CNBC: Gold to hit $11,000 per Oz on dollar collapse - Video

[LoveIsTruth]

Japanese "Consumers" Scramble To Spend... And Buy Cash Safes In Which To Hide Trillions In Cash
http://www.zerohedge.com/article/japane ... lions-cash" onclick="window.open(this.href);return false;

You can celebrate with them by making paper bonfire when their cash becomes worthless. Burn in this bonfire also your wrong ideas about monetary systems and freedom, because you got it exactly wrong.


The truth is:

Freedom => Free Competition in Currencies => 100% commodity based money (the most stable and the most honest monetary system known to man).

You don't believe in freedom, that's why you cannot understand it, but reality will force you to understand, because you cannot stop Liberty anymore than you can stop God.

[SempiternalHarbinger]

Wow. Me thinks you have some issues LoveIsTruth. Just because someone has a different opinion than you doesn't mean they don't understand freedom.

You don't believe in freedom, that's why you cannot understand it

8-|

So your saying, unless one see it with you all seeing eyes and agrees with you, they don't understand freedom? That is laughable. I think you need to gain a better understanding of free agency.

[LoveIsTruth]

Wow. Me thinks you have some issues LoveIsTruth. Just because someone has a different opinion than you doesn't mean they don't understand freedom.

You don't believe in freedom, that's why you cannot understand it

8-|

So your saying, unless one see it with you all seeing eyes and agrees with you, they don't understand freedom? That is laughable. I think you need to gain a better understanding of free agency.

The reason I said it to "Jason" is because of about 10,000 post he made trying to disprove the value of sound, honest, 100% commodity based currency and it's indispensable role in preserving Liberty; and also his messed-up love affair with desperate fraud known as fiat money, and improper use of government force (he cannot comprehend the Benson Principle http://www.ldsfreedomforum.com/viewtopi ... 19&t=12347" onclick="window.open(this.href);return false;).

[Jason]

Wow. Me thinks you have some issues LoveIsTruth. Just because someone has a different opinion than you doesn't mean they don't understand freedom.

You don't believe in freedom, that's why you cannot understand it

8-|

So your saying, unless one see it with you all seeing eyes and agrees with you, they don't understand freedom? That is laughable. I think you need to gain a better understanding of free agency.

The reason I said it to "Jason" is because of about 10,000 post he made trying to disprove the value of sound, honest, 100% commodity based currency and it's indispensable role in preserving Liberty; and also his messed-up love affair with desperate fraud known as fiat money, and improper use of government force (he cannot comprehend the Benson Principle http://www.ldsfreedomforum.com/viewtopi ... 19&t=12347" onclick="window.open(this.href);return false;).

LOL....$54.9 trillion and declining!!!

Here's a little tidbit from the site you linked to previously -

While 2008 total debt increased $3 Trillion, 8 times faster than GDP,
Total Debt in 2009 & 2010 stopped growing - like hitting a brick wall !!
While private sector debt dropped via defaults & foreclosures,
federal government debt expanded $3.3 ($1.6 trillion 2009 + $1.7 trillion 2010)
[state & local govt. debt expanded $226 billion]

http://grandfather-economic-report.com/debt-nat.htm" onclick="window.open(this.href);return false;

....so government expanded by $3.3 trillion yet total debt declined by $2.1 trillion from 2008......so the private sector declined by $5.4 trillion....

....also the private sector drop isn't due solely to defaults and foreclosures....

[LoveIsTruth]

....so government expanded by $3.3 trillion yet total debt declined by $2.1 trillion from 2008......so the private sector declined by $5.4 trillion....

Let's do some math:


3.3-2.1 = 1.2 Trillion new dollars in circulation since 2008.

Have you seen what a trillion dollars look like?



(Not to mention that government (unproductive) sector expanded by 3.3 Trillion, and private (productive) sector contracted by 5.4) That is the nature of Fiat money: Liberty killing fraud.
Liberty demands Sound money.

Fed steals another $Trillion today! See what it looks like!!
http://www.ldsfreedomforum.com/viewtopi ... =1&t=14737" onclick="window.open(this.href);return false;

Plus in case of defaults: reduction of debt through defaults can actually increase amount of money in circulation (because more money has been created than (repaid) destroyed).

[Jason]

....so government expanded by $3.3 trillion yet total debt declined by $2.1 trillion from 2008......so the private sector declined by $5.4 trillion....

Let's do some math:


3.3-2.1 = 1.2 Trillion new dollars in circulation since 2008.

Have you seen what a trillion dollars look like?



(Not to mention that government (unproductive) sector expanded by 3.3 Trillion, and private (productive) sector contracted by 5.4) That is the nature of Fiat money: Liberty killing fraud.
Liberty demands Sound money.

Fed steals another $Trillion today! See what it looks like!!
http://www.ldsfreedomforum.com/viewtopi ... =1&t=14737" onclick="window.open(this.href);return false;

Plus in case of defaults: reduction of debt through defaults can actually increase amount of money in circulation (because more money has been created than (repaid) destroyed).

Speaking of math....umm your math is off...

Total Debt declined by $2.1 trillion.....while the government PORTION grew by $3.3 trillion.....meaning the private sector had to contract by $5.4 trillion.

IF the whole $5.4 trillion was due to default (forfeiture of assets and/or debt forgiveness - i.e. no dollar destruction occurred)....THEN the increase in government debt would be an increase in the money supply and the cause of inflation. On the other hand, IF payment of debt by the private sector exceeded the $3.3 trillion increase by the government....THEN the result would be deflation.

Only the Federal Reserve has those numbers. To my knowledge they are not released to the public.....at least I haven't run across that specific breakdown.

My perspective based on the highest cash holdings by corporations in recent history.....and reduction of corporate debt (although mostly offset by the increase in government debt).....this that we have mild deflation. To each their own though.....

[LoveIsTruth]

IF the whole $5.4 trillion was due to default (forfeiture of assets and/or debt forgiveness - i.e. no dollar destruction occurred)....THEN the increase in government debt would be an increase in the money supply and the cause of inflation.

Ok. You are right. My math in this example was wrong. But, back to the default point I made before:

There is a certain kind of defaults in which total money supply increases because more money is created (loaned) than destroyed (repaid). This occurs when the amount repaid is less than the principle loaned. Granted not all defaults are like that, but probably more than a half (it is not often that a default occurs AFTER the amount equal to principle has been paid back). So if you do math now what do we have?

3.3 trillion created in government debt, means money supply went up by 3.3 trillion.
5.4 trillion decline of private debt: I venture to say probably more than half of it was a default, which is at least 2.7 trillion: and more than half of that was a default before the amount equal to principle was repaid (in fact most defaults probably occur before the amount equal to half the principle was repaid); which gives us, very conservatively about 0.7 to 1 trillion dollars left in circulation because of these defaults. The number is probably much higher, but anyway. Our total then is 3.3 + 1 = 4.3 trillion addition to circulation since 2008!

Here is your inflation, my friend!

[Jason]

IF the whole $5.4 trillion was due to default (forfeiture of assets and/or debt forgiveness - i.e. no dollar destruction occurred)....THEN the increase in government debt would be an increase in the money supply and the cause of inflation.

Ok. You are right. My math in this example was wrong. But, back to the default point I made before:

There is a certain kind of defaults in which total money supply increases because more money is created (loaned) than destroyed (repaid). This occurs when the amount repaid is less than the principle loaned. Granted not all defaults are like that, but probably more than a half (it is not often that a default occurs AFTER the amount equal to principle has been paid back). So if you do math now what do we have?

3.3 trillion created in government debt, means money supply went up by 3.3 trillion.
5.4 trillion decline of private debt: I venture to say probably more than half of it was a default, which is at least 2.7 trillion: and more than half of that was a default before the amount equal to principle was repaid (in fact most defaults probably occur before the amount equal to half the principle was repaid); which gives us, very conservatively about 0.7 to 1 trillion dollars left in circulation because of these defaults. The number is probably much higher, but anyway. Our total then is 3.3 + 1 = 4.3 trillion addition to circulation since 2008!

Here is your inflation, my friend!

First let's get a couple of things straight.

At the point of incurring the debt - inflation occurs. I borrow $300k to buy a house.....$300k into the economy....that will come out (be destroyed) over the next 15+ years. One lump sum in.....small lump sums out. Inflation hits hard and fast.....deflation is spread out over a more prolonged period (unless built up via prolonged kick the can down the road efforts).

Thus a cycle (business cycle) occurs with inflation followed by deflation.

The way to break the cycle is to create more loans/debt/money faster than the loans/debt is being paid off (money destroyed). At the end of the day all this does is extend the business cycle on a macro scale to what have been historically 20-25 year periods. Greenspan was able to extend this last cycle to 30+ years by introducing loan programs like the Sweeps program and lowering the cost of debt (interest) to 50 year lows to facilitate more debt. This works up until the debt saturation point.

Default does not create inflation.....it simply prevents deflation by relieving the debt burden (money destruction) in exchange for assets or forgiveness.

Debt creates inflation.

Debt must be serviced by income/wages. There isn't enough money in circulation to meet the obligation thus default inevitably occurs thus transferring ownership of assets to the bank.

The game isn't about inflation/deflation.....it is about getting gain (obtaining ownership of assets) and control of those assets.

Now back to the math....

Agreed $3.3 trillion into the system via increase in government debt. $2.1 trillion decline in total debt....thus private sector took hit of $5.4 trillion....default/foreclosure amounts could be anywhere from a very small portion to the total amount???

Let's say you are correct in your assumptions about default (50% default).....all that means is that the money (50% defaulted on) was not destroyed. Its already in the system and CANNOT add to the amount in circulation.

If I default on $500k home loan.....the bank doesn't give me an additional $500k to put into the economy.

Therefore you have $3.3 trillion added.......and anywhere from 0 (100% default) to $5.4 trillion (0 % default) destroyed. Based on your guesstimate of 50% default....you would have $3.3 (created) - $2.7 (50% destroyed) to equal $600 billion added to circulation since 2008! A paltry sum in comparison to the levels of money/debt created from 1995 to 2008!

I would guess that the default rate is actually much lower than 50%....I believe its running about 6-7% on residential mortgages and 3-4% of commercial mortgages. Credit cards (unsecured debt) I think are between 15-20%. Corporations have paid down debt and accumulated cash at a recently unprecedented rate as well....

If you figured 25% default rate (which is still probably very high) you are looking at $1.35 trillion that wasn't destroyed......or just over $4 trillion that was destroyed versus $3.3 trillion created by government borrowing......or net decline of $700 billion. Probably much more than that considering the depth of the economic decline over the past couple of years.....

[LoveIsTruth]

Let's say you are correct in your assumptions about default (50% default).....all that means is that the money (50% defaulted on) was not destroyed. Its already in the system and CANNOT add to the amount in circulation.

I understand what you are saying, but you are missing one important point. Yes it is true that there are two forces at work a) inflation (i.e. creation of new money when loans are made) and b) deflation (i.e. destruction of money as the loans are repaid). What I am trying to show you is that a) always, mathematically greater than b). So, thus, defaulted money, though "already in the system," DOES add to the amount in circulation, because it is part of the imbalance, it should have been destroyed but it wasn't, so when new loans are made total circulation is always in an upward trend, because AGAIN: MORE MONEY IS BEING CREATED THAN DESTROYED. How simple can this be?!

This is why the dollar lost 97% of its purchasing power in the last 100 years.

[Jason]

Let's say you are correct in your assumptions about default (50% default).....all that means is that the money (50% defaulted on) was not destroyed. Its already in the system and CANNOT add to the amount in circulation.

I understand what you are saying, but you are missing one important point. Yes it is true that there are two forces at work a) inflation (i.e. creation of new money when loans are made) and b) deflation (i.e. destruction of money as the loans are repaid). What I am trying to show you is that a) always, mathematically greater than b). So, thus, defaulted money, though "already in the system," DOES add to the amount in circulation, because it is part of the imbalance, it should have been destroyed but it wasn't, so when new loans are made total circulation is always in an upward trend, because AGAIN: MORE MONEY IS BEING CREATED THAN DESTROYED. How simple can this be?!

This is why the dollar lost 97% of its purchasing power in the last 100 years.

I understand the point you are trying to make. You still do not seem to get mine. Defaulted money does not ADD to the amount in circulation....it is simply not destroyed. It was already added when the debt was incurred. I know you are trying to say that because this defaulted money is not destroyed that it adds to the pool.....but the reality is it was already added to the pool.

Think of it as a swimming pool. New debt adds water to the pool....payment of debt takes water out. Default means you leave the pool alone as either pure forgiveness or assets are taken in lieu of the debt.

You are also projecting the assumption that the level of new loans will always exceed the level of destruction....which isn't the case as we have witnessed over the past two years with the decline in total debt despite government increases. Thus total circulation is not always in an upward trend. In fact after the debt saturation point (baring free money from helicopters) it will be a drawn out deflationary spiral as money is vacuumed up and destroyed. The default rate will rise as fewer and fewer dollars are in circulation but while there remains money to pay debt.....someone will be paying off debt. Last but not least should be the Mormons who have been instructed to do so.

We already experienced the inflation with the rapid increase in debt (injection of new money into the system). At best with 100% default you would remain flat. Reality is deflation.....unless of course you can prove that new debt is occurring at a faster rate than debt is being paid off (especially in light of declining wages, jobs, asset values, etc.).

Again the main point at issue here is timing (the point at which the inflation occurs and the point at which deflation occurs). Over time defaults mean that more money is created than destroyed (thus the drop in value of the dollars over the long haul despite mini deflationary periods/recessions where the dollar temporarily increased in value - your main point I know). But that only works as long as new debt continues to be created in excess of debt destruction....or at least the majority of the time.....which works up until the debt saturation point.

From the debt saturation point forward....debt destruction will occur at a greater rate than debt creation. On a macro scale it has taken decades to get to this tipping point (not everyone is buried in debt but the vast majority are - the tipping point). Greenspan (Sweeps program, interest rates, option ARMs, ignoring China's currency peg, etc) pushed it to the point that it was guaranteed there would be no recovery.....production could not be increased to the point to sustain the debt. The main vehicle was the residential housing boom that required not only near zero interest rates but also all of the banking industries creativity - exotic leverage instruments. All while production shifted to China via their currency peg that went unchallenged from our elected representatives. In fact even the opposite occurred as Federal and State tax revenues were expended to help shift US businesses to China (see Huntsman's efforts). We paid for our own demise and allowed the debt gavage to be inserted and willingly swallowed the poison handed to us.

Without any secret combinations it would take decades to work through the burden that has been created...but most likely (imo) we will see the full brunt of it over the next three years. If President Hinckley was precisely talking 7 years AND it kicked off in 2001 and 2008.....then 4 1/2 years to go. My bet is a reset occurs at that point.....but one still has to survive the gap between here and there.....and my bet is it will be a severe deflationary gap (famine) versus the good years fueled by crazy increases in new debt. In that gap I anticipate that PMs won't fare too well as reality sets in....

[LoveIsTruth]

Saturation Point is fiction for the government, because they own the printing press. (I know, you will say Fed is not the government... Irrelevant details: Fed needs the government to control the people, and government needs the Fed to rob the people, so they will keep printing until the dollar is destroyed, and replaced with a new fiat fraud, if we allow it.)

Therefore money will keep poring in, as government spending escalates (in dollar amounts) and the purchasing power of the dollar goes to ZERO. This is the destiny of every fiat fraud.

Free Competition in Currencies, as Freedom demands, is the only permanent and true solution.
Free Competition in Currencies kills fiat! Fiat CANNOT exist where Free Competition in Currencies is! Because fiat is fraud, and no one likes being plundered. Thus Free Competition in Currencies keeps the government in iron check against robbing the people via legalized counterfeiting and inflation, because when free to choose, the people will freely choose a 100% commodity based currency, the most stable and the most honest monetary system KNOWN TO MAN!

Honest Money Constitutional Amendment
http://www.ronpaulforums.com/showthread ... -Amendment" onclick="window.open(this.href);return false;

[Jason]

Saturation Point is fiction for the government, because they own the printing press. (I know, you will say Fed is not the government... Irrelevant details: Fed needs the government to control the people, and government needs the Fed to rob the people, so they will keep printing until the dollar is destroyed, and replaced with a new fiat fraud, if we allow it.)

Therefore money will keep poring in, as government spending escalates (in dollar amounts) and the purchasing power of the dollar goes to ZERO. This is the destiny of every fiat fraud.

Free Competition in Currencies, as Freedom demands, is the only permanent and true solution.
Free Competition in Currencies kills fiat! Fiat CANNOT exist where Free Competition in Currencies is! Because fiat is fraud, and no one likes being plundered. Thus Free Competition in Currencies keeps the government in iron check against robbing the people via legalized counterfeiting and inflation, because when free to choose, the people will freely choose a 100% commodity based currency, the most stable and the most honest monetary system KNOWN TO MAN!

Honest Money Constitutional Amendment
http://www.ronpaulforums.com/showthread ... -Amendment" onclick="window.open(this.href);return false;

Well so much for another attempt at reason/logic with you. Every time you are confronted by evidence that disrupts your paradigm you go back to your cheer-leading rant with fingers in your ears.....although instead of M-I-C-K-E-Y.....its DOLLAR WILL GO TO ZERO.....meanwhile Total Debt continues to decline as money is sucked out of circulation!!!

fyi - every dollar the government prints will consume a dollar or more on the private side after the debt saturation point (new money growth via debt comes to a standstill on the private side). Government will buy things but not produce anything versus the private side that is scrambling for cash. Thus the private side will attempt to work for government and quit producing. You won't get inflation....instead you'll get production destruction.

Maybe we can all work for the government and fight wars, build missiles, spy on each other, etc......and we'll all eat good on government food stamps!!!

Of course the reality is that government spending will soon tank (state and local as of July 1st of this year and Aug should be interesting for the Federal branch) as they bump interest costs up....goodbye social safety nets and hello riots!!!

Case in point is the ethanol subsidies that eat up 40% or more of the corn produced. Farmers get paid more so they produce corn instead of other crops. The process is negative return for energy so it consumes more than it produces. You get higher prices for everything related while reaping lower production levels. A downward spiral!

[LoveIsTruth]

Well so much for another attempt at reason/logic with you. Every time you are confronted by evidence that disrupts your paradigm you go back to your cheer-leading rant with fingers in your ears.....although instead of M-I-C-K-E-Y.....its DOLLAR WILL GO TO ZERO.....meanwhile Total Debt continues to decline as money is sucked out of circulation!!!

fyi - every dollar the government prints will consume a dollar or more on the private side after the debt saturation point (new money growth via debt comes to a standstill on the private side). Government will buy things but not produce anything versus the private side that is scrambling for cash. Thus the private side will attempt to work for government and quit producing. You won't get inflation....instead you'll get production destruction.

Maybe we can all work for the government and fight wars, build missiles, spy on each other, etc......and we'll all eat good on government food stamps!!!

Of course the reality is that government spending will soon tank (state and local as of July 1st of this year and Aug should be interesting for the Federal branch) as they bump interest costs up....goodbye social safety nets and hello riots!!!

Case in point is the ethanol subsidies that eat up 40% or more of the corn produced. Farmers get paid more so they produce corn instead of other crops. The process is negative return for energy so it consumes more than it produces. You get higher prices for everything related while reaping lower production levels. A downward spiral!

Your whole argument is built on existence of "Debt Saturation Point," and I told you that IT DOES NOT EXIST as far as government is concerned. They will ALWAYS be able to print more and more money. Disprove that.

[Jason]

Well so much for another attempt at reason/logic with you. Every time you are confronted by evidence that disrupts your paradigm you go back to your cheer-leading rant with fingers in your ears.....although instead of M-I-C-K-E-Y.....its DOLLAR WILL GO TO ZERO.....meanwhile Total Debt continues to decline as money is sucked out of circulation!!!

fyi - every dollar the government prints will consume a dollar or more on the private side after the debt saturation point (new money growth via debt comes to a standstill on the private side). Government will buy things but not produce anything versus the private side that is scrambling for cash. Thus the private side will attempt to work for government and quit producing. You won't get inflation....instead you'll get production destruction.

Maybe we can all work for the government and fight wars, build missiles, spy on each other, etc......and we'll all eat good on government food stamps!!!

Of course the reality is that government spending will soon tank (state and local as of July 1st of this year and Aug should be interesting for the Federal branch) as they bump interest costs up....goodbye social safety nets and hello riots!!!

Case in point is the ethanol subsidies that eat up 40% or more of the corn produced. Farmers get paid more so they produce corn instead of other crops. The process is negative return for energy so it consumes more than it produces. You get higher prices for everything related while reaping lower production levels. A downward spiral!

Your whole argument is built on existence of "Debt Saturation Point," and I told you that IT DOES NOT EXIST as far as government is concerned. They will ALWAYS be able to print more and more money. Disprove that.

LOL....Yes it does....and quite simple and easy to prove!

Debt Saturation Point = The point at which total income can no longer support total debt.

In the specific case of government this is where the service costs exceed tax revenue. It exists whether you like it or not. Perhaps you can prove that the government prints its own money (w/o debt)????

The reality is government is non-productive overhead for the respective population and cannot be taken in isolation from the representative population. In the macro world this is the picture courtesy of Nathan Martin (whose blog excerpts I post almost daily in Blipits) -

Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

http://ftalphaville.ft.com/blog/2010/03 ... ion-alert/" onclick="window.open(this.href);return false;

This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

http://www.shtfplan.com/headline-news/t ... n_03212010" onclick="window.open(this.href);return false;

....and should be your main argument for inflation (via Jesse) -

The debt must be liquidated and income in the form of real wages must increase to bring this relationship back into balance.

This is going to be a dangerous path for the US monetary authority to tread, because a misstep will lead to an inflationary spiral that will surprise most economists as did the stagflation of the 1970's, which up until that point was considered to be almost impossible according to the prevailing theory of that day.

The financial engineers will keep at this until they hit they wall. If we were not in the car with them it might be a more interesting exercise to observe. The answer of course is to get out of the car as best you can.

Think of debt as a surrogate for the creation of money, in its various forms, for that is what it is. What this chart is showing is that money being creating is aenemic, and a trend that looks very much like the 'law of diminishing returns.'

This is the well spring of monetary inflation, that is, the power of money to create some substance to back it. The more dollars that are printed, the weaker their backing, without an economic vitality created by savings, investment, and labor.

This is why I would say that the US dollar is an obvious death spiral. I would not say that its demise is inevitable, merely likely.

http://jessescrossroadscafe.blogspot.co ... onomy.html" onclick="window.open(this.href);return false;

....except (from Nathan again) -

I think you’re going to see more companies fall victim to the forces of margin compression and then deflation as QE unwinds. There are rumors the next trick by the “Fed” is already in motion. The problem for them is that they have already saturated the macro economy with debt – new schemes that fail to unsaturated the debt will only lead to failure and more hardship for Americans.

If you look at a chart of Base Money, it's pretty hard to argue that money pumping has not been occurring:

Now, if you look at the Mean Duration of Unemployment, you are going to be startled, and you are certainly not going to see any form of “recovery” or “job creation” here:

Not proof enough? Do I need to pull out the “Chart of the Century” showing the clearly diminishing returns of debt?

Just as a kicker, when you pour hot money into a debt saturated environment, something bad happens to the velocity of money. When people, businesses, and governments finally get their hands on private created debt money, because they already carry so much debt they have no choice but to turn that money back around and send it back to the bank (plus interest). Thus velocity goes nowhere, it is a symptom of debt saturation. Below is a chart of the M1 money multiplier – how’s the “Fed” looking so far?

The St. Louis “Fed” finally added velocity to their data base, so now I can make velocity charts. When looking at the MZM velocity (MZM is currently the largest measurement of “money”) something struck me:

Oh yeah, velocity is dead, but doesn’t that chart look just like a chart of interest rates? Okay, let’s combine the Federal Funds rate with MZM Velocity and see what happens:

Hmmm... So what’s happening here? Well, in 1980 then Chairman Volcker raised rates to nearly 20% to kill inflation and rates have been falling ever since. But so has the velocity of money… but at some point velocity fell off a cliff, that point in my opinion, is the point at which macroeconomic debt saturation was reached. It was the same point at which the addition of debt began producing negative returns on the diminishing returns chart. It has lead to structural unemployment, deflation in things you hold as an “asset,” and inflation in things you need to consume.

http://economicedge.blogspot.com/2011/0 ... d-617.html" onclick="window.open(this.href);return false;

....and my conclusion is a little different than Nathan's.....in that I believe in a debt saturated economy any dollar printed by the Fed (Reserve) will be vacuumed up to service debt (until free dollars or interest free debt is available to the people).....and any dollar put out by the Fed (government) will steal dollars from the private side as businesses rush to service a non-productive Fed (government) in their efforts to service their debts.....thus leading to a decline in production (GDP) and the ability to service debt. In other words.....the more they print the more production they destroy which makes the debt all the more burdensome and the resultant deflation all the more worse. Instead of the decades of gradual deflationary decline (as witnessed in Japan over the past couple decades).....we instead flat-line while the slope of the deflationary cliff approaches 90 degrees. Deflation is compressed into a much shorter and more wicked and infinitely more painful period of time. Compressing 20 or 30 years into 3 or 4 years....

[LoveIsTruth]

According to you, Jason:

Debt Saturation Point = The point at which total income can no longer support total debt.

In the specific case of government this is where the service costs exceed tax revenue.

In case of government, suppose interest on debt exceeds tax revenue. What do you think happens? Do you think the Fed will refuse to print up and loan more money? If they did, the government, under political pressure for handouts, would abolish the Fed and start printing its own money. That's why the Fed will accommodate the government addict until the dollar is destroyed by hyperinflation, regardless of governments ability to service the debt. This is the predictable end of ALL fiat currencies.

[Jason]

According to you, Jason:

Debt Saturation Point = The point at which total income can no longer support total debt.

In the specific case of government this is where the service costs exceed tax revenue.

In case of government, suppose interest on debt exceeds tax revenue. What do you think happens? Do you think the Fed will refuse to print up and loan more money? If they did, the government, under political pressure for handouts, would abolish the Fed and start printing its own money. That's why the Fed will accommodate the government addict until the dollar is destroyed by hyperinflation, regardless of governments ability to service the debt. This is the predictable end of ALL fiat currencies.

You commonly blend Federal Government with Federal Reserve.....which muddies the waters significantly thus blurring the macro vision concerning who's doing what and what the respective players stand to gain...along with who controls whom.

The reality is the banks own the politicians! Not the other way around. That's why the Fed (Federal Reserve) will not accommodate the government (really the extended will of the people - used to be) as they have many many times in the last 100 years....look at the recently unpopular bailouts of the banking system via tax dollars and Federal Reserve shell games that the majority of the people (and thus by design their elected representatives - should have) were against. Instead the government will enforce the will of the banks upon the people until the people bleed each other out in the streets as the system comes apart at the pieces due to wickedness.

Why did deflation win the day during the Great Depression??? The government had far more power and control over the printing press then than they do now....

[LoveIsTruth]

You commonly blend Federal Government with Federal Reserve.....which muddies the waters significantly thus blurring the macro vision concerning who's doing what and what the respective players stand to gain...along with who controls whom.

The reality is the banks own the politicians! Not the other way around. That's why the Fed (Federal Reserve) will not accommodate the government (really the extended will of the people - used to be) as they have many many times in the last 100 years....look at the recently unpopular bailouts of the banking system via tax dollars and Federal Reserve shell games that the majority of the people (and thus by design their elected representatives - should have) were against. Instead the government will enforce the will of the banks upon the people until the people bleed each other out in the streets as the system comes apart at the pieces due to wickedness.

Why did deflation win the day during the Great Depression??? The government had far more power and control over the printing press then than they do now....

As I said before: Fed needs the government to control the people, to give them appearance of legitimacy. If the Fed allowed the government to default, they would lose control over the people, who would be clamoring for handouts.


In the depression, deflation prevailed because money was backed by gold. Therefore the fraudulent, un-backed notes had to be liquidated. Now no such restraint exists, because the currency is fully fiat, and fully worthless.

[Still Learning]

I just want to pipe in a quick second. I am enjoying your arguments on both sides. I think both are right in certain aspects. I know the real underlying disagreement is between deflation/inflation. I used to be a hardcore inflationist. However, when I read and listen to the words of the prophets in these last days, they are saying "get out of debt." My belief is that debt would be a good thing in an inflationary period. And if the fiat currency fails, then our debt would be wiped out. Why would they give such council if debt will simply be wiped out by collapse of the fiat? This is what leads me - although I have certainly a lesser understanding that either of you - to believe that deflation will win this battle. Granted there could be the argument that we won't buy food storage and/or focus on good things of the world if we are in debt up to our eyebrows and buying into the lusts of Babylon. I don't think that is a very sound argument. If the fiat collapses, and it will, the federal government and the banks aren't simply going to allow our unpaid debts go with being paid. They will get us one way or another. My guess is we will do a transition similar to the way it was done with the Euro.

So, I guess maybe my point is to LoveIsTruth, how do you contrast your argument with that of the warnings of our latter-day prophets? Please believe me that I am not arguing against you but rather trying to better understand this. Thanks to both of you and keep it going. I am Still Learning.

[LoveIsTruth]

So, I guess maybe my point is to LoveIsTruth, how do you contrast your argument with that of the warnings of our latter-day prophets? Please believe me that I am not arguing against you but rather trying to better understand this. Thanks to both of you and keep it going. I am Still Learning.

The prophets did not say a word about deflation. But did speak forcefully about inflation:

http://www.ldsfreedomforum.com/viewtopi ... 33#p203166" onclick="window.open(this.href);return false;


As for why advice to get out of debt, please see:
http://www.ldsfreedomforum.com/viewtopi ... 49#p203949" onclick="window.open(this.href);return false;

Thanks for your questions and kind comments

Best regards.

[Jason]

The prophets did not say a word about deflation. But did speak forcefully about inflation...

LOL....only if you are willfully ignorant!

President Gordon B. Hinckley has taught: “Set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts” ("To the Boys and to the Men," Ensign, Nov. 1998, 54).

http://www.providentliving.org/content/ ... -1,00.html" onclick="window.open(this.href);return false;

....since when has a small reserve been the saving grace during inflation or better yet the hyperinflation you and Ron Paul are predicting???

MANCHESTER — Texas congressman Ron Paul on Friday predicted that inflation will hit 50 percent in the next couple of years, thanks to the massive debt the country has accumulated.
http://www.unionleader.com/article/2011 ... /706119982" onclick="window.open(this.href);return false;

.....meanwhile corporations, hedge funds, banks, etc... are accumulating cash as fast as they can.....from CocaCola to PIMCO to excess reserves stashed by the banks at the Federal Reserve. Not to mention paying off debt.

In an environment of 50% inflation over a couple of years......wouldn't the most prudent thing to do is borrow every last dollar you can borrow at interest rates less than half the rise in inflation.....and buy up assets, PMs, commodities, etc?????

So either you and Ron Paul are right.......and the prophets, CFOs, largest bondholders in the world, etc....are wrong......

OR 100's of the world's best CFO's and money managers are economic idiots and the prophets are giving us non-prudent counsel for the 1st time since the earth was created and man placed in it!

....Or Ron Paul is an economic idiot....

.....Or worse yet.....a stooge and voice for the elite to a select market segment of America.

You choose....and put your money/debt where your mouth is!!!

[LoveIsTruth]

Jason, the word "deflation" is not mentioned even once in all of your quotes. Your extrapolations equating the quotes to the word "deflation" are wrong. You are overreaching, and assigning to the prophets the words they have NOT spoken.

This is a very foolish position! And when the dollar is destroyed by HYPERINFLATION, not only will you look like a fool, but you will also bring disrepute on the prophets, to whom you assigned the word "deflation" which they have NOT spoken. In fact, they said exactly the opposite, and explicitly used the word "INFLATION!"

http://www.ldsfreedomforum.com/viewtopi ... 33#p203166" onclick="window.open(this.href);return false;

[Jason]

Jason, the word "deflation" is not mentioned even once in all of your quotes. Your extrapolations equating the quotes to the word "deflation" are wrong. You are overreaching, and assigning to the prophets the words they have NOT spoken.

This is a very foolish position! And when the dollar is destroyed by HYPERINFLATION, not only will you look like a fool, but you will also bring disrepute on the prophets, to whom you assigned the word "deflation" which they have NOT spoken. In fact, they said exactly the opposite, and explicitly used the word "INFLATION!"

http://www.ldsfreedomforum.com/viewtopi ... 33#p203166" onclick="window.open(this.href);return false;

LOL....how do you define surviving on a small reserve of savings during a period of high inflation (like 50% over next couple years)???

How do you define a "Day of Reckoning" on debt with inflation/hyperinflation???

Why would one be amiss to borrow dollars at near zero percent today that one will have to pay back with dollars that will be worth 50% less over the next couple of years???

Is a depression deflationary.....or inflationary??? How did it work during the Great Depression??? Why would President Hinckley warn about that while discussing the Egyptian scenario - "I am a child of the Great Depression of the thirties. I repeat, I hope we will never again see such a depression. But I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people."???

Why would the Lord's servants steer us wrong by directing us to save and set aside money for a rainy day (proclaiming that just a small savings will save the day and keep a roof over our heads - shelter for wives & children) and get out of debt (stay out of debt) when the money is going to become worthless and the debt burden easily taken from our shoulders.....by inflationary/hyper-inflationary devaluing of the savings/debt????

Seriously....if you can borrow money today to buy a car....and that money will buy half as much car in just a couple years....why would you not do it? Why would it not be prudent? Why have we been warned to only incur debt after prayerful consideration and after receiving the best financial counsel we can obtain???

Quite ironic that you chide me for mis-interpreting the prophets when you leave out the context (timing and what amounts to basically a "what if" opinion for government going off gold standard) for the inflation quote.

Quite ironic how you ignore shear logic - get out of debt when debt works great during high inflation (pay back debt with much cheaper dollars).

Also quite ironic how you don't drink you own koolaid - partake of near zero percent interest rates on debt to buy PMs while touting Ron Paul who is calling for 50% inflation over the next couple years.

Anyways looks like we are at the wall again.....it was fun for awhile as you seemed more prone to reason and thinking through it all.....but at the end of the day you always resort back to your rant with both fingers in your ears chanting HYPERINFLATION.....and ignoring the math.....or the corrections to your bad math.....or the corrections to your logic and your blatant refusal to address the evidence that conflicts with your paradigm.

Time will tell the story on who the fool is.....

The final maka-feke I wish to mention today is one which can crush our self-esteem, ruin relationships, and leave us in desperate circumstances. It is the maka-feke of excessive debt. The day of reckoning WILL come if we have continually lived beyond our means.

- our beloved Prophet, President Thomas S. Monson in his address “True to the Faith” during the April 2006 General Conference

In spite of the teachings of the Church from its earliest days until today, members sometimes fall victim to many unwise and foolish financial practices. Some continue to spend, thinking that somehow the money will become available. Somehow they will survive.

- Elder Joseph B. Wirthlin stated in the April 2004 General Conference in his address “Earthly Debts, Heavenly Debts”

I urge you, brethren, to look to the condition of your finances. I urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.

- Priesthood session of the October 1998 conference President Gordon B. Hinckley

Now, brethren, I want to make it very clear that I am not prophesying, that I am not predicting years of famine in the future. But I am suggesting that the time has come to get our houses in order.

So many of our people are living on the very edge of their incomes. In fact, some are living on borrowings.

We have witnessed in recent weeks wide and fearsome swings in the markets of the world. The economy is a fragile thing. A stumble in the economy in Jakarta or Moscow can immediately affect the entire world. It can eventually reach down to each of us as individuals. There is a portent of stormy weather ahead to which we had better give heed.

I hope with all my heart that we shall never slip into a depression. I am a child of the Great Depression of the thirties. I finished the university in 1932, when unemployment in this area exceeded 33 percent.

I repeat, I hope we will never again see such a depression. But I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people. In March 1997 that debt totaled $1.2 trillion, which represented a 7 percent increase over the previous year.

In December of 1997, 55 to 60 million households in the United States carried credit card balances. These balances averaged more than $7,000 and cost $1,000 per year in interest and fees. Consumer debt as a percentage of disposable income rose from 16.3 percent in 1993 to 19.3 percent in 1996.

Everyone knows that every dollar borrowed carries with it the penalty of paying interest. When money cannot be repaid, then bankruptcy follows. There were 1,350,118 bankruptcies in the United States last year. This represented a 50 percent increase from 1992. In the second quarter of this year, nearly 362,000 persons filed for bankruptcy, a record number for a three-month period.

We are beguiled by seductive advertising. Television carries the enticing invitation to borrow up to 125 percent of the value of one’s home. But no mention is made of interest.

President J. Reuben Clark Jr., in the April 1938 general conference, said from this pulpit: “Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you” (in Conference Report, Apr. 1938, 103).

Since the beginnings of the Church, the Lord has spoken on this matter of debt. To Martin Harris through revelation He said: “Pay the debt thou hast contracted with the printer. Release thyself from bondage” (D&C 19:35).

President Heber J. Grant spoke repeatedly on this matter from this pulpit. He said: “If there is any one thing that will bring peace and contentment into the human heart, and into the family, it is to live within our means. And if there is any one thing that is grinding and discouraging and disheartening, it is to have debts and obligations that one cannot meet” (Gospel Standards, comp. G. Homer Durham [1941], 111).

- Priesthood session of the October 1998 conference President Gordon B. Hinckley

President Heber J. Grant said, “From my earliest recollections, from the days of Brigham Young until now, I have listened to men standing in the pulpit … urging the people not to run into debt; and I believe that the great majority of all our troubles today is caused through the failure to carry out that counsel.”

President Ezra Taft Benson said, “Do not leave yourself or your family unprotected against financial storms. … Build up savings.”

President Harold B. Lee taught, “Not only should we teach men to get out of debt but we should teach them likewise to stay out of debt.”

President Gordon B. Hinckley declared: “Many of our people are living on the very edge of their incomes. In fact, some are living on borrowings. …

“… I urge you to be modest in your expenditures; discipline yourselves in your purchases to avoid debt to the extent possible. Pay off debt as quickly as you can, and free yourselves from bondage.”

My brothers and sisters, many have heeded this prophetic counsel. They live within their means, they honor the debts they have incurred, and they strive to reduce the burden they owe to others. We congratulate those who are doing so, for the day will come when they will reap the blessings of their efforts and understand the value of this inspired counsel.

- Elder Joseph B. Wirthlin stated in the April 2004 General Conference in his address “Earthly Debts, Heavenly Debts”

Necessary debt should be incurred only after careful, thoughtful prayer and after obtaining the best possible advice. We need the discipline to stay well within our ability to pay. Wisely we have been counseled to avoid debt as we would avoid the plague.

- Elder L. Tom Perry in the October 1995 General Conference in his address “If Ye Are Prepared Ye Shall Not Fear”

I testify that it is time for every man to set in order his own house both temporally and spiritually.

I testify that not many years hence the earth will be cleansed.

- President Ezra Taft Benson’s talk “I Testify” in the October 1988 General Conference address

Gradually build a financial reserve, and use it for emergencies only. If you save a little money regularly, you will be surprised how much accumulates over time.

President Gordon B. Hinckley has taught: “Set your houses in order. If you have paid your debts, if you have a reserve, even though it be small, then should storms howl about your head, you will have shelter for your wives and children and peace in your hearts” ("To the Boys and to the Men," Ensign, Nov. 1998, 54).

http://www.providentliving.org/content/ ... -1,00.html" onclick="window.open(this.href);return false;

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered...I believe that banking institutions are more dangerous to our liberties than standing armies... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

- Thomas Jefferson

[Jason]

No answers to questions???

You declare I'm wrong....but yet you don't answer the questions....

[LoveIsTruth]

No answers to questions???

You declare I'm wrong....but yet you don't answer the questions....

I am sorry, what's your question?

[Jason]

No answers to questions???

You declare I'm wrong....but yet you don't answer the questions....

I am sorry, what's your question?

Jason, the word "deflation" is not mentioned even once in all of your quotes. Your extrapolations equating the quotes to the word "deflation" are wrong. You are overreaching, and assigning to the prophets the words they have NOT spoken.

This is a very foolish position! And when the dollar is destroyed by HYPERINFLATION, not only will you look like a fool, but you will also bring disrepute on the prophets, to whom you assigned the word "deflation" which they have NOT spoken. In fact, they said exactly the opposite, and explicitly used the word "INFLATION!"

http://www.ldsfreedomforum.com/viewtopi ... 33#p203166" onclick="window.open(this.href);return false;

How do you define surviving on a small reserve of savings during a period of high inflation (like 50% as Ron Paul is stating over next couple years)???

How do you define a "Day of Reckoning" on debt with inflation/hyperinflation???

Why would one be amiss to borrow dollars at near zero percent today that one will have to pay back with dollars that will be worth 50% less over the next couple of years???

Is a depression deflationary.....or inflationary???

How did it work during the Great Depression???

Why would President Hinckley warn about that while discussing the Egyptian scenario - "I am a child of the Great Depression of the thirties. I repeat, I hope we will never again see such a depression. But I am troubled by the huge consumer installment debt which hangs over the people of the nation, including our own people."???

Why would the Lord's servants steer us wrong by directing us to save and set aside money for a rainy day (proclaiming that just a small savings will save the day and keep a roof over our heads - shelter for wives & children) and get out of debt (stay out of debt) when the money is going to become worthless and the debt burden easily taken from our shoulders.....by inflationary/hyper-inflationary devaluing of the savings/debt????

Seriously....if you can borrow money today to buy a car....and that money will buy half as much car in just a couple years....why would you not do it?

Why would it not be prudent?

Why have we been warned to only incur debt after prayerful consideration and after receiving the best financial counsel we can obtain???