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Fix Gold, Collapse the World

MP3: Discussion with Jay Taylor taped October 7, 2014.


Topics

1. Using US Bureau of Labor Statistics (BLS) CPI inflation method from 1980 as at www.shadowstats.com, real economy is in decline
Even using the understated CPI figures of today, the economy is experiencing very modest growth.

According to the Goldman Sachs index of global leading indicators the global economy is decelerating toward contraction http://www.zerohedge.com/news/2014-10-01/goldman-global-leading-indicator-drastically-revised-collapses-confirmed-slowdown

2. Austrian School of Economics theory of 'time preference'

  • Higher interest rates required to pull economy out of post credit-binge economic slow-down through (1) clearing excess debt (debt burden and cause of economic distortion) and also (2) finance only highly productive enterprise that can clear higher interest rate hurdle and generate high returns in the near term
  • Easy credit policies such as Quantitative Easing merely capitalize the Too Big To Fail (TBTF) banks and lending at low interest rates finances inefficient enterprise continuing prior easy credit economic distortion.
  • Higher interest rates focus financing of productive enterprise on only capital projects that can contribute in the near term and give high returns - this then helps pull the economy out of slowdown as in early 1980s
  • Secular low interest rates result in continued slow / non-growth and does not clear bad debt from economy resulting ultimately in economic decline and currency failure

3. Historically stable debt levels at ~ 150% of GDP.

4. TBTF banks are levered 15:1 and will not allow organized write-down of outstanding debt as writing-down their assets by more than 6.7% would result in bankruptcy of the TBTF banks that control the economic and monetary system and central banks

Larry Summers paper in 1988 with Barsky re. Gibson's Paradox found that rising rising interest rates associated with rising gold prices - Summers had awareness of inter-relationship of gold and interest rates

5. If gold is suppressed then that would allow loose monetary policy to be effected and a series of economic bubbles while gold and interest rates kept low.

1991 J. Aron & Co. of Goldman Sachs given first "bona fide hedging" exemption to allow a US dealer to speculate in commodities

Summers and Robert Rubin (former Chairman of Goldman Sachs) joined Treasury in 1993

Dimitri Speck's statistical work shows strong gold price intervention starting in 1993 on the Comex:

Gold intervention through (1) NY Comex virtual gold trading and (2) LBMA trading of "unallocated" gold (virtual gold) trading on LBMA where 85% of daily gold trading volume occurs. 200 M oz. per day traded in London

Shutting down the golden inflation warning system by rigging the gold price has the global impact of rigging interest rates worldwide as gold is a globally traded asset.

  • Loose monetary policy can be run without impacting gold price when paper gold traded in London & Comex as well as BIS coordinated gold leasing from central banks
  • Results in excess debt and speculative bubbles globally - we ultimately face collapse of the global debt market inflated by the manipulation of gold allowing gross distention of the global debt markets

Need higher gold prices to stop flow of gold (wealth) out of the West as well as restructuring of debt markets

6. There will be no recovery with low interest rate policy. Only bubbles and ultimately currency failure.

John Exter - Exter's pyramid shows end result is deflationary (paper asset) crash with gold going to extraordinary levels

http://en.wikipedia.org/wiki/John_Exter
http://www.goldmoney.com/research/research-archive/a-banker-for-all-seasons-the-life-and-times-of-john-exter-champion-of-sound-money
http://www.goldmoney.com/research/research-archive/A-BANKER-FOR-ALL-SEASONS-PART-II
http://www.goldmoney.com/research/research-archive/a-banker-for-all-seasons-part-iii

7. In summary - Low interest rates and intervention in markets prevents normal market function of gold market and flow of physical gold from primarily paper Western gold markets to Global physical gold markets.

Because London LBMA and NY Comex markets levered 100s:1 virtual gold : physical gold, will be no physical gold available in crisis; even now shortness of physical gold is appearing

Gold market intervention facilitates the ultimate extraction of wealth from the West before currency crash or reset.

 

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