The Giant Pool Of Money. Implications

Phat writes:I dont want to see my country disintegrate. I want to be able to have a decent retirement. I dont ask for much. All I want is a place to live, modest material goods, and a life free from worry about wars or depressions. Why cant people agree on this? Why is our defense budget as large as the rest of the world put together? Why do some of us want to screw other people over?

The US money supply is today twice as large as it was just a few years ago.
The Obama administration is without a clear economic policy — three out of four members of the economic team have just resigned - and the fourth, Tim Geithner, has never held a position in the business world aside from being involved in the banking business at Goldman Sachs. The man can’t even keep correct personal income records.
Worldwide money supply is expanding at an average rate of 10%.
The US dollar is in a long-term decline against gold (see chart below).
The Euro is in a long-term decline when measured in gold (see chart below).
Gold is rising not only in US dollar terms but also as expressed in a number of currencies — this reflects a ‘flight to safety from fiat currencies.’
Gold production is declining, despite higher prices.
It takes longer (due to regulations) to build a gold mine than ever before, and the rising cost of materials and fuel makes it very expensive to build a mine.
The period between US Labor Day and Christmas is usually the most gold-bullish period of the year. In seven of the last eight years gold rose during this period.
The expiration of options on August 26th did not have a negative effect on the gold price, compared to options expiration days in June and July. This proves strong underlying physical demand.
China is buying up local gold production, thus withholding it from the market.
Russia is buying up local gold production, thus withholding it from the market.
Gold ETFs are more popular than ever before, drawing bullion away from the market.
The US gold supply that is stored at Fort Knox has not been audited since 1953 and is most likely all or partly gone. It has either been sold or leased.
Central banks have stopped selling gold and some have become buyers.
Gold thrives when ‘real interest rates (US T-bill rate less CPI) is negative - as now. (People who are earning less than 7% per year on an investment are actually going backwards because of the inflationary effect which is currently 7% and rising!) Gold on the other hand has been rising at an average +20% per year for the past five years. Since 2001 gold has risen 400%!
Gold thrives during periods of price inflation and we are witnessing the beginning of increased price inflation: Wheat, corn, oats, barley, oranges, cattle, hogs, salmon, copper, iron ore, cotton, sugar, coffee, palm oil, health care, education are just some of the categories that are rising in price.This chart courtesy Federal Reserve Bank of St. Louis shows price inflation is rising again after a short respite in 2009 following the credit crisis. Price deflation only lasted for about a year! (This chart is based on official figures. Mr. John Williams at Shadowstats.com has calculated price inflation to be rising at 7% per year). Statements made by government officials need to be taken with a ‘grain of salt.’ Mr. Victor Zarnowitz, a professor at the University of Chicago is an expert on business cycles. He studied the predictions made by US government officials including the Federal Reserve bankers. He discovered that 92 out of 100 predictions turned out wrong.

crashfrog writes:Mining gold and printing money aren't fundamentally different and they're both inflationary if the increase in money supply - under any system - increases demand for goods ahead of supply.

jar writes:You don't understand. Inflation in the price of gold is real money while inflation in the price of a house is not.

Phat writes:I hear that the dollar is depreciating versus other currencies...
what would happen if the dollar became essentially worthless?a dollars worth of anything would be essentially microcosmic

By late 1923, the Weimar Republic of Germany was issuing two-trillion Mark banknotes and postage stamps with a face value of fifty billion Mark. The highest value banknote issued by the Weimar government's Reichsbank had a face value of 100 trillion Mark (100,000,000,000,000; 100 billion on the long scale).[10][11]. At the height of the inflation one U.S. dollar was worth 4 trillion German marks. One of the firms printing these notes submitted an invoice for the work to the Reichsbank for 32,776,899,763,734,490,417.05 (3.281019, or 33 quintillion) Marks.[12]
The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion peng (100,000,000,000,000,000,000, or 1020; 100 trillion on the long scale). image (There was even a banknote worth 10 times more, i.e. 1021 peng, printed, but not issued image.) The banknotes however did not depict the numbers, "hundred million b.-peng" ("hundred million billion peng") and "one milliard b.-peng" were spelled out instead. This makes the 100,000,000,000,000 Zimbabwean dollar banknotes the notes with the greatest number of zeros shown.
The Post-WWII hyperinflation of Hungary held the record for the most extreme monthly inflation rate ever 41,900,000,000,000,000% (4.19 1016% or 41.9 quadrillion percent) for July, 1946, amounting to prices doubling every 13.5 hours. By comparison, recent figures (as of 14 November 2008) estimate Zimbabwe's annual inflation rate at 89.7 sextillion (1021) percent.[13], which corresponds to a monthly rate of 5473%, and a doubling time of about five days.

crashfrog writes:Current rate of inflation in the US is about .2%.
Why is that, Buz?

Modulous writes:They inflate because of investment. If you invest $100 today it might become $130 in ten years. So if you chose between the two, they would the same. Therefore, $100 today is the same as $130 is in ten years.

Crashfrog writes:According to everyone - government, universities, think tanks, NGO's, everybody - inflation is under .2%.Why is that, Buz?

.............They are printing a lot of dollars, but inflation doesn’t seem to be taking off, though gold and silver are acting as though it is. But gold and silver are right, inflation is taking off.First, let me define inflation. To the economist, inflation is not rising prices any more than wet sidewalks are rainstorms. Inflation is an increase in the supply of money. It should really be called dilution because it dilutes the value of existing dollars.In fact, a more proper term would be monetary inflation. Monetary inflation is currently raging as the Federal Reserve is printing more and more money, and gold and silver are responding.Price inflation is another matter indeed. Price inflation is the end result and trails monetary inflation. Monetary inflation is now rampant. Gold and silver, being smarter than you and me, are reflecting that by the increase in price and the big rallies we are seeing now. So inflation is here.But what about price inflation? Price inflation has also already started. Look at the increase in commodity prices. How much longer do you think it will be before these higher wholesale costs filter down to the retail level?For example, Agricultural Raw Materials are up 24%, The Mineral Index is up 25%, The Metals Price Index is up 26%, Coffee is up 45%, Barley is up 32%, Oranges are up 35%, Beef is up 23%, Pork is up 68%, Salmon is up 30%, Sugar is up 24%, Wool is up 30%, Cotton is up 40%, Palm oil is up 26%, Hides is up 25%, Rubber is up 62%, Iron Ore up 103%. Those are prices at the wholesale level. ..............Monetary inflation is here. Price inflation is coming. Commodity price inflation is also here. ............

crashfrog writes:But Ruff is wrong. If prices stay the same then nothing is being diluted.......

Ruff on prices writes:For example, Agricultural Raw Materials are up 24%, The Mineral Index is up 25%, The Metals Price Index is up 26%, Coffee is up 45%, Barley is up 32%, Oranges are up 35%, Beef is up 23%, Pork is up 68%, Salmon is up 30%, Sugar is up 24%, Wool is up 30%, Cotton is up 40%, Palm oil is up 26%, Hides is up 25%, Rubber is up 62%, Iron Ore up 103%. Those are prices at the wholesale level. ..............Monetary inflation is here. Price inflation is coming. Commodity price inflation is also here. ............

Dr Adequate writes:That's hardly a recommendation, is it? While one might applaud his consistency, anyone who's been predicting imminent hyperinflation since 1978 has spent thirty-two straight years being wrong.

Caffeine writes:Unlike Ruff, I doubt that gold and silver make concious decisions about their own prices. More likely, the increase in their cost represents an increase in demand, presumably linked to all the people going around recommending the purchase of gold to keep your money safe in troubled times.

Caffeine writes:Your more likely point is consistent with Ruff. Your concious metals spin is bogus. Ruff never said metals make concious decisions.Up compared to what? The price yesterday? The price in October 1975? These figures are meaningless without context.Let's look at some that he lists. He mentions coffee being up 45%, so I had a look. Coffee is 0.8% down in price since last month, or 33.67% up since last year. He claims that pork is up 68%. All I can find is pork bellies, which are down 3.59% since last month, or up 23.64% since last year.I did find some numbers which looked higher than his. Cotton is up 24.51% since last month, or 70.55% since last year. The point is that his numbers, without explaining the time period under discussion, don't tell us anything whatsoever. All these figures come from CNN's money pages. which has a nice little graphic which shows where current prices for each commodity are compared to the range of prices over the last year. It ranges from natural gas, at which the current price is the lowest it's been in the last year, to gold and silver, in which the current price is the highest.Clearly, things aren't as simple as Mr. Ruff would have us believe.

Dr Adequate writes:I am aware of your penchant for finding "fulfilled prophecy" in the most unlikely places, but even you must surely concede that this is pretty poor.

jar writes:From 1981-1987 the Republicans held the Senate. Plus Reagan still had veto power.

Dr Adequate writes:"His timing was off". Yeah, thirty-two years ago he predicted that hyperinflation was imminent. Today the inflation rate is seven times smaller than it was in 1978 and you're still waiting for him to be right ... any day now.

Dr Adequate writes:Er, no. Assuming you were right about $40 and $800, the people who kept on buying while prices rose lost (in real terms) half their investment or more (depending on whether they were more heavily into gold or silver). It's meant to be "buy low, sell high" not the other way round. If you could show me that Ruff at some point advised people to stop buying bullion because it was becoming overpriced, then I shall listen more carefully to your praise of his astuteness.

Beginning in the early 1970s, Hunt and his brother William Herbert Hunt began accumulating large amounts of silver. By 1979, they had nearly cornered the global market.[6] In the last nine months of 1979, the brothers profited by an estimated $2 billion to $4 billion in silver speculation, with estimated silver holdings of 100 million ounces.[7]During the Hunt brothers' accumulation of the precious metal, prices of silver futures contracts and silver bullion during 1979 and 1980 rose from $11 an ounce in September 1979 to $50 an ounce in January 1980. Silver prices ultimately collapsed to below $11 an ounce two months later. The largest single day drop in the price of silver occurred on Silver Thursday.[1]Hunt filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code in September 1988, largely due to lawsuits incurred as a result of his silver speculation.[1]