Bonds set record on record, stocks down, gold leaps

The world is so poised on the edge. The jitters are sweeping through tonight.

Just suppose you have $100m in assets that you are nervous about. You cannot stick that amount in a bank, because government guarantees only cover the first $1m or whatever, and banks are all risky now. So you buy into the biggest, most liquid market in the world — US Treasury bonds, that is, the debt of the US Government. Sure, you risk losing a few percent as bond prices jostle up in the panic, but at least you preserve your wealth. So you sell your assets, convert the proceeds to US dollars, and buy US Treasuries.

So much money had run to US Treasury bonds  that the yield — which was at a record low yesterday — just got a lot lower. People are happy to give their money to the US government for an historically low yield.

Yesterday things were more scary than any time since WWII:

On Thursday, benchmark 10-year Treasuries yields fell to a historic low of 1.5326 percent, according to Tradeweb. The previous low was in November 1945 when yields ended that month at 1.55 percent.

Tonight, things are more scary than any time since Napoleon:

Benchmark 10-year Treasury notes were up as much as 1-4/32 in price with a yield of 1.442 percent, the lowest level since records going back to the early 1800s according to Reuters data.

Gold just zoomed up nearly $70 in two hours as the NY exchange opened. German and Australian bonds are also attracting refugee money.


If (when) the current money system of creating money/debt out of thin air falls away and is curtailed, the growth of big government that it fueled might also fall away (says David) or it might get bigger — a whopper crisis being the GoldStar-best-excuse to call for even more regulation (says Jo — did I mention this was a joint post?). Part of the collateral damage will be the climate change agenda, of government regulation of all energy use worldwide.


Watch the fun: CNN bonds and Kitco Live Gold

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59 comments to Bonds set record on record, stocks down, gold leaps

  • #

    I’ve been an investor for over three decades. I never felt concerned after the ’87 crash, the 90’s property crash, the Asian meltdown, 9/11 or the GFC because I have always held fundamentally valuable investments which I knew would weather the storm! But I admit I am concerned about current markets and there are few places to hide.

    The combination of the European breakdown, continued slowdown in the Chinese economy and a worldwide credit squeeze as financial institutions call loans and become more risk averse could see even solid ventures fall over.

    Obviously it’s wise to pay down debt and increase cash holdings. Part of the reason stock markets are struggling is because corporations and investors have been doing this.

    On the bright side, cost pressures will cause Governments to ditch their stupid carbon taxes and uneconomic push for inefficient renewable energy. Instead there will be a big swing back to efficient and relatively cheap fossil fuels including coal, gas and oil. I would also expect Germany and Japan to re-commission nuclear power plants as an economic imperative.


  • #
    John from CA

    hey Gorgeous!

    Well, as we all knew, the fools lack insight and fail to protect our freedoms.

    They are in their self-proclaimed downturn.

    Its as easy to see as a child learning to walk. Short the game and redefine mining regulations.


  • #
    Carl Chapman

    Greeks and Spaniards are moving their money from their own banks into German banks. But that’s not much safer. The German banks deposit the money with the European Central Bank, which lends it straight back to the Greek and Spanish banks. If the Greek and Spanish banks go, the ECB will, and then the German banks. The only alternative would be a massive printing of Euros.


  • #
    Kevin Moore

    The problem with fiat money is that it is in the hands of uncontrolled individuals who issue it as an interest bearing debt. Their is no point in producing things if the facility to purchase them is not created. To have a stable money system the issue and control of money should be interest free and tied to the productive wealth of a nations citizenry.

    Successful No interest Fiat Money of the Past
    Before we explore fiat money more deeply let us give a definition of it to avoid confusion – as, at present, the term is used in a variety of ways.
    The word “fiat” comes from the Latin, which literally means, “let it be done.” The common modern definition is expressed by as: “an authoritative decree, sanction, or order.”
    Fiat money is often defined as unbacked money created by government decree or sanction but technically this extends to any money that is not fully backed by a commodity. So for the sake of clarification and purpose of this treatise we’ll define it as follows.

    “Fiat money is any money, paper, coin, substance or digital creation which is not fully backed by a commodity. It exists only because of a decree or sanction made with enough authority to cause the people to accept it as money.”

    That said we must now ask if it is possible to create a feasible fiat money system as illustrated in the parable. Many fundamentalists think not and feel that every possible form of fiat money is doomed to failure.

    And why is this?

    Basically because they look at the surface of a few examples of failed money in the past and lump all fiat money into one category. They pretty much call it the god-awful bad category. This is basically where their analysis begins and ends.

    Let us look below the surface and first ask ourselves why fiat money has received such bad press.

    Here are three reasons various economies have had problems with fiat money in the past and present.

    (1) Too much money is printed or created and placed into circulation. If there is more money in circulation than the value of goods and services needed there will be inflation. If there is a shortage of money there will be deflation. If the right amount of money is in circulation the prices will be stable.

    This runs contrary to the party line of some thinkers who believe that all fiat money is inflationary. It is not. It is only inflationary when too much money is added to circulation. For instance, during the Great Depression we had a contraction of the fractional fiat money in circulation and prices went down, not up.

    (2) The second problem is the government borrows the fiat money from banks and burdens its taxpayers with paying the accumulating interest rather than creating interest free money itself.

    (3) Because the money is easily created the temptation of governments to overspend by borrowing too much money is great. This straps their people with not only high interest payments but a large amount of debt.

    These problems may seem significant enough to make us think we should ditch fiat money and go with a gold standard until we look at the problems of maintaining such a gold standard. Earlier we covered the gold standard and we discovered even more problems there.

    Some simply state that fiat money is bad because it has always failed in the past. They count as failure every money system that is no longer with us but overlook the fact that money systems have often changed in history, not because they failed but because a new king or power comes to the throne. War and conquest has also greatly altered money systems of the past. Sometimes a good money system has been replaced with a bad one. If a new king saw the system benefitted the people more than himself then the temptation was to install one that was unstable but good for the elite.

    Gold and silver backed currencies (as has been previously illustrated) have their own set of problems and one could also argue that they have all failed because they no longer exist. There is not one country in the entire world that has a gold or silver backed currency. The last one was Switzerland which backed its money with 40% gold reserves but in the year 2000 they had a referendum and the people voted to go off it. Now they merely have gold reserves for security purposes just as we do.

    One might ask that if gold and silver backed currencies are so great then why has every nation on the planet abandoned them? If they are so stable and bring prosperity (as advocates claim) then why hasn’t one nation seen the light?

    With all things considered a growing number of thinkers are considering that interest free fiat money represents the best hope for a permanent money system that allows for unlimited expansion of prosperity. To create this, a definite change from the one in use today is required. That is, instead of our government giving away its power to create money to private banks it will instead reserve that power to itself. It will then be able to create money for the people’s welfare, which will be interest free and debt free.

    The Federal Reserve notes of today are a promise to pay. The new notes will not contain any promise to pay but will be real constitutional money.

    Has there ever been any such debt and interest free fiat money in the past that we can examine to see how it worked?

    Fortunately, the answer is yes. Let us look at a few…….


  • #

    Catastrophic Anthropogenic Global Financial Meltdown.


  • #
    Kevin Moore

    This is part of a speech given by Jeremy Lee at a conference in Toowoomba.

    No wonder Jim Cairns was so vilified –

    See, The Story of the Commonwealth Bank by Amos

    The whole of this speech is well worth taking the time to read.

    …….But, like every economy in the world, Australia has now transferred its constitutional power to create its own money into private hands. And the same private hands have indebted Australians, and hold mastery over the people and their governments. To quote a former A.L.P. Federal Treasurer, one-time deputy Prime Minister Dr Jim Cairns, in his book “Oil in Troubled Waters”:
    “… I want first to explain how money is obtained or supplied in a capitalist economy. Banks certainly create credit or, more exactly, they create money. Creation of money by banks is a simple process… The banks, therefore, can create deposits by lending to customers… within very wide limits, the trading banks decide how much or little to lend and who to lend it to… Not only have the banks power to create money within wide limits, but they do so.
    As well as determining the total volume of money, the banks decide also to whom they will lend. It is obvious they will prefer rich and powerful people and the companies associated with them; they will prefer ‘old customers’, and they will not be too keen to lend to poorer people, to ‘battlers’, or to persons or even companies who may be competitive with their associates. The power to create money and to decide who should get it is a vast and significant social and economic power and for this reason, the Labor movement has always believed it should not be a privately owned power but be exercised solely by a public or peoples’ bank…”

    That, for all its sins, was the old Labor Party in Australia – the party of Andrew Fisher and King O’Malley, of John Curtin and Ben Chifley; of national sovereignty and Australian ownership and mateship. Many people find it difficult to comprehend that the old Labor movement was gradually captured after World War II by a totally different idea – international Marxism.
    The new Labor used the same words, but had never had a blister on their hands. They weren’t ‘workers’, or patriots, but international academics. They followed Marx’s belief that the Debt System would finally destroy Capitalism and deliver the Marxists a global slave state.

    Karl Marx put it this way in his book Das Capital in 1867:
    (Quote) “…Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Communism…” (unquote)…….


  • #

    We are about to have all those recessions that were too politically inconvenient to have over the last 30 years+ – all at the same time. And yes you can blame all those rent seeking leaders we had who were and are still focused on their political career ambitions for that.

    But keep cool – it will be happening to everyone at the same time, so it’s all relative. Yes, some people will be caught out (possibly even myself this time around), but the adaptable and efficient will survive.

    Whilst the trick was to get more gains than inflation/the jones’, the trick now is to lose less money than the jones’.


  • #
    Rereke Whakaaro

    What is the current price of popcorn?


  • #

    no wonder the EU is desperate to collect aviation carbon dioxide taxes and the like:

    31 May: BusinessWeek: AP: Euro setup is unsustainable, ECB chief warns

    30 May: EnergyChoicesUK: Household energy bills will be ‘unaffordable’ by 2015
    When it comes to household energy, Britain is less than three years away from an affordability crisis, according to new research from independent price comparison and switching service
    An annual energy bill of £1,500 is the tipping point at which energy bills will become unaffordable in the UK, says the research. When this point is reached, 77% will be forced to ration their energy use, 59% will go without adequate heating and 36% will be forced to turn their heating off entirely.
    If bills then hit £2,000 a year – which the forecast suggests could happen in 2016 – almost nine in 10 households (88%) will be rationing their energy use, 75% will be going without adequate heating and over half (55%) will turn their heating off entirely.
    ***Worryingly, the forecast does not take into account the impact of the government’s ambitious plans to cut carbon and switch to renewable generation, the cost of which will be added to household bills. says consumers have a right to know by how much the government’s energy policy will increase their bills…

    ***what is worrying here is the way the govt is not admitting to all the costs incurred through renewable energy targets forced on the energy companies and other CAGW-related costs (desal plants etc) which have raised prices BEFORE the carbon dioxide tax has even been implemented.


  • #

    Some people do know how to make wise investments and whose preditions to trust.


  • #

    as if we haven’t known this all along:

    2 June: Australian: Damon Kitney: Wesfarmers warns on carbon tax price rises
    Fortescue Metals chief executive Nev Power also described it as poor legislation.
    “All it is going to do is put a clog on the economic growth of the country,” Mr Power said.
    “I think it’s going to kill off a lot of downstream industries in Australia . . . It is the unintended consequences of a tax like that that are very difficult to understand, and the impact will be felt for generations to come.”
    WA Premier Colin Barnett claimed what had started out as a debate about reducing greenhouse emissions had been “turned into a debate about getting a carbon tax at any price”.
    “We’ve lost the plot as to what we’re trying to do here, and Australia has got all sorts of ways of reducing its emissions without imposing such a huge impost on people and the industry,” Mr Barnett told the forum.
    Earlier in a speech, the Premier said people were “shaking their heads in disbelief, from consumers right through to leading people in business and politics”.
    “Why would we have a carbon price of $23 when the only somewhat credible carbon trading market in Europe has a market price of $10?” Mr Barnett said.


  • #

    When the big crunch hits and nobody has money and people ate rioting… you know what will be more valuable than gold? Toilet paper.
    People will still have to wipe their arse.
    He who holds the toilet paper will be king!


  • #

    30 May: Businessweek: AP: NYSE Euronext eliminates head of derivatives
    NYSE Euronext Inc. said Wednesday that it’s eliminating the position of global head of derivatives as part of an organizational shakeup…
    Derivatives are complex financial instruments that allow investors to bet on changes in many areas, including interest rates, stock indexes or the price of oil. Today, the value of outstanding derivatives contracts traded has surpassed by many times the value of traditional financial products like stocks and bonds…

    funny how the MSM is extremely reluctant to ever mention the amount of the derivatives outstanding, which most people now agree is approx $1.2 QUADRILLION, or 20 times the size of the world economy. at least QUADRILLION is mentioned here:

    14 May: Australian: Robin Bromby: Time to ponder tax-loss selling before financial year ends
    The JPMorgan Chase loss of $US2 billion ($2bn) on credit derivatives this week reminds everyone of the real ticking time bomb.
    If you take the median of the range of guesses as to the size of global derivatives positions now held, you get about $US1 quadrillion. (That’s a one with 15 zeros after it.)
    Fortunately, thanks to the Office of the Comptroller of Currency in Washington, we know how much live derivatives exposure is held by US banks: $US231 trillion as of December 31. Of that, JPMorgan held $US70.1 trillion, Citibank $US52.1 trillion, Bank of America $US50.1 trillion and Goldman Sachs $US44.2 trillion.
    Fingers crossed nothing else goes bump in the night with counterparty risks…


  • #

    one of the biggest stories of the week, which has had almost no MSM coverage. Deutsche Welle spin it as good for the US:

    1 June: Deutsche Welle: China, Japan begin directly trading currencies
    China’s efforts to turn promote the yuan as an international currency have been boosted as direct trading with Japan’s yen has begun. The move ditches the US dollar as an intermediary currency…
    In addition, it is designed to ease tensions with the United States, which has accused China of keeping its currency artificially low against the dollar to boost foreign trade…,,15991787,00.html

    Asia Times, perhaps more realistically, sees it as good for Japan & China:

    2 June: Asia Times: Japan, China bypass US in currency trade
    By Kosuke Takahashi
    Skipping the dollar
    Up until Friday, Japanese and Chinese firms had paid currency conversion fees twice. For Japanese companies, they first had to convert the yen into the dollar, then they exchanged the dollar for the Chinese currency. For Chinese firms, it was vice versa. With this removal of the interim step by skipping the dollar in transactions, many expect cost reductions…
    Annual trade between China and Japan more than doubled in the past 10 years.


  • #
    Kevin Moore

    YouTube – 12 year old Victoria Grant explains why her homeland,Canada and most of the world is in debt. Over 500,000 views.


  • #
  • #
    Richard (Realist)

    With all the shenanigans and abundance of distractions (e.g global warming fiasco), it’s important not to lose sight of who and what is behind the screen (the globalists) controlling the dancing marionette (nation states and the general populace). The whole show is manipulated; it has been for a very long time. The globalists’ agenda is transfer of wealth from the masses to the minority (them). There is no integrity or principle involved, as we would define it, just greed and in particular a lust for absolute power and dominion over others, to decide all facets of other people’s lives: Totalitarianism, no matter how it’s achieved. The world has plenty of examples in nation states, some even call themselves a “democracy”, and export their “humanitarian” version, usually delivered by air with a very heavy thud.

    As pointed out by many others, there are those who have held the power strings through control of “money” (“printing” of currency for trade). This is blended with a particular (religious) philosophy (“the chosen ones” to inherit the earth) that guards itself and operates with secrecy and has progressively built an “army” over centuries of useful idiots as the public interface, eager for fortune and displaying of ego (e.g. UN bureaucracts, politicians, and of course, climate change “scientists”); a motely collective of psychopaths, sociopaths and their bevy of useful idiots. They co-opt similar philosophies (Socialism/Marxism/Communism/Fascism) to infiltrate and incrementally gain control over the complacent and ignorant populace, lest they wake up to what’s going on and rise up in mass opposition. Global awareness and understanding of their creeping agenda (e.g. Agenda 21) by the populace is their achilles heel. Hence their ABC and control of school curricula to spread brainwashing and propaganda with a view to creating a complacent and compliant populace.

    The agenda of this self-appointed “elite” is total control of resources and populace. Privatising of and then owning infrastructure and resources of all nation states is a means to their end game. In essence, the agenda is a return to a Fuedalistic system with controls imposed using modern technologies. The UN is simply an instrument of imposing controls globally by “consensus”. Some initiatives are benevolent and worthwhile, others are draconian – best to dress a wolf in sheep’s clothing. The IPCC is one of a number of a UN “lambs”. Dish out loads of money and some “scientists” will gladly trade it for personal and professional integrity, and there will be no shortage of others line up for a free load of “entitlement”. NGO’s will gladly peddle propaganda to gain an illusion of legitimacy and power, money, notoriety and boosting of egos. Technology will gladly build solar panels and turbines while heavily subsidised, and the side show rolls steadily on.

    Fabian socialists from Whitlam on have been steadily white-anting (selling out) Australia by incrementally subverting all institutions to their Leftie perspectives, e.g. political correctness (a process of destroying liberty and freedom) such that it percieved as “normal”. Hawke is busy selling agricultural land to the Chinese. Costello does the same for the Arabs, so don’t assume the “right” side of politics is any better. Turnbull is patently to the Left but there are plenty of closet lefties. Fraser and Whitlam share a similar philosophical viewpoints. Our political “elite” take orders from the same controllers based in London and Washington. We might vote periodically for politicians who don’t actually run the country, it’s just made to seem that way by the also-controlled media (just tune into their ABC). Which is why the internet and researching publications is the best method for gaining a realistic understanding of history and contemporary times. And it’s why Jo’s blog and others are so important, while we still have access.

    Don’t rush out and place any (or particularly heavy) bets on gold. Do some careful research, as all trading markets are manipulated. The only thing we can be sure of is the stock market has a high probability to trend down, down, down. With fast slides and “recoveries”. If you have any, get your super out into fixed interest cash, and some in cash, fast. The point to aim at it after the heavy slump, for when it eventually recovers, have a plan to get back in for cents in the dollar. Wealth is transferance of assets from some to others; just make sure your aren’t getting it stolen from you (any more than it is officially).

    The agenda for a one-world currency and political/social controls might well hit the metaphorical wall of the law of unintended consequences. The unconcious part of human nature cannot be controlled. We also have a herd mentality and sometimes act like Wildebeest on the run. The US is stuffed (economy and politics), so is the EU (the trial run for world government run by unelected technocrats). The US $ will most likely lose “world currency ” status, so hedge your bets. We could end up with new geopolitical alliances and perhaps a basket of “international” currencies. Some sovereign states are already trading in their own currencies. When it happens widespread with oil, the US$ loses its global rule. The EU might end up being re-modelled from below into a more democratic “euroland” and form a trading bloc with the BRIC’s, with others joining it. This could leave us relatively isolated trade wise; exploited and stuffed by London and US “banksters”. The bad boys might get very desperate and toss a monster firecracker or two at others and initiate WW3. When empires fade from centre stage, it’s not always a pretty exit. We need an “epsom salts” era here to flush out like an enema, the entrenched rot in the system and get back to solid basics, the likes of which built the economic foundations of this country in its middle 100 years, which ended with the arrival of Whitlam’s Fabian socialist engineering. The rest of this decade will be anything but stable. Stay alert and focussed.


  • #
    John Smith101

    You must have some interesting conversations around your kitchen table Jo! Also I’m glad to see that a connection is being made between the current economic situation, the fiat economy and CAGW or climate change. It wasn’t that long ago that such an understanding was within the realms of a conspiracy theory. With this connection in mind it is possible to better understand the role of the UNFCCC and the UN’s Agenda 21, Kyoto, REDD, etc.

    To further help this understanding I thoroughly recommend reading, “Carbon Currency: A New Beginning for Technocracy” by Patrick Wood, found at

    To quote from the Introduction: “The new currency, simply called Carbon Currency, is designed to support a revolutionary new economic system based on energy (production, and consumption), instead of price. Our current price-based economic system and its related currencies that have supported capitalism, socialism, fascism and communism, is being herded to the slaughter­house in order to make way for a new carbon-based world.”
    And, “Forces are already at work to position a new Carbon Currency as the ultimate solution to global calls for poverty reduction, population control, environmental control, global warming, energy allocation and blanket distribution of economic wealth. Unfortunately for individual people living in this new system, it will also require authoritarian and centralized control over all aspects of life, from cradle to grave. What is Carbon Currency and how does it work? In a nutshell, Carbon Currency will be based on the regular allocation of available energy to the people of the world. If not used within a period of time, the Currency will expire (like monthly minutes on your cell phone plan) so that the same people can receive a new allocation based on new energy production quotas for the next period. Because the energy supply chain is already dominated by the global elite, setting energy production quotas will limit the amount of Carbon Currency in circulation at any one time. It will also naturally limit manufacturing, food production and people movement.”


  • #

    But the major damage is that most of us are going to get thoroughly screwed.



  • #
    Owen Morgan

    Living in the UK, I envy those who are optimistic about the future. Here, we have an “Energy Secretary” called Ed Davey, who seems to think that his brief is to put the country back into the Dark Ages. James Delingpole famously referred to Davey as someone whose claim to fame was third place in a Wayne-Rooney-lookalike * contest. More to the point, he’s the libdims’ replacement for Chris Huhne (the libdims being the junior party in the coalition supposedly ruling Britain). Since Huhne’s appointment was the most obtuse imaginable (thanks, Dave, you moron), replacing Huhne seemed to be a clear opportunity for installing some sanity in the energy sector, but -NO- we got the equally dogmatic Davey in his place, utterly devoted to the green creed.

    Davey has already turned his face against shale gas. The weasel words were that there wasn’t as much gas in the ground as people supposed. Actually, there may be be at least as much shale gas as there ever was North Sea gas – and we’re still buying North Sea Gas from our Norwegian friends. Given the shape of the North Sea, almost all of the deposits were, by international law, British, but a labour government, headed by Harold Wilson, chose to hand over half of Britain’s drilling rights to Norway. In any case, ignoring a resource because it’s supposedly too small is ridiculous. If it’s able to be exploited, let it be so.

    There are much worse people than the Norwegians to rely on for energy, but the fact is that the UK still has abundant coal, natural gas and oil resources of its own. As the ruling elite doesn’t want us to know (so is resolutely not broadcasting on Channel1984, also known as the BBC), we are sitting on shale gas which will last for centuries. A recent conference about shale in Whitehall conspicuously failed to invite anyone who knew the first thing about it. Everyone present was known beforehand to be opposed to shale.

    At the next election, the government is rightfully going to be crucified for its failure to keep the lights on. The trouble, for those of us in the UK, is that the incoming government will be following the same energy policy and won’t change a thing. “Green” is cool, until “cool” turns to “cold”.

    * Wayne Rooney, for those lucky enough not to recognise the name, is the one getting sent off in an England shirt.


  • #
    Rod Stuart

    The gold market is burdened with (let’s just say the establishment)manipulating the gold market.
    This is accomplished because the amount of “paper gold” is many times the amount of physical gold.
    Up until Friday the gold market has been manipulated through the London Metals Exchange and the Chicago Mercantile Exchange.
    For some time now gold bugs have been anticipating the opening of the Pan Asia Gold Exchange in Kunming, ROC.
    It’s no coincidence that when it opened Friday, the price of bullion jumped. It will now be much more difficult for the the establishment to make its interventions.


  • #
    Philip Bradley

    What most people don’t realise is the extent to which world trade is dependent on fiat currencies. Look at Argentina which doesn’t have access to sufficient amounts of currencies that other countries are willing to trade in. No one will take the Argentinian Peso (or whatever its called), because of the fear of rapid devaluation. Imports are drying up and industries grinding to a halt.

    Loss of faith in the world’s major currencies will reduce world trade, which is particularly bad news for an economy as trade dependent as Australia.

    And resources are a notoriously boom and bust industry. During the boom, no one ever thinks the bust will happen. There are ominous signs out of China, that the iron ore boom is about to go bust.

    BTW, there is nowhere near enough gold to support current levels of world trade. From memory, there is only enough gold in the world to support 5% of current world trade. A problem that could of course be fixed by gold going to $40,000 /oz.


  • #
    John Kettlewell

    Take note of whom calls out targets. The mob must always be aimed, lest it feast upon it’s master(s). The abdication of responsibility will be represented in those that deflect or redirect attention; those are the dangerous persons.

    What is the breaking point? Who knows, but they will carry it until it collapses upon itself. Then the real problems start. Either capitulation to the state as well as remaining calm, or a replay of the Spring of Europe circa 1850 (only with ALOT more people, and the addition of foreigners, and increased technology). I feel more confident about here in these United States even though I guarantee riots and battles; there’s just more of a foundation and a willingness by atleast a third (100million), in my opinion, for stability and security. California would be ravaged, also an educated guess.

    Do they create a problem for which they will deem themselves needing to solve? Is a single currency the answer? Whatever happened to Soros and his wannabe Bretton Woods or global currency from a year or two ago? Do none of the current actors know what they’re doing? What is the failure? Besides big government and monetary puppeteers, where specifically are the flaws? Illusory, or assumed wealth? Did we just plateau as a civilization after the 20th century boom and therefore growth is somewhat of a ghost?

    Rapid expansion via mass production/consumption, the brick wall was inevitable. It’s a rubber-band economy. That’s my best guess for the label of our era within history. There is only so much “stuff” one wants.


  • #
    Rereke Whakaaro

    What most people don’t realise is the extent to which world trade is dependent on fiat currencies.

    Not only that, but most international trade is conducted in promissory notes, backed by letters of credit, that are based on fiat currencies and a variable rate of exchange.


  • #

    1 June: UK Daily Mail: Hugo Duncan: ‘Beware a rerun of the Great Panic of 2008’: Head of World Bank warns Europe is heading for ‘danger zone’ as world markets suffer bleakest day of the year so far
    Robert Zoellick: ‘Far from clear leaders ready for impending catastrophe’
    Raft of dismal news from around world wreaked havoc on market
    Manufacturing output crashed in Britain, jobless up in Europe and U.S.
    Fast-emerging economies such as Brazil and China running out of steam


  • #
    Elizabeth (Lizzie) B.

    Now THAT’S a hockey stick!


  • #

    the biggest, most liquid market in the world — US Treasury bonds, that is, the debt of the US Government.

    More like the biggest, most liquid Ponzi scheme in the world, US debt is junk. The ‘heart’ of the global monetary system is rotten. How well can a person function with a rotten heart?

    I’m not just picking on the USA here, Australian debt is also junk.


  • #
    Graeme Bird

    What a dysfunctional financial system it is, when people are buying US government bonds (a sewer of wealth destruction) even though we know the Americans aren’t going to pay their debts off ever. And what a criminal racket the rating agents are involved in. Rating the Americans AA- or some such thing, even though the Americans will never pay their debts.


  • #
    Richard The Great

    What is find odd is that temperatures have been rising (with shorter intercalated cycles) since the end of the Maunder Minimum circa 1690. At the end of a long period of warming I don’t find it strange that the hottest temperatures are right now. Likewise, the yield on US treasuries has been on a long term decline (with smaller ups and downs) since 1980. At the end of a long period of falling interest rates, a lot of smart people find it surprising that the lowest yield on US treasuries is er… also right now? Why?

    A US treasury is not a safe haven. The US has reneged on its debt obligations (to the dollar) twice in the last 100 years under FDR and RMN. Who is to say that they will not do it again? Why shouldn’t they? For the same reason that dogs lick their genitals: they can and nobody on earth can stop them.

    Now, many misunderstand the reason for falling interest rates. US treasuries have not had a magic attraction for 32 years? or have they?
    The secret lies in the charter of the Private Federal Reserve. They exchange debt for money and that is what they do for a living and collect interest on these debt instruments which they use to pay dividends to their shareholders who are kept a secret. To do this they have to buy debt with existing money. They cannot create the money first and then buy the debt- an interesting snippet. They also cannot buy the debt directly from the treasury. The Fed has to come to the “open market” to top up the money supply. Speculators know this and buy up bonds they can sell to the Fed at profit. Speculators also straddle the bond market selling short dated treasuries and buying long dated higher yielding treasuries and pocketing the difference in yield. The only risk is a yield inversion and selling the short dated treasuries both of which are currently negligibly small i.e. the practice if effectively risk free. The net result of these actions is the further depression of interest rates along the entire yield curve. Newly created money does not find its way into commodities which are inherently risky but it enters the bond market where the action it. This explains why there is no hyperinflation and bond yields are at a historic low despite the unprecedented monetization of debt we have seen in the last five years. The quality theory of money fails.

    People are buying US debt NOT because they are a safe haven but they know bond yields are falling which means bond values are rising and they can make a profit.

    An interesting thought: If I buy a bond in a falling interest rate regime I get richer as the value of the bond increases. If companies issue bonds in a falling interest rate environment, the bond speculator’s gains come directly from the capital account of the company. Where else? The company’s capital has been financed a too high a rate or alternatively the burden of debt on the company has increased. It is surprising that the US has largely become de-industrialised in a 32 year period of falling interest rates?


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    Many governments (including Australia) will guarantee savings bank deposits of $100 million or more. You just have to pay a small amount of deposit insurance (typically about 0.1% pa) for the privilege.


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    Joe V.

    Great article Jo. Gold is still rising , at $ 1620 now, but that is still below its average over the last year and little compared to the $1900 it reached last August .
    1Year Gold

    A great resource though that link , if you click on the black chart and scroll down.


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    […] Bonds set record on record, stocks down, gold leaps Gold just


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    I am still in complete and total disbelief that Mr. Barnett continues to refer to himself as a


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    If you think that the US monetary system is ‘safe’ then believe in the tooth fairy as well. The currency is bound to drop like a rock once the world settles a bit because printing notes is like drilling holes in the bow of a boat. At some time the trickle will become a flood and when the structure eventually collapses everybody drowns. Ok so the analogy is a bit over the top.

    Perhaps some of the gurus can help me with an answer to this question if indeed there is a simple answer: how much real money is there in the Australian economy compared to say 20 years ago? Whilst the Reserve Bank will give you pretty little charts of M1, M2 and M3 these tell me little about the how much physical money (notes and coins) we have. This appears to be the relevant number as only then can we see what our own charming political system is up to.