maher or agree with him very often, but not too long ago he said something along the same lines that at least with the cocaine on the money it’s worth something.
November 25th, 2009 at 10:38 pm
Can we say MANIPULATION OF GOLD PRICES?
November 25th, 2009 at 10:55 pm
“The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. They frankly own the place.”
– U.S. Senator Dick Durbin, Democratic Party Whip, April 30, 2009
While the U.S. spends trillions of dollars to bail out its banking system, leaving its economy to languish, China is being called a “miracle economy” that has decoupled from the rest of the world. As the rest of the world sinks into the worst recession since the 1930s, China has maintained a phenomenal 8% annual growth rate. Those are the reports, but commentators are dubious. They ask how that growth is possible . . .
The answer may be simple: China has not let its banking system run roughshod over its productive economy. Chinese banks work for the people rather than the reverse.
in China, unlike in the U.S., credit has been flowing freely, not just to the financial sector but to industry and local government. State-owned banks have massively increased lending, with local governments and state enterprises borrowing on a huge scale. The People’s Bank of China estimates that total loans for the first half of 2009 were $1.08 trillion, 50% more than the amount of loans Chinese banks issued in all of 2008. The U.S. Federal Reserve has also engaged in record levels of lending, but its loans have gone chiefly to bail out the financial sector itself, leaving Main Street high and dry. Writes El-Shahat:
“In the UK and US, the financial sector is booming, while the world of normal people seems to be going from bad to worse, unemployment is high, businesses are folding and house foreclosures are still taking place. Wall Street and Main Street might as well be existing on different planets. And this is in large part because banks are still not lending money to the people. In the UK and US, banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people.
http://www.webofdebt.com/artic....._china.php
November 26th, 2009 at 12:51 am
Unmolested by government, no depression/recession will last more than 18 months. Markets are normally and naturally self-healing and self-correcting. Or we can do like FDR and screw with it endlessly, scaring sane people out of investing since one never knew if capital would be taxed out of existence,regulated out of existence or nationalized or redistributed or whatever else the loon came up with. Keep changing the rules and the rich will keep their money in their mattresses. Gold looks better all the time.
November 26th, 2009 at 8:47 am
The bailouts created plenty of cash,but the banks are not writing loans.
I believe that was the reason for the bailouts,wasn’t it?…..
…..To get the banks off the hook,so they start writing loans again?….
It’s the banks,stupid.
GREED
November 26th, 2009 at 8:55 am
Take all of your money out of the bank and burn it.
Refuse to pay anyone anything…
Refuse to renew your drivers license…
Refuse to COMPLY with anyone claiming authority…
EVERYBODY!!!…
Just make sure your garden is up and producing first.