Gaming Imaginary Money
Tuesday the Fed auctioned off another $37 billion in 4-week T-bills. My first thought was that this is reminiscent of “payday loans” shops, except the rate of interest is far lower when the question is, “Buddy, can you spare $37 Bil’ until next month?” but the mechanics were very interesting again and echoed what happened in January.
There are two types of bids in these auctions: competitive and non-competitive. The non-competitive bidders agree to buy the bonds at whatever rate the Fed offers. The competitive bidders will buy the bonds only if they are paying some minimum interest rate. When the bonds are auctioned the non-competitive bids are accepted first at the lowest interest rate offered by the competitive bidders. Any bonds left after the non-competitive bids are sold to the competitive bidders in the order of increasing interest.
Last Tuesday, the lowest bid was 0.0% – no interest. The highest bid accepted was at 0.055%–almost nothing. Nearly 99% of the bids were competitive ones. This makes sense – who in their right mind would buy a bond that pays no interest? (And who DID buy a little over 1%’ worth?!) But almost 30% of the bonds went at the HIGHEST yield. This is quite unusual. How many bidders are going to guess the exact percentage down to the thousandth of a percent? This could signal the market is starting to demand higher interest rates to buy U.S. debt and we will likely have to pay more interest in the very near future, a nice traditional attitude, or at a rough cynical guess, at the very least somebody knew something ahead of time about just how high competitors were willing to go and how much money they were willing to spend. Let’s worry this one around a bit. Forget the interest, which is inconsequential. The first two questions that cross my Medieval mind are “Who was confident enough of prospective buyers’ interest in T-bills to hold off and demand ‘top’ dollar?” and “WHY did they want ten billion in short term bonds–four weeks being very short term–in the first place?” The interest isn’t even penny ante; there is almost certainly more money to be made in lightning trades.
The only answer that sprang to my mind immediately was that someone knew or had strong reason to suspect that it will be safer or more advantageous to hold one sort of government paper rather than the same government’s fiat currency very soon. On the surface, one would suppose the things are interchangeable, which only makes me wonder more what is lurking down in the murky depths. If I know that my competition is willing to buy two-thirds of what is available…and that all the bonds must be sold lest the foundation rock even more under the monetary world (and by the rules of the game)…why do I put in my top bid at 0.055%? Why not try for more, toss in .075%, perhaps, and see who blinks?
What do I really want, the interest, to keep up the sham of an auction, or to hold the T-bills for what they represent/may be worth at a later date?
Let’s let that percolate through the assorted facts and theories in our minds while we look at WHO was buying the bonds.
There are 3 types of bidders in the competitive bid world:
- Primary Dealers – The banks that are “part” of the Fed (J.P Morgan, Citi, e.g.).
- Direct Bidders – Groups that bid directly through the Treasury department. Direct bidders are usually other countries such as China and Japan. China, of course, just sold off about that much US paper, leaving Japan holding the biggest and ugliest of the Old Maids out there.
- Indirect Bidders – These have to bid for the T-bills through a Primary Dealer…but neither the Primary Dealer nor the Fed is required to report who they are. Hmmm. Now, why would anyone want to keep a thing like that secret, other than embezzlers or Congressmen who had kept the cash in their freezers, or possibly someone who wouldn’t want to be known for picking up such a position…Sometimes accounting for how one came by money can be quite embarrassing…
Historically, these are individuals or banks that are not members of the Federal Reserve System. In the last year the Fed has also bid on the T-bills it was issuing through the indirect bidder channels. This is one of the ploys that makes honest folks like us whimper, because it seems like money laundering or Dr. Seuss’ Star-Bellied Sneetches. After the money has been run through the machine several times it can be quite difficult to keep up with what is “real” and what is imaginary, even for fiat currency.
Swapping trading cards is one of the ways they have accumulated their $5.1 trillion balance sheet. Note: Indirect bidders are reported through the primary dealers. Whimper again. If the Primary Dealer doesn’t have to report that he bought, how does he explain reporting who he sold the T-bills to? “Oh, look, the cute wee elves drank the little bowls of milk we put out for them and left us certificates to sell!?”
It is…disturbing…that only 19% of the paper was bought by Direct Bidders, i.e., by foreign governments.
“Primary Dealers are required to buy whatever debt does not sell at auction. Thus it is possible, although unlikely, that the Fed just could not sell the full $37B and the Primary Dealers were forced to eat it. The reason I say this is unlikely is because $37B is a LOT of money even to organizations as big as the Primary Dealers. The Fed is NOT going to put their buddies (the Primary Dealers) in a cash flow bind if there is any way they can help it. But, if the primary dealers did get stuck with that big a chunk, it would mean that our debt is not even AA rated (as Moody’s has been reporting lately.)” comments my friend, Mike. Well…maybe. We were batting around the idea after a recent auction that there weren’t enough direct bids to cover most of the T-bills offered and speculating on the ramifications of that. It should be noted that the rules/definitions of what constitutes an “indirect bidder” have been loosened and fuzzied recently which hardens my suspicions that because our paper is being seen as less and less desirable new ways of disguising who is buying (or “buying”) are being sought. There have been rumors, let’s call them, of funds being transferred to other nations who use them to purchase/”purchase” our bonds. It could be that Citi has laid the groundwork to spring the “no withdrawals for 7 days” scheme to cover forced buys anticipated in an auction in March.
To digress only slightly into the banking situation, Citi is in bad odor this time for warning customers that effective 1 April it will “reserve” the right to deny withdrawals for seven days, almost certainly “banking days.” (See “New Meaning to Special Drawing Rights?”) Wells is in deep kimchee, WAMU and over a hundred other banks are pushing up daisies…banking in general is a pretty dicey business for anyone without a platinum parachute and/or the ability to pull strings…something like 700 banks are in the coronary ward…and FDIC is down another big hunk ($21 Bn) and gasping on the way to reaching into their $500 Bn from the Fed.
Last Tuesday, nearly 70% of the debt issued went through the Primary Dealers and will either be resold to indirect bidders or kept by the Primary Dealers. (In normal times the goal is for the Primary Dealers to be stuck with the debt to leave indirect buyers free to invest their money in the stock market and corporate bonds.) But, then again, in normal times the Treasury is not issuing debt at these levels. Or with this frequency.
The last time this much of the debt issued went through the Primary Dealers was in mid-January of this year. That did not alarm many at the time because the stock market was generally going down and it was easy to suppose Fed paper was picked up by folks selling their stocks and parking their money in T-bills for a month or two until the market returned. This time seems different-–or maybe we’re just being cautious or even paranoid.
Nearly a third of the bonds purchased by the Primary Dealers went at the highest rate (30% of $37B–the amount sold at the highest rate–about the same as 43% of $25.9B, a previous result that I discussed in an article the name of which escapes me. I write a lot of the things, you know!)
It appears that a gaudy chunk of the Primary Dealer purchase went to one person/organization. My friend, Mike, commented “That certainly could be a ‘whale’ like a George Soros or Warren Buffet sensing–or setting up–an imminent drop in the stock market and trying to protect his money – even though the stock market has been going up more or less again for the last month, but it could also be the Fed again buying through the Primary Dealer channel to hide just how bad the quality of our debt is.” It gets harder and harder to hold on to that triple-A rating. Moody’s is of the opinion that AA is pushing it. Spontaneous laughter…maybe Timmy needs to get one of those firms that run banners across the bottom of the screen offering to straighten out bad credit ratings.
Hmmm…Once may be an oddity or somebody’s accountant dropping a decimal, but we’re starting to develop a pattern that I would be inclined to label a trend if we get one more dot that belongs on the same plane. Three dots may show us who’s playin’ with the money. Recall that the Fed announced that it wouldn’t buy any more after 31 March, 2010, so in the next month Uncle Sam needs to come up with a new player in the game of “you buy mine and I’ll buy yours.”
Are you, too, starting to feel that all of this is meshing in ways investors aren’t going to like? The knowledgeable gentleman who brought these facts to my attention commented “at least a 60% chance that Direct Bidders (China, Japan, etc.) no longer want U.S. debt and we are going to start seeing bad inflation in the next few months and the ‘bad’ inflation will turn into ‘way bad’ inflation within a year because the Fed is just monetizing the debt through the Primary Dealer channel.” Optimists forecast hyperinflation no later than 2012, but only the green shoots crowd doesn’t expect it by then. That was my tentative conclusion in January, when we had an auction that looked like this. The banker boys are playing ring-around-the-rosy with electronic digits, or, to put it bluntly again, laundering fiat money.
Knowledge comes from tearing words and figures apart hunting for contradictions, nuances, and straws in the wind. We’re past the occasional straw and looking at what (honest!) is known as a “flake” of hay, a hunk ripped off for an individual animal. That’s useful terminology on more than one level: the well-positioned flakes are ripping us off, as usual, but it is also possible that some of them will be eaten in the process. If all the banks on the watch list fail the estimated bite for FDIC is something like $409 Bn, which, when added to how much it is in the red now, would wipe out c. 86% of the imaginary “special fund,” and another half a trillion dollars.
Analysts work with what we’ve got and keep dumping data in the hopper. Our..inner minds?…extrapolate from the handful of puzzle pieces we have and test hypotheses and conjectures, worrying bits of data that don’t appear to fit anywhere, and leaping blithely over several missing steps when necessary to form working hypotheses. If the picture appearing weren’t so unpleasant I would be enjoying myself because quite a few bits are slotting into my mental grid very neatly. A reader asked recently that I write an article on how I think and analyze, and the one- sentence answer is “Accumulate a lot of information and impose order on it.” In time we learn to deduce what the probable structure is and keep that hypothesis in mind until something disproves it. Not closing our minds in the process! We’re trying to discover the truth, not pushing global warming.
Facts that indicate we’re in for–at best–the Greater Depression with strong possibilities of civil unrest or even dictatorship have been accumulating for several years, now. All that has varied are the time table and speculation on which pillar will collapse first placing further stress upon the remaining supports. Every additional strain makes the aging system that much more rickety, and here in the Whiskey Bar we’ve been expecting the collapse of the commercial real estate bubble–and the collapse of the bond market. One odd recommendation I haven’t found a logical home for in the emerging picture is taking physical possession of stock certificates. Helpless gesture; I didn’t think anyone who dealt in round lots ever wanted to hold those things. Don’t we just leave them “in street name?” Ideas, anyone? A simple answer is a pitying, “You were a trader, so you never planned on holding anything you bought for more than a few months to a year or so. People who are in it for “growth” or “investment” should keep up with such papers in case the computers all go out.”
I expect the bond market to go first, and soon. As Abraham Lincoln asked, “How then will I fill my coffers?” If the Washington gang can’t sell paper to cover creating “money” out of thin air, where will they go for funds? My call is the GRA, a grab for the fifteen trillion held in private retirement accounts of one sort and another. I’m no Miss Cleo, but the sheer relief of “solving” the projected debt now and through perhaps 2020 will almost certainly set off an even bigger bender of government spending. Hurrah, hurrah, they don’t have to decide between shutting down a lot of useless, detrimental government programs and throwing Grandma out when she needs an MRI…can put off whether to make trial lawyers or union/government pensions take the next hit…can put off cutting welfare programs while inflating their way out…They think. Some day soon we’ll discuss Juan and Eva ruling Argentina.
Sorry, Charlie, as the old tuna commercial went. The only way from here is down, down, down.
The above was my first draft, which I sent to Pete (the Middle East expert), Mike (who sent me the basic figures, darling man that he is) and our own Tex Norton, before leaving the matter to bubble through my brains. Today is when things really started to pop. Tex wrote back thanking me for the “brilliant” thought that there may come a time when an instrument denominated in dollars may be worth more than the face value–and my mind bonged “Ka-ching! Like silver ‘dollars’ being worth more than FRN.” I thanked Tex prettily but started writing that I’m not fully responsible for what the gremlins in the gray matter do. Just as I prepared to write that I didn’t know why that such a disparity in relative value might be, my brain smacked me firmly. Of course I can account for how it might be that a short-term T-bill could suddenly be worth more than face value.
Two things were obvious instantly and my brain added, smugly, “And don’t forget Hugo Chavez.” Right. He devalued lately, but there is a tiered system; what your money is worth depends on where you are spending it. Brain also said, “GM, yoyo.” Right; what your stock was worth after the government takeover depended upon whether you were union, management, or Joe Nobody who owned 22 shares. The “obvious” reasons were what we know about legislation with short sections that exempt “certain corporations located in New Jersey” or American Samoa, and SPQ-USA, where Senators rail loftily over bonuses they had already approved in previous legislation. Ayn Rand, of course, and the “frozen” railway bonds which could be melted by those with pull and cash. Piece of cake.
The fix is in, and in time to come–perhaps very shortly–some bonds may be more valuable than other pigs. My advice is that we NOT buy T-bills because that’s bound to be a mug’s game; the rules will be written carefully to benefit only connected players, and not for the man in the street or even the Whiskey Bar.
Regards,
Linda Brady Traynham
March 1, 2010
Linda Brady Traynham
Linda Brady Traynham is a former editor and analytical project report writer and is now a Whiskey & Gunpowder field correspondent on a ranch in the Republic of Texas. She studied Counseling at Boston University and got her Masters degree in Philosophy from the University of Hawaii.
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Hi, Linda.
I’ve been gnawing on this for a while, then went over to Fleckenstein’s column and a random thought popped into my head- There is an election this November- dare the Powers That Be grab the IRA’s before then?
I like your description of “feeding the elephant’s child”- read read read and then let the old multistate, multitasking, multithreading, lateral jump enabled, fuzzy logic organic computer take over. The only legitimate way to approach a chaotic system- which is to say most of them in the real world.
Best-
EP
Yep and if you add back in the “off balance sheet” bailout money that has been spent on Fanny Mae and Freddie Mac. You can quickly see that the US is in the Identical Position as the PIGS percentage wise. But OH MY GOSH LOOK AT THOSE GREEKS. Hypocritical at best.
America is on its way down, as is most of the west nations,the future will be an intresting place to live.
Yo, Tennesee James, good to hear from you, buddy. We live in “interesting times” already, but if we get past three things we might actually stagger on for a couple of years before widespread chaos and anarchy. The first is the collapse of the Fed through our own government’s actions fairly soon. Jerry pointed out that as much toxic debt as possible has been transferred from Fanny and Freddie. Second is the large terrorist strike forecast by our Intelligence agents and those overseas for sometime in the next 6 months. That wouldn’t even have to be EMP or suitcase nukes in HOU, LA, DC, NYC, CHI, and D/FW so long as it were big enough to knock out a large portion of the electric grid and disrupt the food transportation system. Last is getting through the November elections AND seating a new Congress next January without anything untoward occurring. ALL of those things will remain possible, along with foreign attacks on the dollar. Old song, “If we make it through December,” everything won’t be all right, but we’ll have evaded particular threats that have been posited.
Dear Jerry: Great comments, thanks. We were talking about the transfer of toxic debt from F&F as one clue that the Fed might be dismantled. Greece was the birthplace of civilization in many ways. Will it be the forerunner in its demise? How can so many countries fail to see that credit card benders in the name of “safety nets” doom all who try it? Cyrus of Persia lost his kingdom over foreign aid…
Dear Ernie: It’s always great to have your input! I don’t know Fleckenstein but I’ll go look. If I were part of the Statists in power I would grab for the Golden GRA by the end of the year, for sure. Lame ducks don’t have anything to lose. Gurgle of laughter…thank you for the technical answer on how we “think.” Sometimes I compare charts and graphs and come up with good conclusions, but usually what produces a miracle is to chuck everything in the hopper, leave my mind alone while I play Free Cell or read Sci Fi–anything to keep from distracting it–and when the urge hits me, start writing. Sheer bliss is gawking at the screen and exclaiming, “I didn’t know that!” Well, of COURSE I “knew” it. I just wrote it. I didn’t “know” I “knew” it until I went to the effort of getting it out. Some people talk it out, but I prefer writing. If I’m talking to someone I’ll get interrupted or sidetracked. We don’t have to and can’t “teach people to think.” All we can and must do is give them things to think about. Big, big thanks to all of you who write. Your comments are like the flippers on a pin ball machine–they knock the ball up and it trickles down in different directions and new ideas and possibilities emerge. Besides, I like knowing that I’m not yodeling down a well. Nearly a quarter of a million of you will have the opportunity to read this on W&G and more elsewhere, and a very special few of you write me. It means a lot to me. Linda
Hey Ms. Traynham!
The end of the game of “musical chairs” that is currently called Unfunded Obligations, which is an International Game of the Century, will shortly arrive. When the music stops, there will be NO CHAIRS FOR ANYONE, and all will wind up looking silly sprawled all over the floor.
A few might manage “less-bad” results; Australia, Canada and Brazil are all resource-rich, parasite-poor, and willing to work for their futures. I am investigating something called Perth Mint Certificates (a sort of paper gold, but the real gold behind them is stored overseas, harder for USG types to steal it). Hopefully when the music stops, some of my assets will survive the ensuing panic.
Until we recall that debt is not money, this will not stop. The recollection cannot be all that far off; certainly less than five years, and probably sooner. Enjoy, guard and protect the ones you love, for the bandits and parasites will not go easily into that good night.
Yet I hope for my children what I had as a youth; maybe better, if they will work for it.
Cheers!
james the wanderer
Linda,
As I type I am keenly aware of the trap set by the infamous “spam filter” and can only hope to escape its grasp.
I must admit that your latest is quite hard to digest. Afterall, I am a mere mortal! I was quite proud having passed physical chemistry and differential equations many years (and many martinis) back but trying to understand the psychology of selling and buying bonds escapes me. Why indeed would anyone want to buy this junk?
But not taking exception to the above, I do understand the following:
There is no mortgage market except Fanny, Freddie & Ginnie and they are broke govt. entities.
Homeland Security has invaded my privacy with, amongst other tools, large cash payments to foreign banks.
The government spent billions and possibly trillions bailing out failed Wall Street entities just to see millions given to their lackeys in bonuses. The American worker/homeowner has been offered nothing.
If it wasn’t for the USD being Reserve Currency the US would be judged as just another banana republic.
Mark to market accounting has been eliminated and assets on the books of US banks are lies.
The FDIC is all but broke.
Housing sales statistics although bleak are artificially enhanced by shadow inventories & cash back incentives resulting in zero-down closings for naive buyers.
States & municipalities are flat broke & tax-revenue outlooks dismal. To make ends meet some consider legalizing marijuana and/or selling state buildings.
Real unemployment exceeds 16%. Many of those looking will never work again.
US debt stands at 64% of GDP; this can never be paid back.
Hugo Chavez may have devalued the Bolívar but at least he has oil; America doesn’t.
As you so eloquently wrote, the Fed is buying its own paper and at ridiculously low interest rates (and why do you put stock in Moody’s?). China and others are bailing out.
All but the select few are being played for chumps.
On another note, a clear thinker Mr. Bonner at the Daily Reckoning. Have you read his latest? I am a big fan of Ronald Reagan. A great man and great American yes; financially irresponsible (?) yes maybe that too.
Best wishes.
Jeff
Robert Prechter of “The Elliott Wave Theorist” has been warning that we are in for a big downturn in markets AND society. He has even been warning that shorting the market may be too dangerous because the damage may be so great that counter party risk rears its ugly head. That is, individuals and brokerages may lose money so fast that they can’t honor their side of the deal and you may be left with nothing, even though you were right about what was going to happen to the market.
His view is much more “Big Picture” than just the markets and his view is decidedly pessimistic, i.e., collapsing economies, governments and societies. Interestingly enough, though, after the collapse he sees the buying opportunity of multi-generations. That would fit in with short Treasuries: conserve what you’ve got and wait for the buying opportunity after the crash.
I meant short term Treasuries, not shorting Treasuries, just to be clear. Big difference!!!
Dear Vernon: Very interesting point on current dangers of selling short. Sounds rather like 1929 more and more, doesn’t it? I, too, think it is going to be the buying opportunity of several lifetimes once we make it through the crash in terms of durable goods, but the seller’s market of several centuries for those who who have the necessities of life to trade during the crash and as long afterwards as it takes to establish some sort of order and renewal of commerce. My theory remains that our “big” money should already be tucked away in PM–precious metals–while we continuing working on preparations for “if.” Depending upon one’s resources (and faith in the American people) there are already very fine buying opportunities in houses, yachts, and bulldozers–supposing we want those for our own use and don’t see them as a source of profit later. The abyss before us is unfathomable. It may be we’ll find a ledge and scrabble our ways back up without too many contusions and abrasions, but I think it is difficult to be too pessimistic right now. Good to hear from you, as always. Linda
Dear James: Great comments. Your word picture is so vivid: wind up looking silly sprawled on the floor. Those of us who whisked ourselves away for picnics on the hillsides may be sitting on the ground already but we did it on purpose and have a much better view. The Mint certificates sound interesting. “certainly less than five years, and probably sooner…” I agree. I’m more inclined to think two years, max, with no guarantees. “Enjoy, guard and protect the ones you love, for the bandits and parasites will not go easily into that good night.” Always, dear James. As for our children, we can be hope for an Ayn Rand happy ending when our land, what we produce, and what we earn in other ways will be recognized as ours by RIGHT.
Dear Jeff: The SPAM filter kept yours for quite a while, didn’t it?! I think you and I are going to write an article together over on http://www.thetexasring.com, that being the least it will take to do justice to your comments. I thought that was a thumping good article, myself, and say again I couldn’t have done it without Mike’s beautifully clear explanation of how T-Bill auctions work. I had deduced a lot of that stuff, but he handed me the structure that showed me where the pieces went. It was as good as a Christmas tree! I got to hang the baubles on it. Bill Bonner is the landlord of this hyar Bar. He’s always at least good, and lots of times he’s stunning. I’m a fan of Adam Lass and Justice Litle, too. Keep on thinking out there in the Stans ’cause you’ve got a talent for it. Big hug, Linda
THE BOND WARS
Bonds are one means by which the Government via the private Central Bank, remove from circulation huge quantities of cash and electronic digits, in order to head off inflation.
Is this too obvious, or even too simple for me to even bother putting into words?
You give them your hard earned, saved cash from many years of labor, and in return, you get a very tiny amount of interest you use to obtain from every one else, a little bit of real wealth, i.e., things you eat, wear and use.
Good Deal? Really? This way the government gets to “park” or put out of circulation, hundreds of billions of electronic dollars that consumers would ordinarily use for their own personal consumption. If these billions were left in the hands of consumers, they would be in direct competition with the government for the limited amount of consumer goods available at any one time in the economy.
By convincing (tricking really…) consumers to “park” their hard won savings in government debt for ten, twenty or more years, the government is now free to immediately consume all the real wealth the bond holders would have consumed over the life of the bond.
In the end of this ‘eletronic’ funds ‘parking lot’ game, the bond holder left holding the bonds when the government debt collapses, will get next to nothing. That is because almost no real wealth will be left to back the bonds when production plummets down towards zero.
Remember the Bonds of the Civil war and their circulating representatives, the “Green Backs”? People were convinced to turn in their gold for Bonds, and were promised after the war, that they would receive just as many “dollars” worth of notes for gold as they surrendered before the war.
How did that work out?
The “Green backs” lost almost 80% of their purchasing power by the end of the war.
So who really won that Bond “War”? The BOND ISSUERS? or the BOND HOLDERS?
BOTTOM LINE: Governments use bonds to confiscate Real Wealth from purchasers NOW, with the promise of greater Real Wealth in the future. In the meantime, the government consumes immediately the Real Wealth the bond purchasers would have bought.
And when in history, has any government kept its’ promises, let alone a sacred oath of office?
Yep. Any honest analysis of the BS leads one to conclude that it is definitely NOT Shinola. A lot of folks are still admiring the “shine”, though. Wait till they get downwind, like us!
Did you folks catch the fabulous, archetypal Mogambo rant of 2/22/10 “Common Sense Economics”?
The last two paragraphs are right out of the cartoons. I’ll try a Copy & Paste, but if it won’t work, you’ll just have to click the mouse 2 or 3 times and enjoy it by yourselves.
So while my future as an employee is probably limited, I am soothed that gold, silver and oil will see me through the next half century, which is longer than my expected life span, unless we get some big advance in the technology of putting people’s brains into robots, creating a super-powerful cyborg, where I could shoot laser beams out of my eyes so that things explode in flames, and then I could go to Washington, DC and tear the Federal Reserve to the ground with my bare, metallic hands, and nobody could stop me, as even the puny missiles and cannons of the mighty American armed forces would bounce off me – Ping! Ding! Sproing! – and I would be, at long last, (taa-daa!) The Mighty Mogambo (TMM), a hero foretold to bring blessed adherence to the Constitution of the United States and the sanity of the gold standard to my beloved America, shoving down the throats of a loathsome, bankrupting, socialist Congress and the vast majority of the university economists who are scumbag neo-Keynesian econometric trash who currently hold sway, toiling at taxpayer expense to justify such loathsome stupidities as these, but who wouldn’t have a prayer against a rampaging cyborg with laser beams shooting out of his eyes! Hahaha! Zzzzzt!
In the meantime, I will continue to accumulate gold, silver and oil like a crazy person possessed by demons and pursued by an angry wife, a phrase designed to indicate frenzied single-mindedness and sheer panic, and I will continue to encourage you to do so, too. To do otherwise, says the TMM, is, indeed, folly.
Dear Steverino: How GOOD it is to start my day with the Mighty Mogambo Guru, who hasn’t written much lately. I understand he has been ill–and I am assured that my supposition that he adores his wife and children is quite correct. I differ only in thinking that what I, at least, refer to laughingly as “the big money” should be put in PM (precious metals) and the rest should be stashed in peanut butter and jelly sandwiches and a nice, safe cave for the reign of terror. We seem to be on a curious path of repeating histories, imitating Rome and Venice and working our way towards the excesses of the French Revolution (confiscating houses and private fortunes) and perhaps other gaudy regime changes. MMG always brings that out in me! Linda
Dear David:
Very well said, Sir. Next time you write something that good why not send it to me over at http://www.thetexasring.com, please? Unless you aren’t interested in being encouraged to write a bit more and appearing as a guest author there…LBT
Steverino, the dreaded filter ate my first reply. I’m devoted to Richard Daughty, and assured that he dotes on his family, as I expected. Sigh…what do we have to do to become Junior Mogambo Rangers?!
Nice article Linda. Now you know why I haven’t bought a US Treasury in years. Yes, the times are going to be interesting. But you know as well as I do, that depressions are what clean up and out financial irresponsibility. Unfortunately it is very painful and many suffer who shouldn’t. I do think that the last thing the Government will renig on will be treasury debt. Once that happens , katy bar the door.
Kenny, how right you are…I can’t even remember a time when they struck me as a good place to put money. So many kinds of fiscal irresponsibility, too…If the hard place is disavowing treasuries the rock must be bailing on welfare and social security. Sometimes an invasion by Mars probably sounds good to those who will bear the public blame!
Dear Ms. Linda Traynham,
Thank you for your kind compliment on my BOND WARS comment. I went to that website but found no way to submit any writings to you. Perhaps if you ask Gary the editor for my email address, he will provide it to you. He has my permission to do so.
I would be pleased to write more but question whether readers are ready for my RWA (Real Wealth Analysis) economics which directly exposes the fraud of all government finances via the private central bank.
Hope you hear from you soon.
Kind Regards,
Dave Franklin
Dear David:
The easiest way to make contact with me is to post a comment at http://www.thetexasring.com–which has three new articles up, Shooters! Not only do responses post immediately but copies of them are sent immediately to my personal e-mail, providing me with the e-mail addresses of correspondents.
A great many are interested in bonds for a number of reasons, and it is high time we inspect them from several points of view. I received a terrific article yesterday which should be up on the Ring soon, likening bonds to a slave auction. I am quite interested in seeing your method of Real Wealth Analysis in detail and talking over ways the “average” person can protect him/herself. I put “average” in quotation marks because MDC and I are “retired,” ranchers, and own our homes and land outright. We’re past kids in college, worrying about the job market, and concerns with mortgages. What works for us is seldom applicable to younger, employed city dwellers. I’m an analyst, foremost, so I am looking forward to seeing your ideas on how our readers can assess their situations and the measures you have worked out to ameliorate their problems. My interest in this area was caught in ’92 when the interest rate fell to 5% (!) and I saw quickly that there were going to be a lot of widows, particularly, who were going to lead very meager old ages. If I don’t hear from you on gmail by tomorrow I’ll jiggle Gary’s elbow. Cordially, Linda
Dear David:
The SPAM filter hates me and refused to post my first answer. Leaving a comment on http://www.thetexasring.com causes a copy to be sent to my private e-mail immediately providing me with your address. I am really looking forward to learning more about your system. I’ll jiggle Gary’s elbow anyway. Cordially, Linda
The next FOMC meeting is next Tuesday and “informed sources” claim that the Fed is going to hike their interest rate by .25%, Would I sound overly cynical if I expressed the thought that this was a deliberate leak to test the waters? There is nothing holding this market up but hot air. A Fed rate hike could be the excuse for the sell off that many of us are expecting. This way, they can get a peek at market reaction before they actually commit themselves.
On a related note, when this market does take the next dive, Uncle Ben is going to take a big part of the blame, no matter what he does. I think he will deeply regret being reappointed Fed Chairman before his current term is up.
Nice thinking, Vernon. Thanks for the warning. Raise the interest rate by a quarter of a percent? Wow, now we can all get rich buying Treasuries.
Looks like the game will be up for the money changers soon. Glad I’ve got ‘preps’ in place. I’m not glad to be going to Europe till October. At least I’m working for an Asian billionaire and I’ll get paid no matter what. Should I ask to be paid in a different currency and bank offshore? I’ve a feeling that no matter what paper I hold, it will be worthless when common folks realize that the emperor has no clothes. In a currency collapse it will not be a good thing to be a politician or work for some useless government agency. Might as well walk around with a target on as there will be a lot of unhinged folks about. We do not have the same moral character as we did in the 30′s. This is thanks to the same Progressives that have hold of our education system and government. Should have listened to the Founders on this subject people.
Hey Linda! I’m not sure why there was such a hiatus in the mogamboistries, but I’m glad heeee’s baaaack! I myself go off-planet from time to time and I know he does the same. Why do I think you might understand that?