рекомендую, простым английския языком о происходящих процессах:
Professor Ben Bernanke of Princeton wrote a treatise on the Great Depression. After studying the Great Depression at length, the good Professor believed that he knew why the Depression occurred, and he knew what the Fed had done wrong to bring on the Great Depression. All that was needed, concluded the Professor, was the production of a veritable ocean of Fed-created money, and the Great Depression would not have happened. It was all so simple -- all so obvious.
Let's move forward many years, and lo and behold, the studious Professor has been given the honor of being the new Chairman of the Federal Reserve. Bernanke took over from the man who has been called "the greatest central banker in history," none other than "bubble-maker" Alan Greenspan. Bernanke took over, the housing bubble had burst, and a surprised Ben Bernanke was given a chance to work his magic. Deflationary forces were overwhelming the world. Simple, Bernanke would apply what he had learned from his Depression studies -- he'd halt the deflation with money-creation. How much money? "Whatever it takes."
The Fed created the money -- with the euphemistic "quantitative easing," better know as creating trillions of dollars. Furthermore, the Fed dropped short interest rates to the zero level. The dollar quickly took over from the Japanese yen as the carry-trade favorite. The US dollar became the planet's new "junk money."
For those unfamiliar with the carry trade, people with access to world currencies find the country with the lowest interest rates (the "free money") and borrow that money. With that money, they buy high-yielding paper or even bonds and pocket the difference.
What happens next is that the cheap dollar is dumped on the market in huge quantities. When any currency or any item is created in massive quantities, that item must fall in value. And the dollar is falling. Ah, Professor Bernanke, what do you do now? To make a currency more attractive, you raise the rates that it pays. But raise the Fed Funds and you squeeze that already gasping US economy. Also, when you raise rates you raise the cost of carrying the gigantic US debt. Total public and private debt in the US is around $57 trillion. A one percent rise in interest rates would drain $500 billion each year out of the US economy.
Meanwhile, all the spending by the Government, the trillions that the Fed has created, seems to have gone to Wall Street. Most of the Fed-created trillions went to bail out and save the giant institutions that were considered "too big to fail." The Fed and Wall Street take care of their own.
The men and women in the streets, America's consumers, are struggling with unemployment, taxes, battered stock portfolios, foreclosures, and the rising cost-of-living. Their consumption represents two-thirds of the GDP of the nation. Where was the hoped-for return that Bernanke was dreaming about? Where was the lift he was waiting for? Easy, consumers needed "boosts." Give em "Cash for Clunkers," give them tax breaks for buying houses, give them anything they need that will inspire them to spend.
But what about saving? Sure, the man in the street is trying to save. But with interest rates literally at zero, what does he do with his savings? Ah, problems, problems, and as the new Fed chief wakes up at midnight from a feverish sleep, Ben Bernanke asks himself, "Why did I take this damn job? I should have stayed happily at Princeton." Back in the 1930s there were no doubts about the much-loved "Yankee dollar." The dollar was "as good as gold." And there were no damn foreign "vigilantes" to warn and pressure the US about spending. Ben never thought about that when he wrote his treatise on the Great Depression.
Meanwhile, unintended consequences are emerging from the massive sums that the Bernanke Fed has created. The stock market is rising in a liquidity bubble. Worse, gold is climbing into all-time high territory, and in so doing, it is advertising to the world that the dollar is sinking and that "something is dreadfully wrong." And the worst of it is that housing prices are not rising, they remain weak. And now commercial real estate is sinking.
Currently, the talk is of "exit strategies." Strategies to undo the damage that the Fed has done. But the Fed isn't finished yet. And the story hasn't been told in full. What happens if a fed-up world decides to exit the dollar? Oil is priced and sold in dollars. What if the oil producers decide that they want a different currency. What happens then? The questions are endless.
The problem -- you can't save the real world with fantasy money. When too much fantasy money is created, knowledgeable people turn to real money -- gold. Which is why central bankers fear and hate gold.
When the world turns to gold, it is turning away from the fantasy ("counterfeit") currency that the central banks create. This terrifies the bankers, whose power comes from their ability to create "money" out of thin air.
Meanwhile, a great bull market starts, it's a bull market that mirrors the demise of the dollar. Gold is priced in dollars, and as the dollar weakens, it takes an increasing amount of fiat dollars to buy an ounce of gold.
Beginning in 1999 gold started up in a primary bull market. In my personal opinion, this is fated to be one of the greatest bull markets in history. It will be a bull market built on not one, but two powerful human emotions -- both greed and fear. The speculative third phase lies ahead. Slowly but surely, the public will finally realize that the US government is bankrupt both morally and monetarily. People will panic into gold to save what ever they have left from the inflationary intentions of the US government.
Aside from the Chinese and Indians, the world's population owns no gold. As the planet realizes to its horror that all fiat currency is "worthless" fantasy paper, I believe that there will be a world panic to buy gold. This will set off one of the wildest and most explosive bull markets in human history.
Gold today, around $1,000 an ounce is still cheap, Cheap, CHEAP.
The day is not too far in the future, when the dollar price of one ounce of gold and the Dow Jones Industrial Average will be the same number.
Meanwhile, the "secondary" monetary metal is silver (often called "the poor man's gold") is far too cheap compared with its historic ratio to gold, which has been as low at 15 to 1. An ounce of gold now buys 59 ounces of silver.
The following is an interesting article:
With continuing stress in western economies, particularly in the U.S, changing attitudes towards gold from Central Banks, the desire to diversify reserve holdings by some major economies and the growth in ETFs, the outlook for the gold price is strong.
by Lawrence Williams
Monday, October 5, 2009
LONDON -
U.S. gold economist, Jeffrey Nichols, seems more bullish than ever on the prospects for substantial upwards movement in the price of gold over the next few years considering the latest development in the markets, perhaps even more so than in his previous analyses. While Nichols has tended to be a gold bull in the past he has also been one of the more sober commentators amongst this genre so his developing views do require some attention.
He feels the root causes of the current economic crisis - and his now extremely bullish views on gold - have been decades of easy money, low interest rates, and a persistently expansionary monetary and fiscal policy by the United States. As he put it in a speech to the Latin Exploration 2009 Conference in Buenos Aires last week, "As a result, Americans have been on a buying binge in the global marketplace, buying things we often don't really need with money we don't really have. And the rest of the world - especially China and the other Asian economic powerhouses - have been co-conspirators, lending us the money to satisfy our need for more things in order to promote economic growth and high employment in their own economies."
He likens the situation to a massive Ponzi scheme on a scale never before seen. "Beginning late in President Reagan's second term with the appointment of Alan Greenspan as Chairman of the U.S. Federal Reserve and continuing with Ben Bernanke at the helm of America's central bank, the Fed has pursued an expansionary, low interest-rate policy that has placed growth above all else" reckons Nichols. "During these years, every economic or financial-market crisis was met with injections of liquidity into the banks and financial markets with interest rate cuts often to negative inflation-adjusted rates of return.
"The stock market crash of 1987, the Gulf War beginning in 1990, the Mexican Peso Crisis in 1994, the Asian Currency Crisis in 1997, the Long-Term Capital Management bankruptcy in 1998, the Internet Dot-Com Bubble in 2000, and the U.S. Housing Bubble that ended in 2007:
"Each crisis was met with more money and lower interest rates - a policy that came to be known as the Greenspan Put and more recently the Bernanke Put because it assured many of the most reckless risk-takers they would not lose a red cent.
"We never would have had the last stock market boom carry valuations to such heights without easy money. We never would have had the U.S. housing boom without artificially low interest rates and without Fannie Mae and Freddie Mac promoting home ownership for everyone, whether or not they could really afford it.
"We never would have had the mortgage-backed securities debacle without easy money and low interest rates. And, no one - especially foreign central banks - would have bought these and other sub-prime securities if they thought they could lose their shirts.
"Rather than allowing periodic recessions and bear markets to purge the excesses of each prior boom or bubble, the Fed stimulated the economy with massive doses of new credit, more injections of liquidity, and lower interest rates. Neither the Fed nor the politicians in Washington wanted a recession - and hardly anyone complained when the Fed just printed more money." says Nichols.
Like all ‘Ponzi Schemes', investors lose out at the end, although those in and out again in the early stages can make massive gains.
As to the current ‘economic recovery', Nichols, like a number of other economic observers is skeptical to say the least. "Although many are beginning to talk about economic recovery in the United States, those that are seeing "green shoots" are looking through "rose-colored" eyeglasses" says Nichols " . . . and there is significant risk of a "double-dip recession with further contraction and a second down-leg yet to come. The economy is showing signs of life only because of massive injections of liquidity by the Fed and the various bailouts by the Treasury."
"We have never" says Nichols "in the economic history of the United States seen a period of rapid growth in money and credit nor an extended period of negative real interest rates that has not been followed by a declining dollar exchange rate and a rising inflation rate at home."
Nichols also notes as bullish for the gold price a changing attitude towards gold by Central Banks, with even those which have been among the sellers now seemingly reluctant to sell any more, while countries like China and Russia are now increasing their portions of reserves held in gold - and still have a huge way to go to get anywhere near the percentages held by most western Central Banks.
Indeed those Central Banks which did sell large percentages of their gold holdings are looking pretty foolish - perhaps most of all the U.K. which sold half its reserves under the guidance of current Prime Minister, Gordon Brown (who has since managed to spin his way to a reputation for financial prudence), at the nadir of the price - now known by U.K. economists as ‘Browns Bottom'.
There certainly seems to be a trend towards increased diversification of reserve assets away from what is seen as a dollar in decline, with gold probably being a major beneficiary.
The performance of the scrap market in this latest run-up to $1,000 is also cause for positive thinking among the bulls with the responsiveness of the scrap market being much more subdued than the last time gold moved above this level.
Gold mine production is also seen as continuing to decline having seemingly peaked and with the main areas of production growth in countries like China and Russia which may well be buying up all their domestic production anyway, new supply to the market may be limited.
Another factor noted by Nichols is the introduction and growing popularity of gold exchange-traded funds which have changed the market in a very important way that is not yet well appreciated by many analysts and observers of the gold scene. By facilitating gold investment and ownership ETFs have brought significant numbers of new participants to the market - not just individuals but hedge funds, pensions, and other institutional investors.
Nichols concludes that thanks to extremely expansionary monetary policy - and with a little help from ETF investors, central banks, and new or evolving markets - like China and India – the gold price will continue to move ahead. He reckons $2,000 to $3,000 is on the cards in the next few years.
рекомендую, простым английския языком о происходящих процессах: Professor Ben Bernanke of Princeton wrote a treatise on the Great Depression. After studying the Great Depression at length, the good Professor believed that he knew why the Depression occurred, and he knew what the Fed had done wrong to bring on the Great Depression. All that was needed, concluded the Professor, was the production of a veritable ocean of Fed-created money, and the Great Depression would not have happened. It was all so simple -- all so obvious. Let's move forward many years, and lo and behold, the studious Professor has been given the honor of being the new Chairman of the Federal Reserve. Bernanke took over from the man who has been called "the greatest central banker in history," none other than "bubble-maker" Alan Greenspan. Bernanke took over, the housing bubble had burst, and a surprised Ben Bernanke was given a chance to work his magic. Deflationary forces were overwhelming the world. Simple, Bernanke would apply what he had learned from his Depression studies -- he'd halt the deflation with money-creation. How much money? "Whatever it takes." The Fed created the money -- with the euphemistic "quantitative easing," better know as creating trillions of dollars. Furthermore, the Fed dropped short interest rates to the zero level. The dollar quickly took over from the Japanese yen as the carry-trade favorite. The US dollar became the planet's new "junk money." For those unfamiliar with the carry trade, people with access to world currencies find the country with the lowest interest rates (the "free money") and borrow that money. With that money, they buy high-yielding paper or even bonds and pocket the difference. What happens next is that the cheap dollar is dumped on the market in huge quantities. When any currency or any item is created in massive quantities, that item must fall in value. And the dollar is falling. Ah, Professor Bernanke, what do you do now? To make a currency more attractive, you raise the rates that it pays. But raise the Fed Funds and you squeeze that already gasping US economy. Also, when you raise rates you raise the cost of carrying the gigantic US debt. Total public and private debt in the US is around $57 trillion. A one percent rise in interest rates would drain $500 billion each year out of the US economy. Meanwhile, all the spending by the Government, the trillions that the Fed has created, seems to have gone to Wall Street. Most of the Fed-created trillions went to bail out and save the giant institutions that were considered "too big to fail." The Fed and Wall Street take care of their own. The men and women in the streets, America's consumers, are struggling with unemployment, taxes, battered stock portfolios, foreclosures, and the rising cost-of-living. Their consumption represents two-thirds of the GDP of the nation. Where was the hoped-for return that Bernanke was dreaming about? Where was the lift he was waiting for? Easy, consumers needed "boosts." Give em "Cash for Clunkers," give them tax breaks for buying houses, give them anything they need that will inspire them to spend. But what about saving? Sure, the man in the street is trying to save. But with interest rates literally at zero, what does he do with his savings? Ah, problems, problems, and as the new Fed chief wakes up at midnight from a feverish sleep, Ben Bernanke asks himself, "Why did I take this damn job? I should have stayed happily at Princeton." Back in the 1930s there were no doubts about the much-loved "Yankee dollar." The dollar was "as good as gold." And there were no damn foreign "vigilantes" to warn and pressure the US about spending. Ben never thought about that when he wrote his treatise on the Great Depression. Meanwhile, unintended consequences are emerging from the massive sums that the Bernanke Fed has created. The stock market is rising in a liquidity bubble. Worse, gold is climbing into all-time high territory, and in so doing, it is advertising to the world that the dollar is sinking and that "something is dreadfully wrong." And the worst of it is that housing prices are not rising, they remain weak. And now commercial real estate is sinking. Currently, the talk is of "exit strategies." Strategies to undo the damage that the Fed has done. But the Fed isn't finished yet. And the story hasn't been told in full. What happens if a fed-up world decides to exit the dollar? Oil is priced and sold in dollars. What if the oil producers decide that they want a different currency. What happens then? The questions are endless. The problem -- you can't save the real world with fantasy money. When too much fantasy money is created, knowledgeable people turn to real money -- gold. Which is why central bankers fear and hate gold. When the world turns to gold, it is turning away from the fantasy ("counterfeit") currency that the central banks create. This terrifies the bankers, whose power comes from their ability to create "money" out of thin air. Meanwhile, a great bull market starts, it's a bull market that mirrors the demise of the dollar. Gold is priced in dollars, and as the dollar weakens, it takes an increasing amount of fiat dollars to buy an ounce of gold. Beginning in 1999 gold started up in a primary bull market. In my personal opinion, this is fated to be one of the greatest bull markets in history. It will be a bull market built on not one, but two powerful human emotions -- both greed and fear. The speculative third phase lies ahead. Slowly but surely, the public will finally realize that the US government is bankrupt both morally and monetarily. People will panic into gold to save what ever they have left from the inflationary intentions of the US government. Aside from the Chinese and Indians, the world's population owns no gold. As the planet realizes to its horror that all fiat currency is "worthless" fantasy paper, I believe that there will be a world panic to buy gold. This will set off one of the wildest and most explosive bull markets in human history. Gold today, around $1,000 an ounce is still cheap, Cheap, CHEAP. The day is not too far in the future, when the dollar price of one ounce of gold and the Dow Jones Industrial Average will be the same number. Meanwhile, the "secondary" monetary metal is silver (often called "the poor man's gold") is far too cheap compared with its historic ratio to gold, which has been as low at 15 to 1. An ounce of gold now buys 59 ounces of silver. The following is an interesting article: With continuing stress in western economies, particularly in the U.S, changing attitudes towards gold from Central Banks, the desire to diversify reserve holdings by some major economies and the growth in ETFs, the outlook for the gold price is strong. by Lawrence Williams Monday, October 5, 2009 LONDON - U.S. gold economist, Jeffrey Nichols, seems more bullish than ever on the prospects for substantial upwards movement in the price of gold over the next few years considering the latest development in the markets, perhaps even more so than in his previous analyses. While Nichols has tended to be a gold bull in the past he has also been one of the more sober commentators amongst this genre so his developing views do require some attention. He feels the root causes of the current economic crisis - and his now extremely bullish views on gold - have been decades of easy money, low interest rates, and a persistently expansionary monetary and fiscal policy by the United States. As he put it in a speech to the Latin Exploration 2009 Conference in Buenos Aires last week, "As a result, Americans have been on a buying binge in the global marketplace, buying things we often don't really need with money we don't really have. And the rest of the world - especially China and the other Asian economic powerhouses - have been co-conspirators, lending us the money to satisfy our need for more things in order to promote economic growth and high employment in their own economies." He likens the situation to a massive Ponzi scheme on a scale never before seen. "Beginning late in President Reagan's second term with the appointment of Alan Greenspan as Chairman of the U.S. Federal Reserve and continuing with Ben Bernanke at the helm of America's central bank, the Fed has pursued an expansionary, low interest-rate policy that has placed growth above all else" reckons Nichols. "During these years, every economic or financial-market crisis was met with injections of liquidity into the banks and financial markets with interest rate cuts often to negative inflation-adjusted rates of return. "The stock market crash of 1987, the Gulf War beginning in 1990, the Mexican Peso Crisis in 1994, the Asian Currency Crisis in 1997, the Long-Term Capital Management bankruptcy in 1998, the Internet Dot-Com Bubble in 2000, and the U.S. Housing Bubble that ended in 2007: "Each crisis was met with more money and lower interest rates - a policy that came to be known as the Greenspan Put and more recently the Bernanke Put because it assured many of the most reckless risk-takers they would not lose a red cent. "We never would have had the last stock market boom carry valuations to such heights without easy money. We never would have had the U.S. housing boom without artificially low interest rates and without Fannie Mae and Freddie Mac promoting home ownership for everyone, whether or not they could really afford it. "We never would have had the mortgage-backed securities debacle without easy money and low interest rates. And, no one - especially foreign central banks - would have bought these and other sub-prime securities if they thought they could lose their shirts. "Rather than allowing periodic recessions and bear markets to purge the excesses of each prior boom or bubble, the Fed stimulated the economy with massive doses of new credit, more injections of liquidity, and lower interest rates. Neither the Fed nor the politicians in Washington wanted a recession - and hardly anyone complained when the Fed just printed more money." says Nichols. Like all ‘Ponzi Schemes', investors lose out at the end, although those in and out again in the early stages can make massive gains. As to the current ‘economic recovery', Nichols, like a number of other economic observers is skeptical to say the least. "Although many are beginning to talk about economic recovery in the United States, those that are seeing "green shoots" are looking through "rose-colored" eyeglasses" says Nichols " . . . and there is significant risk of a "double-dip recession with further contraction and a second down-leg yet to come. The economy is showing signs of life only because of massive injections of liquidity by the Fed and the various bailouts by the Treasury." "We have never" says Nichols "in the economic history of the United States seen a period of rapid growth in money and credit nor an extended period of negative real interest rates that has not been followed by a declining dollar exchange rate and a rising inflation rate at home." Nichols also notes as bullish for the gold price a changing attitude towards gold by Central Banks, with even those which have been among the sellers now seemingly reluctant to sell any more, while countries like China and Russia are now increasing their portions of reserves held in gold - and still have a huge way to go to get anywhere near the percentages held by most western Central Banks. Indeed those Central Banks which did sell large percentages of their gold holdings are looking pretty foolish - perhaps most of all the U.K. which sold half its reserves under the guidance of current Prime Minister, Gordon Brown (who has since managed to spin his way to a reputation for financial prudence), at the nadir of the price - now known by U.K. economists as ‘Browns Bottom'. There certainly seems to be a trend towards increased diversification of reserve assets away from what is seen as a dollar in decline, with gold probably being a major beneficiary. The performance of the scrap market in this latest run-up to $1,000 is also cause for positive thinking among the bulls with the responsiveness of the scrap market being much more subdued than the last time gold moved above this level. Gold mine production is also seen as continuing to decline having seemingly peaked and with the main areas of production growth in countries like China and Russia which may well be buying up all their domestic production anyway, new supply to the market may be limited. Another factor noted by Nichols is the introduction and growing popularity of gold exchange-traded funds which have changed the market in a very important way that is not yet well appreciated by many analysts and observers of the gold scene. By facilitating gold investment and ownership ETFs have brought significant numbers of new participants to the market - not just individuals but hedge funds, pensions, and other institutional investors. Nichols concludes that thanks to extremely expansionary monetary policy - and with a little help from ETF investors, central banks, and new or evolving markets - like China and India – the gold price will continue to move ahead. He reckons $2,000 to $3,000 is on the cards in the next few years.