Stacy Summary: Excellent report by our latest Keiser Report guest, John Butler. I can’t get enough of pieces on the Cantillon Effect,’ first introduced to me by John Aziz. Max had also indirectly identified this phenomenon in arguing that workers should tie their wages to money supply as bankers do . . . via the Cantillon Effect.
But to the extent that this wage convergence process is driven by reserve currency inflation, rather than natural, non-inflationary economic integration, the Cantillon effects discussed earlier result in wages converging downward rather than upward, implying a global wealth transfer from ‘owners’ of labour—workers—to owners of capital.
So-called anti-globalists disparaging of free trade are thus not necessarily barking mad—well, perhaps some are—but they are barking up the wrong tree. The problem is not free trade; the problem is trade distorted by monetary inflation. If you want workers around the world to get fairer compensation for their labour, shut down the reserve currency printing press. And if you also want them to have access to the largest possible range of consumer goods at the lowest possible cost, remove trade restrictions, don’t raise them.
Paul Mylchreest has released the December Thunder Road Report, titled Inflationary Deflation: Creating a Bubble in New Money. The report is 75 MUST READ pages detailing the END GAME to the largest debt bubble in the history of the world: a massive cost-push hyperinflationary collapse of the US dollar.
This is the biggest debt bubble in history. Each time DEFLATIONARY forces re-assert themselves, offsetting INFLATIONARY forces (monetary stimulus in some form) have to be correspondingly more aggressive to keep systemic failure at bay. The avoidance of a typical deflationary resolution of this Long Wave is incubating a coming wave of inflation. This will not be the conventional demand pull inflation understood by most economists. The end game is an inflationary/currency crisis, dislocation across credit and derivatives markets, and the transition to a new monetary system, with a new reserve currency replacing the dollar. This makes gold and silver the go-to assets for capital preservation.
By using this talking point of a gold standard to steer focus towards the Federal Reserve & Fort Knox, could the Silver Liberation Army then increase pressure on the suppressed silver price and the COMEX?
I happen to find the esoteria between the gold bugs and various other flavors (and, in my view, mis-flavors) of Misean thought to be highly amusing. From my perspective there’s only one point worthy of consideration in this regard, and that is whether or not the particular economic model under debate counts all credit and currency as “moneyness” and therefore innately fungible when evaluating the impact of various policy decisions and strictures.
We discuss all hell breaking loose as an electronics chain store stockpiles security shutters, capital flees Greece (and Spain) and Max proposes a love market. In the second half of the show Max talks to Detlev Schlichter, author of Paper Money Collapse, about the euro, the drachma, the dollar and gold.
We discuss the gold standard extremism and how your dollar got to be worth just 3.8 cents. In the second half of the show, Max talks to Francine McKenna of reTheAuditors.com about the crimes and illegitimate activity of the MF Global collapse.
Remember my commentary below? ICE is now accepting gold as collateral for energy trades and CDSs. If China, Japan, and other foreign holders of US dollar debt start writing CDSs on the US that settle in gold (to hedge their long dollar positions), it’s a back door way of moving the USD to the gold standard. Obviously, the gold delivery would be set to preserve the value of the contract.
Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act, after these “financial weapons of mass destruction” levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull’s-eye.
Tavakoli Structured Finance, Inc.
The Stacy Summary: Wow, Max has been urging Russia to do this for over three years now. But I can’t believe that this is now being discussed so openly now. And the momentum is gathering rapidly behind this ‘dump the dollar’ idea.