French History Is Fascinating

I wanted to have a look at the price of the US dollar, (and later also the Pound Sterling, Yen, and Euro), to check out an idea that came to me, and I got a little surprise which I will pass on to you.

The obvious thing might seem to be to just get a Dollar Index chart and the job is done. That won't work! Unfortunately the problem is that the Dollar Index is not a chart of the fortunes of the USA and its currency. That’s because the Dollar Index is a currency cross rate, where one side is obviously the US Dollar, but the other side is a basket of other countries currencies, and thereby contains the political and economic fortunes of those other countries.

Just so readers are aware – the DX or USDX is the US dollar measured against a basket of other foreign currencies – approximately 57% Euro, 13% Yen, 12% Sterling, 9% Canadian Dollar, 4% Swedish Kroner, and 4% Swiss Franc. It's the dollar against those few. It is not the dollar against everything it can be used to buy.

Now any observant reader has noticed a second problem. Several of these other currencies, against which the US dollar is measured, are significant trading partners of the US, and they manage their interest rates, and currencies in such a way as that there is reduced fluctuation against the dollar, so that their trading industries suffer as little dislocation as possible.

So when I want to look at the dollar’s history I must deal with two problems:

  1. Valuing the USD against the index favours the US trading partner countries in it’s price. (Hmmm ... it’s strange China’s Renminbi isn’t there, but that’s a different discussion for another day)
  2. Those particular countries manage their affairs so that their currencies try to move together with the dollar, and don’t have big swings of value against it. For example the CHF (Suisse) is “locked” together with the Euro via a peg, and the Swiss Central Bank buys or sells dollars and Suisse in such a way as to keep the Euro and Suisse “together” - for the moment anyway.

Here is what a chart of the Swiss Franc (CHF or Suisse) looks like:

The left side of the above chart is what it was when the  Suisse was “freely floating” against the Euro, and in the right side up to today the Suisse is pegged against the Euro. But this is a Dollar-Suisse chart, so you can clearly see that the Euro must be pegged against the Dollar by merely comparing the early (left side) with the later (right side) and the tiny trading range which now exists in CHF/USD. So a Suisse-Euro peg is also indirectly a Suisse-Dollar peg.

For the record, the Euro -Suisse cross with the "pegging" highlighted looks like this:

As you can see the Dollar-Suisse, and the Euro-Suisse look very very similar, so that means the Euro itself must be unofficially and periodically pegged to the dollar.

But lets get back to that “basket of currencies” the dollar is valued in. Hmmmm .... the CHF is pegged, there goes 4% of accuracy in pricing. The Euro ... 57% more accuracy in pricing is gone if dollar valuation is “managed” there. That dollars is inconveniently difficult to price.

This was just no good for my required purposes. So I had to think up another and better way to get the historic value of the US Dollar.

I had the bright idea to value it against energy, you know – oil!

Oil is priced in Dollars, and if the people who sell oil want to be paid fairly for it, then they would set a “fair” dollar price for the oil they sell – wouldn’t they?  You would think so. But as it happens that was no good either.  When I looked into it, the biggest seller of oil (in the medium term past) was the Saudis. But they have this military protection deal going that they made with that Bush fellow a few decades ago. So I guess the payments for that would be hidden in the oil price, wouldn’t it? So there goes my “fair valuation dollar chart” using the oil price. Plus there seems to be the odd problem in the Middle East every so often, like on-and-off during the past couple of thousand years, and the price of oil also zooms up and down when these flare ups occur.

Despite the above setbacks I was still looking for the best long term dollar chart (like 10-20 years back) I could get. So my next idea was to improve the oil idea by taking the price of a basket of consumer goods instead. It seems sensible that if an average family grocery cost was “x” dollars 10 years ago, and it is “y” dollars today, then the change in the value of the dollar’s value would be “x” – “y”.  “This is easy”, I said to myself! “Why didn’t I try this first?”, I thought. So I looked up the Consumer Price Index to see what I would find. Well there was a little glitch when I tried it. You see, the CPI (Consumer Price Index) seems to get modified every time inflation goes up. The government seems to take out the items rising in price so they are no longer “in the basket of goods” any more. This works out very nicely for the government, because all the pensions and pay raises they pay out, which depend upon a look at the CPI increases to set those raises, well the CPI is a lot lower than it should be and the government pays out less. Well done and good for them! Not so good to the non recipients of the extra low pay raises, but I guess that’s life and how it works. Also I discovered that the items in the CPI basket of goods are sold with smaller and fewer of contents inside the wrapper, can or box these days compared to several years ago, and that complicates the CPI still further.

Indeed, there is a guy on the internet called John Williams who has a website called www.shadowstats.com, and what this helpful chap apparently does is he tells people what the CPI would be if ... err ... it had not been changed all those times to stop it rising. (Odd isn't it, how the relatively basic CPI just happened to become so complicated?) Anyway, looking at the CPI did not find a nice true dollar price for me and my required purpose. So I moved on once more in my search.

Lets’ see what my now modified requirements were at this stage:

What I required was something a bit like the CPI (a commodity basket), and also a bit like the Dollar Index (a currency basket), where the US dollar is valued in another currency or solid real items in a basket of goods. But that currency must not be attached to any particular country and it’s economy or political swings. But it can’t be merely trading partner country currencies because they won’t work. And it can’t be retail consumer goods as in the CPI because their sizes and prices are all changed. And it can’t be oil or energy either. It must be a real solid valuable multinational something that is bought and sold in US dollars. Something that’s been around a long time. Something that is of such value that people who sell will demand a similar value of dollars in exchange every day before they part with it. Something not technologically enhanced or improved, and still sold in the same wrapper/package sizes today as it was decades ago. Something global like the dollar bought and sold everywhere. Something like ..... gold!

“Aha!” Said I to myself! “That’s it!” All I need is a gold chart.

So I got this one:

Unfortunately that is a chart of the dollar price of gold. But I wanted to have a chart of the price of dollars. So like currency traders do when they look at the FX contract I simply turned that chart upside down and then it showed the value of the US dollar over the last decade and a half.

Here it is "Forex style":

Not so good for the dollar, eh? But at least I had found what I wanted, a chart showing accurate prices of the US Dollar in real (inflation shown) terms with no price interference from other country currency fluctuations or CPI type value messing “in the price”!

Well that was it, the answer to my search was found and I could get back to work again.

So I took my true dollar price chart and overlaid on top the other data series for which I needed a comparison. This one:

And now my original job was done.

Here is the result:

I think by looking at it that that might be an 85% correlation or thereabouts, but that's just my visual impression and not a precise measurement or anything like that.

I almost forgot to tell you what that is.

The continuous black line is the value of the Assignat from the late 1700s (chart used from Wikipedia and modified to simplify by removing clutter) compared to the dollar from the late 1990s. The price charts of the two are sort of similar to each other in a certain way. Kind of reminiscent of each other, you might say.

A little background information:

At that time France was big, much bigger than today, and the previous regime that the French Revolution deposed had actually taken over all of Italy and much of Europe by using their military supremacy which defeated all before it. Unfortunately the military, together with controlling interests that enjoyed tax exemptions and didn't pay much tax all ran up huge costs, causing a big national debt, and essentially the taxes of the middle classes became so unfair that revolutionaries gathered much popular support and kicked out the protesting aristocracy and then took over the running of France (does any of that sound familiar?).

The Assignat was the currency of the French Revolution and they put a chap called Robespierre in charge.

It looked like this:

Robespierre was like the Queen in Alice in Wonderland only deadly serious, and was always saying “off with his head” and things like that. He authorized many executions in his time as leader of the Republic.

After the revolution, the leaders decided to rule by terror, and execute the old regime or other perceived enemies with the guillotine. This was called "The Reign of Terror" usually shortened to "The Terror". The mass execution sentences were passed by "A Revolutionary Tribunal" and numbered in the tens of thousands. It is another amazing resonance of the fabric of society over two and a quarter centuries that the leaders of the western nations actually have a "War on Terror" in progress right at this moment!

There is much symbolism descended to us from that time, like the Liberty Tree and the Phrygian Cap which was also known as the Liberty Cap which were symbols of the French Revolution. One of these symbols returned 150 odd years later in Adolph A Weinmann's beautiful engraving design of Lady Liberty wearing a Phrygian or Liberty Cap) which appears on the Walking Liberty Silver Half Dollar coin and the American Silver Eagle bullion coin.

I suppose it could also be said that either the Liberty movement, or the common usage of the word "Liberty", has also has a resurgence in the political conversation of the 21st century.

That's history, and it seems impossible any similarity at all could exist to events in the modern world of 2013 which is two hundred and twenty five years later. But similarity there is, uncanny similarity. I should add that I find the similarity of these mass societal movements fascinating, even down to the similarity of imagery used.

Anyway, during Robespierre’s career the Assignat declined in the way shown in the chart. They even confiscated assets to prop it up, like eg Church lands and so on. Some people refused to take the Assignats on principle after confiscation.  

Eventually somebody came along to straighten France out  and then Robespierre lost his head too. And the French people thought all their problems were sorted out.

You might have heard of the new fellow who took over then. His name was Napoleon.

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author can be found here: RhythmNPrice

78 Comments

Bollocks's picture

Furst!

ivars's picture

USA is getting ready for

USA is getting ready for autocracy, no doubts.

Mr. Fix's picture

3rd, (But who's counting anyway?)

This is a very nice follow-up to “Yardsticks” and explained in more detail why there really isn't any.

(well at least not much)

Thank you for the work you do here, you have greatly increased my understanding of the charts and graphs that I read. 

 (Yes, occasionally I look at them).wink

Marblesonac's picture

If only

If only we had some "off with their heads" moments.

AlienEyes's picture

If only

we could start with congress and the executive branch.

¤'s picture

Interesting

Mr_SpockFascinating

Thanks AM for the considerable effort and your perspective.

As you stated, once the yuan becomes fully convertible we'll get a clearer and fuller picture of the USD 's value.

Buy gold!

fraxinus's picture

Where's Louis XVI when you need him?

The crash of the French livre gained momentum very slowly, because from 1789 to 1792, the perception was that the King intended to wrestle down the budget deficit. Of course, his death in 1793 completed the rise to power of the "deficits don't matter" crowd, and I doubt that any modern-day head of government has the guts to fill Louis' shoes. frown

Island Guy's picture

Gold Manipulation

The problem with using gold as the "standard candle" for evaluating value over time is that gold itself is heavily manipulated.  So it won't give a true value either.

argentus maximus's picture

I think it's hilarious that

I think it's hilarious that the IMF, Fed/Central Bank PhDs and banksters "doing God's work"  and political leaders are dancing the same steps danced by the French Aristocracy, Royalty, Clergy and Revolutionaries of two and a half centuries ago, to the extent that currency charts resemble those of that previous time.

Of course as they do it, they're not ignorant of what they do. That's why the states (I use the word for its international meaning) are arming up. What was the first requirement of Greece to get their first bailout (loan) payments released? You guessed it - buy armaments!

As I see it the revolutionary coup, if measured by rise in income above all around is undoubtedly the .01% gaining supremacy over the old aristocracy (the body politic) and over the 99% too.

Politicians = Bourbon Royalty, old leaders now operating as puppets but with big perks for doing the right thing for their master-donors and may have to pay for what they are doing if power should transfer too fast.

Middle class = the rapidly becoming impoverished demograph soon to switch allegiance from their old paradigm - the leader they foolishly believed that represented them and their families".

The uber-wealthy .01% = French Revolutionary Committee with deployment of lethal force (armament of internal police forces)  via measures varying from "tanks and ultrasonic weapons" to riot shields and water cannon.

The reaction = the counter revolution = Napoleon = the winner between NWO (NWO/.01% are just the old order under a different name!) and the emergent "third party" which most crowds are beginning to recognize they have a need of.

But it's not really about any precise identification of who now is who then, since times are different. The change of eras/regimes is the common feature, along with the transfer of wealth and willingness to apply ruthless force.

gold slut's picture

Great thread!

Thanks for another brilliant thread Argentus, as always so thoughtful.

I have wondered about the same thing of late, and have decided to set my own personal basket of goods to follow and to monitor prices and quantities myself.  It has to be a heck of a lot more accurate than the fairy tales we are fed by TPTB!

brad_pitts_betterlooking_brother's picture

French History Is Fascinating

because it rhymes.

the french were often in backwardation too.

Bollocks's picture

sorry for the scrolling....

transplanted baby's picture

Queens and France

You might want to read Democracy in America by a Frenchman name Toqueville. I did. One impression that you are left with is that a benevolent monarchy is "better" than a democracy. The unfortunate reality is that you can't always get a benevolent monarchy.

Another fascinating read is The Guillotine and the Cross by an American named Carroll. The impression here- the French revolution was an evil thing. Nothing like the American revolution.

The book by the bedside now is Flee to the Fields.

Note that last title. Don't say I didn't warn you.

Green Lantern's picture

AM-BRILLIANT!!   Absolutely

AM-BRILLIANT!!  yesyes Absolutely freakin' brilliant!  Man, if I had your skills, I'd be somebody.

Next week, I request a graph illustrating where we are compared to the 1790 to 1793 period.  smiley

See 6th post down on the following thread for the timing. "The French Example"   I obviously got a couple of things wrong in terms of the stage of inflation we are at.   I'm smarter now.

http://www.tfmetalsreport.com/comment/288690

Actually, I don't want to know.  This is a situation where ignorance is bliss.

argentus maximus's picture

@GL: Would you consider

@GL:

Would you consider copying your post from last March, that you linked to above, to here? It's just so spot on in this topic it needs to be here in full, not just the link. (and I don't feel right copying it myself since it is your inspiration that's in it).

AM

tyberious's picture

I Think I found the problem

“The terms of the Federal Reserve Act (1913) … specified interest payments were to be made only in gold and after the gold was gone, the United States declared bankruptcy. Bankruptcy was declared on the carefully chosen date of March 9, 1933. (interesting numerology 3-9-33 or 333-333 ==666! ) After 1933, all property and all potential income of all persons born thereafter was hypothecated to the non Federal no Reserve private banking cartel but this another story.

“Gold and silver prices are being deliberately and criminally destroyed by bankers hoping to keep the financial system alive a little longer as the wealth of the economy is transferred to bankers in the form of interest payments….

“Lowering prices of gold and silver is equivalent to boosting the value of the dollar and simultaneously strengthening face value of government debt. … Destroying the price of gold and silver to maintain purchasing power of the dollar moves money from investments in gold and silver to government debt which rises in value relative to gold and silver.

…Metal prices were frantically slammed to slow the rise in interest rates on approximately June 17, 2013.

“Slamming the price of gold helped slowed the rate of increase in the 10 year yield temporarily, preventing an interest rate crisis. Note again, after October 1st, interest rates stopped falling and started climbing, and, again, a gold smack down in prices was engineered beginning in the second week.

“The price of gold and silver are being pushed lower at great cost. In order to engineer the sell down, naked short selling and flash trading are being used, both of which are causing the depletion of physical gold and silver, …

“In the very near future, the physical shortage of gold and silver will lead to default in the commodities market exchanges (comex and other metals exchanges) creating a crisis in metals delivery and, for a short time, making gold and silver unavailable at any price.

“At the same time when gold and silver prices rise exponentially and the metals exchanges default, bond prices will fall like a rock triggering financial system destroying interests rates.

“The only protection bond holders and dollar holders have is to sell both before interest rates begin to rise. …

“Buying gold and, preferably, silver and other safe assets is the only hope to save your wealth….”

http://www.silverdoctors.com/manipulated-markets-prospects-gold-u-s-dollar-bonds-equities-interest-rates/

DeaconBenjamin's picture

A seminal work on assignats

51fI614kQ8L._SY344_PJlook-inside-v2,TopR

Green Lantern's picture

Ok, AM.  Here it is with it's

Ok, AM.  Here it is with all it's imperfections. 

"The French Example" 

Very interesting how you are trying parallels to the French example of 1790.   I haven't read the book you mentioned but I have written about the French example a couple of times here in the past. 

To me the French example is a clear-cut three stage inflation scenario.  At the meeting in NY, Sinclair said something along the lines comparing this bull-market to the early 70's which mimicked a three step bull-market and that wouldn't happen this time in gold. 

Basically, you have a 1st stage inflation where prices are not rising as fast as the money supply.   As a result of this people hold onto their money waiting for prices to get better.  That's not many of us as we are busy trading our fiat away for metals.  But we do see that the masses have pulled out of the stock market and there are mass closings of consumer good stores that people are holding their fiat.   And some of that is people do not have the fiat to spend.

the next step is stage 2 which happened in France around 1790.  People begin to realize their money is loosing value.  And so they want to trade it away for somethign that WILL hold value.  Velocity is increasing people want goods, cars, real estate, equipment etc... Anything with intrinsic value that will be useful and will hold it's value.   We have to remember that the non-dollar asset of choice among the working class (most of us) are the metals for future spending power.   It is not the only non-dollar asset of the wealthy.  Fine art is a non-dollar asset and there are many fine art funds that have arisen in the last couple of years including Jim Rickards firm which has established one. 

At the second stage of inflation in France, as soon as they recieved their new assignant, they traded it away for something with intrinsic value as the assignant fell in value.    My sense is that we are at the beginning stage of a stage two inflation where metal buyers have realized their declining value of the dollar as well as those with some degree of wealth.  The masses have not figured it out but that could change in the next 4 to 6 months as we are seeing an increase of wealth buying luxury goods as I mentioned in previous post on velocity.  Those who are awakened already here on Turd, choose only metals as did a certain population of the French as it is the least risk.

Merchants in France recognized the decreasing value and so began to jack up the prices demanding more fiat for the same goods to counteract the decrease in value.   Government kept printing, demand for money decreased, increasing velocity out of money.

Between 1790 and 1793, France saw a SCARY inflation.  Something that cost 25 assignants ended up costing 1000 assignants.   Nobody wanted the assignant and they kept trading it away for goods or for metals.   This was stage 3 developing and this is where government began it's capital controls.   By enforcing wage and price controls.  This was the first attempt at government to control the descend of the assignant.  Gold and silver was outlawed as well as trade in foreign currencies. You couldn't sell goods above goverment set prices.   So this gave rise to a black market.   Which btw, the penalty was STIFF if you were caught.  And the laws became stiffer 6 years, then 20 years then death for breaking the laws.

By 1793, there was civil unrest, mobs and riots. People began stealing food.  Ok, these strong measures including putting people to death did stop the run on the assignant a wee bit and it went back to stage two inflation.  But not for long.  Finally, the french decided to put a new currency into circulation, the mandat, which was even WORSE.  As soon as it entered the economy, they entered a stage two inflation.  Make a long story short by 1797 fiat had ZERO value.  By 1799, there was a coup and A new chapter in Frances history.  His name was Napolean;)surprise

So yes, there are some parallels between Cyprus with the controls.  However, I see a couple of reasons that it won't be as overt in the USA.  If we begin bank holidays or overt capital controls as the world's super power and reserve currency, we are telling the world outright what the BRICS already know.  We are faltering.  We do not want to be so overt in our declaration.  I could see more MFglobals and people loosing their money in that way 1st before tight capital controls are put in place.   I could see foreign currency wars escalating, money being stolen, increased counterfeiting of bonds similar to the bearer bond scandals on financial institutions.

I disagree with the notion that fear won't make people put money in circulation.  It has worked time and time again and history will bear that out.   If you waiting to buy a car, and you know the price of that car will continue to go up and up and up, you will choose to buy it now rather than waiting for the future.  This will stimulate velocity.    And this is true especially for those with wealth.   Is that not what most of you are doing with gold and silver with people saying I hope gold and silver don't go up too fast so I can buy it more?  In a stage 3 inflation, the crowd will recognize gold and silver.   

Now, I realize that many people do not believe that is how things are going to unfold because never before have we seen a world currency standing in the shadows.   The BRICs are basically buying the entire African continent.  There are alot of unique things happening that I'm not sure fit neatly into any of the garden variety hyper-inflations and I guess you would have to put peak oil into that category also.

Spartacus Rex's picture

Thanks A.M.

For reminding us that history is definitely beginning to rhyme as the Banksters just keep whistling the same old tune that the Sheople can't help but keeping humming to,  as apparently the tune is intoxicatingly hypnotic. 

Spartacus Rex's picture

@ Tyberious "Think(ing)"

Bankruptcy was never declared by the United States, the Banksters' puppet FDR simply "Bailed Out" the Banksters by "Bailing In" the whole Country and a complicit and crooked Congress passed H.J.R. 192 in the fraudulent attempts to nullify the existing Gold Clauses in Contracts, thereby violating the U.S. Constitution's provision against passing any "ex post facto Law" under Article I Section 9 Clause 3, which nevertheless still took the remaining 1-2% honest Americans 50 years to apply enough effective pressure against Congress to repeal H.J.R. 192

Been there, won that one too!

Spartacus Rex's picture

@ Tyberious "Think(ing)"

Double post deleted

HappyNow's picture

Nice work argentus.   This is

Nice work argentus.   This is a very reasonable scenario.

The political parties are each as unbelievable as the other and in time of panic will not been seen as able to save the country.

I don't think we can stop the outcome.

Another party, or an individual will have enough appeal and be unknown enough to actually be credible because we will choose the devil we don't know over the 2 we know too well.

After the revolution/reformation or call it what you will whoever is next to govern will not be our friend, will not be ultimately seen as good for the country but will provide the flashpoint for whatever comes next.

Bollocks's picture

(No subject)

sierra skier's picture

Island Guy beat me to it,

Island guy said it first when he indicated that the manipulation of gold makes it difficult to peg the dollar value to it with confidence.

Then tyberious goes to the beginning of the current Federal Reserve in 1913 and the gold slams since then.

My thoughts go to the value of gold relative to the dollar when it was created in 1913 and to draw a comparison too todays purchasing power of both items. From the indications that appear to be common the dollar has lost between 96% to 98% of its value since the Fed. Reserve created it in 1913. Perhaps drawing a basket of goods, maybe out of the Sears Catalog or some other good reference and comparing to todays prices would give a true answer. The one I always hear is that an ounce of gold would buy a nice suit then and will also do so today.

Those in charge keep changing the measuring stick so it is near impossible to draw real conclusions, moving targets are more difficult to hit. This is obliviously intentional and necessary for those in charge to keep the folks from noticing the reality of their cleaning out our back pockets through inflation.

Tax increases, fees and other direct comparisons are easy to spot but moving and changing targets are much more difficult to draw comparisons and conclusions from. When those in charge camouflage the value of dollars with inflation by manipulating prices and quantities of the products we use they are able to hide much of it from most of the folks and many folks just don't seem to care.

There are however a few who do care and are aware of the devices used by those in charge and take efforts to protect themselves and their accumulated wealth with tangibles. I am proud to say that many in this community are amongst the most concerned and doing the most we can to be responsible for self sufficiency in the future.

Great post AM and your effort to point out just how difficult is really is to show just what a failure the dollar (or any other currency) is at maintaining value for the little guys.

tmosley's picture

One of my favorite musicals

One of my favorite musicals of all time is set in historical France, though a bit after Napoleon was out of the picture.

DayStar's picture

Harvey's Up!

  • Silver Coins Today: The one-day Silver Eagle gain was better than the weekly totals since the end of August. Sales for 2013 are now at 37,724,500. The annual record for the bullion coins belongs to year 2011 when sales reached 39,868,500. That year, it took until Nov. 28, 2011 for sales to hit where they are now.
  • Harvey: GOFO numbers are now mostly in the negative as gold is now extremely scarce as the boys are finding it harder to find physical. Gold is in backwardation from 1 month out to 3 months out. We had another monstrous bleed of 3.3 tonnes of gold which again leaves London heading for Shanghai.
  • Mario Draghi: I am the former Governor of the Bank of Italy that has the fourth largest reserve of gold in the world, but I never thought it wise to sell it, because for central banks this is a reserve of safety, it’s viewed by the country as such. In the case of non-dollar countries it gives you a value-protection against fluctuations against the dollar, so there are several reasons, risk diversification and so on.
  • Tyler Durden: Fosun International, China's largest private-owned conglomerate which invests in commodities, properties and pharmaceuticals announced in a statement filed just as quietly with the Hong Kong stock exchange, that it had purchased JPM's iconic former headquarters, the tower built by none other than David Rockefeller, at 1 Chase Manhattan Plaza for a measly $725 million.
  • Alex Pappas: There's no actual debt ceiling right now. The fiscal deal passed by Congress on Wednesday evening to re-open the government and get around the $16.4 trillion limit on borrowing doesn't actually increase the debt limit. It just temporarily suspends enforcement of it. That means Americans have no idea how much debt their government is going to rack up between now and Feb. 7, when the limits are supposed to go back into place and will have to be raised.
  • Frank Tang: In the early hours of the New York morning on Thursday, when scarcely a few hundred lots of gold futures are usually traded, a wave of buy orders worth over $2.3 billion surged into the market. Prices soared 3 percent in just 10 minutes.
  • John Rubino: The cost of reopening the government is a Republican civil war with only two likely outcomes: 1) The two groups stay in the big tent but challenge each other in primaries and intrigue over committee seats, etc., making a united, coherent policy front impossible and handing the next few elections to the Democrats. 2) The Tea Party/Libertarian Republicans leave and either join the existing Libertarian Party or start one of their own, siphoning just enough votes from Republicans in future elections to keep the Democrats in charge.
  • Reuters: Exports of gold jewellery from India rose 16.5 percent in value terms to $653.90 million in September, an industry body said on Friday, as supply pressures eased for exporters before the peak Christmas season in the United States.
  • Andrew Maguire: During the government shutdown the Fed moved in to short gold and buy the dollar in the FX markets in order to give the impression of stability as the dollar was declining and under tremendous pressure.  While these synthetic paper markets for gold are putting pressure on the price of gold, the underlying physical market is on fire. It’s only when these paper gold buyers have the audacity to turn up at a PM fix in London and demand the physical gold that alarm bells are triggered. The bullion banks are then forced to buy at market to fill these orders, and there is no bullion bank I know that can turn up 90 tonnes of gold supply overnight. That’s why we saw 1 - 3 month GOFO rates spike negative once again mid-week. As these orders stood for delivery, it actually forced gold into backwardation again. And it’s going to happen each and every time the gold price is now pushed lower.
  • Eric Sprott: What happens when someone’s (social security or pension) check falls by 50% or 60%? The economic chaos that will ensue will be unbelievable. But it’s going to happen. It’s so clear cut there is nothing that can be done about it. The whole world has this huge debt problem. If you have this view that the countries are insolvent, what does it mean for all of us? I’m talking about, as human beings, how is everyone going to survive?
  • Grant Williams: we are dealing with a physical, finite supply of a precious metal, and there is only so much of it to go around. There are unlimited amounts of paper, but that really is worth nothing. One day it’s going to matter, and it’s going to matter from a physical sense. People are not going to want to hold paper anymore, and they are going to insist on having physical gold delivered. And with the warehouses the way they are, the tightness of supply, you can’t have that situation going on and not have an increase in price.
  • SafeCastle.com: The 30-thousand members of Oath Keepers are ramping up their action teams, based loosely on the U.S. Special Forces “A Team” model. They feel like we are flat running out of time and we need to get as prepared as possible as fast as possible. The Oath Keepers national Board of Directors war-gamed what we think is the most likely move by our enemies to scrap the Constitution. We estimated that the most effective course for “them” to follow would be to intentionally trigger a catastrophic economic collapse as an economic “neutron bomb” (kills the people, but leaves the land intact), let the country descend into chaos, and ride in like the cavalry to "save" us by martial law and scrapping the Constitution.

All this and more on...

The Harvey Report! wink

http://www.tfmetalsreport.com/comment/359538#comment-359538

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tyberious's picture

@Spartacus Rex

https://docs.google.com/document/d/165i0dicryJ_KtzCr6agR6O6v4XaRM2EDr6f1WbmU3Fg/edit?hl=en&pli=1

The fact of the matter is, the United States did go "Bankrupt" in 1933 and was declared so by President Roosevelt by Executive Orders 6073, 6102, 6111 and by Executive Order 6260 on March 9, 1933, under the "Trading With The Enemy Act" of October 6, 1917, AS AMENDED by the Emergency Banking Relief Act, 48 Stat 1, Public Law No. 1, which is presently codified at 12 USCA 95a and confirmed at 95b. You can confirm this for yourself by reading it on FindLaw. Thereafter, Congress confirmed the bankruptcy on June 5, 1933, and thereupon impaired the obligations and considerations of contracts through the "Joint Resolution To Suspend The Gold Standard And Abrogate The Gold clause, June 5, 1933" (See: HJR-192, 73rd Congress, 1st Session). When the Courts were called upon to rule on various of the provisions designed to implement and compliment FDR's Emergency BANKING Relief Act of March 9, 1933, they were all found unconstitutional, so what FDR did was simply stack the "Court's" with HIS chosen obsequious members of the bench/bar and then sent many of the cases back through and REVERSED the rulings.



House Joint Resolution 192 (HJR-192), 48 Stat. 112, was passed by Congress on June 5, 1933. The 'Act' impaired the obligations and considerations of contacts and declared that the notes of the Federal Reserve banks were "legal tender" for the payment of both public and private debts, and that payment in gold Coin was against "public policy". (In effect, FDR and Congress, under executive orders and legislative fiat, nationalized the people's money, i.e., their gold Coin. Nationalization is a violation of the Law of Nations and existing public policy of Congress. See: Hilton vs. Guyot, 159 U.S. 113 (1895). The gold Coin that was confiscated (nationalized) was later used to purchase voting stockholder shares in The Bank and The Fund at $35 per ounce.) At this point in time, "Fair Market Value", i.e., a willing seller and buyer, without compulsion, lost any substantial meaning.



Moreover, all of the Governor's of the several States of the Union, who were summoned to and were in Washington, D.C. during the several days of this pre-planned economic "Emergency" (the first phase of which was to nationalize and expropriate the people's Money, i.e., their gold Coin on deposit in the banks), pledged the full faith and credit thereof to the aid of the National Government, and formed various socialist committees, such as the "Council of State Governments", "Social Security Administration", etc., to purportedly deal with the economic "Emergency." The Council of State Governments has been absorbed into such things as the National Conference Of Commissioners On Uniform State Laws, whose headquarters is located in Chicago, Illinois, and "all" being "members of the Bar", and operating under a different "Constitution and By-Laws", far distant from the depositories of the public records, and it is this organization that has promulgated, lobbied for, passed, adjudicated and ordered the implementation and execution of their purported "Uniform" and "Model" Acts and pretended statutory provisions, in order to "help implement international treaties of the United States or where world uniformity would be desirable." (1990/91 Reference Book, NCCUSL). These organizations operate under the "Declaration of INTERdependence" of January 22, 1937, and published some of their activities in "The Book Of The States." The 1937 Edition openly declares that the people engaged in such activities as the Farming/Husbandry Industry had been reduced to mere feudal "Tenants" on the Land they supposedly owned.



On April 25, 1938, the supreme Court overturned the standing precedents of the prior 150 years concerning "common law," in the federal government.



"THERE IS NO FEDERAL COMMON LAW, and CONGRESS HAS NO POWER TO DECLARE SUBSTANTIVE RULES OF COMMON LAW applicable IN A STATE, WHETHER they be LOCAL or GENERAL in their nature, be they COMMERCIAL LAW OR a part of the LAW OF TORTS." -- Erie Railroad Co. vs. Tompkins, 304 U.S. 64, 82 L.Ed. 1188.



You must realize that the Common Law is the fountain source of Substantive and Remedial Rights, if not our very Liberties.



The members and association of the Bar thereafter formed committees, granted themselves special privileges, immunities and franchises, and held meetings concerning the Judicial procedures, and further, amended laws so as "to conform to a trend of judicial decisions or to accomplish similar objectives", including hodepodging the jurisdictions of Law and Equity together, which is known today as "One Form Of Action." This was not by accident, but by a carefully conceived plan.



The enumerated, specified and distinct Jurisdictions established by the ordained Constitution (1787), Article III, Section 2, and under the Bill of Rights (1791), Amendment VII, were further hodgepodged and fundamentally changes in 1982 to include Admiralty jurisdiction, which was once again brought inland.



"This is the FUNDAMENTAL CHANGE necessary to effect unification of Civil and ADMIRALTY PROCEDURE. Just as the 1938 Rules ABOLISHED THE DISTINCTION between actions At Law and suits in Equity, this CHANGE WOULD ABOLISH THE DISTINCTION between CIVIL actions and suits in ADMIRALTY." (See: Federal Rules Of Civil Procedure, 1982 Ed., pg.17; also see, Federalist Papers No. 83; Declaration Of Resolves Of The First Continental Congress, October 14, 1774; Declaration Of Cause And Necessity Of Taking Up Arms, July 6, 1775; Declaration Of Independence, July 4, 1776; and, Bennet vs. Butterworth, 52 U.S. 669)



The United States thereafter entered the second World War during which time the "League of Nations" was reinstituted under PRETENSE of the "United Nations" (22 USCA 287, et seq.), and the "Bank For International Settlements" was reinstituted under PRETENSE of the "Bretton Woods Agreement" (22 USCA 286 et seq.) as the "International Monetary Fund" (The Fund) and the "International Bank For Reconstruction And Development" (The Bank or World Bank).



The United States as a corporate body politic (artificial), came out of World War II in worse economic condition that when it entered, and in 1950 declared Bankruptcy and "Reorganization." The Reorganization is located in Title 5 of the United States Codes Annotated. The "Explanation" at the beginning of 5 U.S.C.A. is MOST informative reading. The "Secretary of Treasury" was appointed as the "Receiver" in Bankruptcy. (See: Reorganization Plan No. 26, 5 U.S.C.A. 903; Public Law 94-564, Legislative History, pg. 5967)



The United States went down the road and periodically filed for further Reorganizations. Things and situations worsened, having done what they were Commanded NOT to do (See: Madison's Notes, Constitutional Convention, August 16, 1787; Federalist Papers No. 44), and in 1965 crowned their continuous fraudulent acitivities with passage of the "Coinage Act of 1965" completely debasing the Constitutional Coin (gold & silver, i.e., "Dollar"). (See: 18 USCA 331 & 332; U.S. vs. Marigold, 50 U.S. 560, 13 L.Ed 257) At the signing of the Coinage Act on July 23, 1965, Lyndon B. Johnson stated in his press release that:



"When I have signed this bill before me, we will have made the first fundamental change in our coinage in 173 years. The Coinage Act of 1965 supersedes the Act of 1792. And that Act had the title: An Act Establishing a Mint and Regulating the Coinage of the United States...."



"Now I will sign this bill to make the first change in our coinage system since the 18th Century. To those members of Congress, who are here on this historic occasion, I want to assure you that in making this change from the 18th Century we have no idea of returning to it."



It is important to take cognizance of the fact that NO Constitutional Amendment was EVER obtained to FUNDAMENTALLY CHANGE, amend, abridge or abolish the Constitutional mandates, provisions or prohibitions, but due to internal and external diversions surrounding the Viet Nam War, etc., the USURPATION and BREACH went unchallenged and unnoticed by the general public at large, who had become "a wealthy man's cannon fodder or cheap source of slave labor". (See: Silent Weapons For Quiet Wars, pgs. 6, 7, 8, 9, 12, 13 & 56) Congress was clearly delegated the Power and Authority to regulate and maintain the true and inherent "value" of the Coin within the scope and purview of Article I, Section 8, Clauses 5 & 6 and Article I, Section 10, Clause I, of the ordained Constitution (1787), and further, a corresponding DUTY and OBLIGATION to maintain said gold and silver Coin and Foreign Coin at and within the necessary and proper "equal weights and measures" clause. (See also: Bible, Deuteronomy, Chapter 25, verses 13 thru 16; Proverbs, Chapter 16, Verse 11; Public Law 97-289)




 

tyberious's picture

Guest Post: Growth Is Obsolete

http://www.zerohedge.com/news/2013-10-20/guest-post-growth-obsolete

We are in the third act of the industrial melodrama now where the dire sub-plot of peak oil has taken stage. Despite the wishful thinking and happy-talk propaganda lighting up the media-space, we have arrived at the problematic point of the story: the end of cheap oil. This is poorly understood by the public and, apparently, by leaders in business, politics, and the media, too. They misunderstand because they insist on thinking that peak oil was simply about running out of oil. It’s not. It’s about running out of the ability to extract it from the earth in a way that makes economic sense — that is, at a price we can afford in terms of available capital and energy invested (and also ecological destruction). That dynamic is now exerting a powerful influence on modern civilizations. We ignore it -- even at the highest levels of intellectual endeavor -- because we have made no alternate plans for running the complex operations of everyday life, and because the early manifestations of the dynamic present themselves in the realm of finance, which is dominated by academic viziers and money-grubbing opportunists who benefit from obfuscating reality.

The sad, stark fact is that oil is now too expensive to permit further expansion of economies and populations. Expensive oil upsets the cost structure of virtually every system we need to run modern life: transportation, commerce, food production, governance, to name a few. In particular expensive oil destroys the cost structures of banking and finance because not enough new wealth can be generated to repay previously accumulated debt, and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it. Through the industrial age, our money has become an increasingly abstract and complex product of debt creation. As Chris Martenson has put it so succinctly in The Crash Course, money is loaned into existence. Thus, the growth of debt (allowing the growth of money) has played a crucial role at the heart of our banking operations, and the very word “growth” has become shorthand for this process in the lingo of current economic discourse.

It is quite clear that the banking system has been thrown into great disarray as the price of oil levitated from $11-a-barrel in 1999 to the great spike of $140 in 2008, and then settled into a range between $75 and $110 since 2010. Most of this disarray is a result of attempts to offset the failure to create new real wealth with fake wealth generated by accounting fraud, "innovative" swindling, insider chicanery, high frequency front-running, naked shorting of securities, and the construction of a vast untested network of derivative counterparty wagers that give every sign of being booby-trapped. All this private monkey business has been abetted by public mischief in central bank interventions and market manipulations, fiscal irresponsibility, political payoffs for favorable legislation, statistical misreporting, and the failure to apply the rule of law in cases of blatant misconduct (e.g., the MF Global confiscation of segregated client accounts; the Goldman Sachs “Timberwolf” CDO scam… the list is very long).

Mr. Fix's picture

I think it's a little bit faster now,-Do you see any difference?

20131020_USAUSAUSA.jpg

redwood's picture

argentus

An inspired piece!  I have to wonder if the French had computers instead of pigeons whether we would have seen an accelerated historical development.  Yet your graph suggests not.  Interesting indeed.

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