Investing in Precious Metals 101 Ad
  • Podcast
    Blue Sunburst Peak Prosperity Logo

    Erik Townsend: Expect a U.S. Price Shock as Black Swans Come Home to Roost

    by Adam Taggart

    Friday, March 2, 2012, 5:37 PM

American investor (and longtime CM.com member) Erik Townsend has spent the past several years living internationally, with an eye to which countries may be good alternatives if economic crisis and/or Peak Oil start to materially impact life in the U.S. 

His main observation as an expat? Through its misguided policies, the U.S. has been exporting inflation to the rest of the world, raising prices all over the globe (as an example, Erik cites a $57 chicken pot pie from the menu at a 'working class' restaurant in Australia). 

This inflation is affecting the rest of the world harshly, but is not yet being felt in the U.S. due to our ability to export it as the issuer of the world's reserve currency. Our immunity will not last forever though, and when it ends, a massive upwards spike in prices is going to hit U.S. markets.

On the Global Economy

As far as I can tell, this whole economy is being propped up by stimulus and money printing, really, since 2009. And I think that what is going on is we have forgotten that we are literally changing the I do not know if you want to call it changing the terminology or changing the paradigm but what is going on here is, we used to use words like “solution” fairly accurately. Now as we are just creating these Band-Aid fixes to temporarily put symptoms of problems at bay.

We are calling those solutions, and we are actually behaving and when I say “we,” I mean collectively market participants are behaving now as if the ECB printing money in order to buy some more Greek bonds and put a bid under that market was a solution to the European sovereign debt crisis. And it is obviously nonsense. The ECB printing money just dilutes the value of the euro and causes more reason in the long term for people to flee away from making investments in euro-denominated sovereign debt. So it does not solve anything.

But we have gotten to the point where we are so overwhelmed that the market is thinking in terms of these Band-Aid patches as being actual solutions to problems. And I think as long as that is the case, we are going to continue to apply these Band-Aid patches, which are things like printing more money, until it all comes to a head. When it comes to a head and how it comes to a head, I do not think anybody is smart enough to predict accurately.

At some point, though, we are going to get to a point where we cannot handle any more printed money, and I think that the black swans that have been leaving the market alone for several years are going to come in force.

 On the Market's Willful Blindness

I do not think that we have ever seen a larger basket of major macro structural risks that everybody is aware of. It is not like nobody sees these things. But we have just somehow put them all on the back burner. Do not worry about China. Do not worry about Europe blowing up. Do not worry about Iran. Do not worry about the carry trade unwind in Japan that you have just written about recently. Do not worry about Peak Oil. Do not worry about the domino effect of China and Japan going down, taking out other economies that depend on them.

It is all fine. The LEIs are looking up. And we just seem to be in this cyclical trading mindset that it is going to continue to last until something breaks. And I think that when something breaks, it is going to break big.

On the China Wildcard

I think China has quite a bit of pull here. In that as QE3 happens and I am convinced it is going to happen sometime this year, I do not know when it is going to export so much inflation to China that it is going to be almost intolerable for them.

And I think that we are forgetting that if China says, “Okay, guys, we have had enough of this. If you do any more QE-ing we are going to dump the U.S. Treasury bonds that we are holding and we are going to use the money to save our own economy.” If we see that kind of reaction from China, it really could put a monkey wrench into the plans of the central banks to inflate this all away.

I think that whether it is that mechanism or another one, at some point we are going to get to a hard wall here where you cannot just print money forever without the unintended consequences coming back and biting you.

Click the play button below to listen to Chris' interview with Erik Townsend (runtime 51m:56s):

iTunes: Play/Download/Subscribe to the Podcast
Download/Play the Podcast (mp3)
Report a Problem Playing the Podcast

Or click here to read the full transcript.  


Our series of podcast interviews with notable minds includes:

Related content
» More

78 Comments

  • Fri, Mar 02, 2012 - 11:59pm

    #1
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    Nice!!!

    Nice!!!

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 12:46am

    #2
    Doug

    Doug

    Status Platinum Member (Offline)

    Joined: Oct 01 2008

    Posts: 1353

    Hey Davos

    This must be old home week.  Dogs back one week, Davos the next.  Welcome.

    Great interview Chris and Erik.  I look forward to a continuation of this conversation.  One question.  It seems I hear more and more rumblings about China, Russia and others already dumping US bonds.  Do either of you have any sense of how big that is so far?  And, how will we know when the trickle is about to become a flood?

    Doug

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 1:19am

    #3
    plato1965

    plato1965

    Status Bronze Member (Offline)

    Joined: Feb 18 2009

    Posts: 86

    Bernanke/Schwarzschild radius...

    CB balance sheets as black holes (not to be confused with Black-Scholes) for fictional collateral…

    I do like that concept… (as a pure idea, if not as a policy) Chris.. :o)

     Also interesting concept from Erik, that the debt crisis is designed to concentrate financial into political/legal power…

     Rehypothecated from the financial frying pan into the political fire..

      To add a slightly unorthodox idea.. are the "nations" really competing ? 

    Thinking here of the principles of Oligarchic Collectivism..  – Orwell style.

      http://en.wikipedia.org/wiki/The_Theory_and_Practice_of_Oligarchical_Collectivism

    I dunno…

     but by the exercise of doublethink he also satisfies himself that reality is not violated . . . To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies — all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink.

     see: "Fedspeak."

     

     Anyway. Nice interview.

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 1:40am

    #4
    SPAM_pet000

    SPAM_pet000

    Status Member (Offline)

    Joined: Mar 03 2012

    Posts: 0

    office 2010

    ~spam~

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 2:53am

    Reply to #1

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

    Davos wrote:Nice!!! Holy

    [quote=Davos]
    Nice!!!
    [/quote]
    Holy Cow! I couldn’t possibly be more honored than by a first post from such a site legend as Davos. Welcome back my good friend!
    ET

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 3:25am

    #5

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Exporting Inflation? Not So Fast

    Its great to hear from Erik again, and I’m so happy Davos has poked his head up, but the "exporting inflation" idea is shallow thinking at best.

    A $57 chicken pot pie is the result of outrageous endogenous credit expansion, not a global currency war.

    You can’t blame inflation in China on US monetary policy when the Chinese choose to peg their currency to the USD and pump out bank credit at incredible rates.  

    Don’t blame the Fed because you will be taking your eye off the real culprit of inflation; investment banking.

    Jeff

    P.S. It’s nice to have some old sparring partners back.

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 3:45am

    #6

    Arthur Robey

    Status Platinum Member (Offline)

    Joined: Feb 03 2010

    Posts: 1814

    Good conversation.

    Doug, the Chinese are trying to sneak out the back door. They are putting adverts on tv  encouraging their citizens to buy gold and silver. What are they doing? Converting Paper into something of value. I believe that one of the iron ore mines here in Australia is insisting that China pay for their ore in Yuan.  (ouch!)

    I work for the Australian Government. 10 years ago the Government garnished my paycheck before I had a look in and placed those funds in a Government guaranteed fund. Then they changed their minds and no longer guaranteed the funds. Yesterday they sent out a form saying we could nominate whichever fund we wanted.

    What does that mean? First guaranteed, then not, and then invited to leave? That does not sound like salad days to me. Let me guess. The fund managers haven’t got a clue where to park the money.

    Do the workers care? About beer, yes. My bosses always rush in to shut down any conversation. They think I am a good worker with weird and embarrassing ideas.

    I suffer from massive amounts of cognitive dissonance.

    Plato, you have got it. Bernankies bubble has a Schwarzschild radius

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 4:03am

    #7

    Mark_BC

    Status Bronze Member (Offline)

    Joined: Apr 30 2010

    Posts: 275

    I am wondering, why is it

    I am wondering, why is it that QE exports inflation? Shouldn’t the US also be experiencing it? Is it that the deflation from the collapsing economy is offsetting it? Then why have we not seen $57 pot pies in Canada, since our economy is booming on commodity extraction and definitely not in deflation? Does China feel it more because commodities are a bigger portion of daily expenses?

    I applied for New Zealand immigration but was rejected. I guess it helps if you’ve actually been to the country… Actually, apparently Chile is one of the best bets right now I think. They dealt with a lot of their corruption issues in the previous decades. We have put down some roots there. I think S America is the best overall place to be. My concern about Canada is that although we have the biggest oil reserve left on the planet and a very low overall population density, we are right next door to the US. I could see us being flooded with millions of desperate American refugees. Maybe we’ll be taken over by the US, actually that sounds almost inevitable considering the way the media is able to justify the most heinous acts to the American population and get them to buy into it..

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 8:26am

    #8

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    $57 Chicken Pot Pie Doesn't Bear Repeating

    Nice interview, and some good insights.

    I quite agree about the risks. It is interesting to watch how the market herd seems to daring themselves to frolick out in the meadow, despite the presence of sharp-toothed black swans lurking behind the tree line.

    And I really love Erik Townsend’s take on agility. I hadn’t really thought about it that way before. My focus has always been about trying to find a way to build up resiliency, when agility is obviously just as important. Thank you.

    However, I think the examples of food prices just don’t make sense to me. I’ve been to restaurants that charge a lot for not much ($50 per person, not including appetizer, soup, salad, or dessert), and they didn’t even look that fancy, though they certainly tried to be.

    Let’s look at other, ordinary restaurants out of Wellington, New Zealand, courtesy of some Googling and Menus.co.nz…

    Here’s a listing of restaurants under NZ $10 to $20 in the Wellington area:
    http://www.menus.co.nz/restaurants/wellington/?&i=10-20-dollars

    Here’s a couple of restaurants I noticed:

    Sweet Mother’s
    http://www.sweetmotherskitchen.co.nz/?q=home&quicktabs_1=3#quicktabs-1

    Maranui Cafe
    http://www.maranuicafe.co.nz/user/file/1/Maranui%20Food%20Menu.pdf (PDF)

    Now, granted I’m nowhere near as worldly nor as well-traveled as Mr. Townsend. I’ve only made 3 overseas trips out of the U.S. in the past decade. But may I suggest that perhaps to Mr. Townsend what is an ordinary, "middle-of-the-road casual dining restaurant", is to the rest of us likely something above the ordinary.

    Thus, I don’t think that a USD $57 chicken pot pie or a USD $31 heirloom tomato salad are noteworthy indicators of exported inflation but of a casual dining establishment’s imported aspirations to ambience. There are numerous other indicators of exported inflation available. I just don’t think the anecdotal evidence here cuts it.

    Poet

     

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 8:37am

    #9

    SingleSpeak

    Status Bronze Member (Offline)

    Joined: Nov 30 2008

    Posts: 162

    Possibly Off-White at this stage...

     

        Erik, you can have a pot-pie at my place anytime, no charge. Looking forward to the Financial Sense interview.

        Erik looking for black swan, Chris postulates perhaps a dark brown would suffice, I’m thinking off-white could possibly do the trick at this stage.

        SS

        Nice 

         to have Sherman on the board. 

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 9:45am

    #10

    DGCanuck

    Status Member (Offline)

    Joined: Dec 09 2011

    Posts: 6

    Not a bail-out

     Erik Townsend:   "You tell the taxpayers, look, we are buying, we are buying this stuff up. It is not really a bailout. We are just transferring it from the private to a public balance sheet. But do not worry. It is not bailout. We are just buying this stuff for what it is worth. Well, of course, they are actually paying ten times more than it is worth. And then eventually it gets sublimated off of the Fed’s balance sheet—I, I like that expression—in a way that nobody ever really finds out that, you know, that was a bailout."

     

    Erik, we’re way ahead of you. It started at $25B in 2008.

     

    Canada Mortgage and Housing Corporation Supports Canadian Credit Markets

    http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2008/2008-10-10-1700.cfm

     

    $25B credit backstop for banks ‘not a bailout’: Harper

    ‘Market transaction’ will cost government nothing, Tory leader says

    http://www.cbc.ca/news/business/story/2008/10/10/flaherty-banks.html

     

    Then it moved up to $75B

     

    2008: ARCHIVED – GOVERNMENT OF CANADA ANNOUNCES ADDITIONAL SUPPORT FOR CANADIAN CREDIT MARKETS

    http://www.fin.gc.ca/n08/08-090-eng.asp

     

    2009: Special investigation: How high-risk mortgages crept north

    http://www.theglobeandmail.com/report-on-business/article727831.ece

     

    2012: Connect the housing bubble dots: There could be trouble on CMHC’s horizon

    http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/connect-the-housing-bubble-dots-there-could-be-trouble-on-cmhcs-horizon/article2310132/print/

     

    But don’t worry, Canada’s banks are the best in the world, eh?

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 9:50am

    Reply to #9
    Sabco

    Sabco

    Status Member (Offline)

    Joined: Sep 28 2008

    Posts: 7

     I have no idea where you

     I have no idea where you were eating Eric but I live in Perth Western Australia and those prices are utterly outrageous. A typical good restaurant meal for 2 costs about $60-$70 Aus. A family pizza costs $20. A Big Mac meal costs $6.
    Sounds like you went to some kind of rip off joint or top class restaurant. 
     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 9:57am

    #11

    Rector

    Status Bronze Member (Offline)

    Joined: Feb 07 2010

    Posts: 315

    That was great!

    Thank you so much for a clarifying interview. You guys are helping a lot of real people navigate the mess we’re in. My four kids thank you.
    Rector

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 12:02pm

    Reply to #11
    nigel

    nigel

    Status Bronze Member (Offline)

    Joined: Apr 15 2009

    Posts: 89

    Presently I am flooded in,

    Presently I am flooded in, today i watched a black swan with two babies paddle over the driveway. That aside food price inflation is systemic in australia. I have observed 100% approx since 2008. A large part of that is due to the constant floods and cyclones, however a large part is the food price inflation that Erik is talking about. I have noticed an increase in australian food prices, I frequently travel to other cities and I would agree it is happening. I even wrote in a thread on the subject in the asia/pacific forum in the message boards on this site on the subject of australian inflation.I always get a chuckle when anyone talks about black swans. I only have to walk a half mile to watch them swim in the lake beside my driveway.

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 12:04pm

    #12
    jeanius2

    jeanius2

    Status Member (Offline)

    Joined: May 23 2008

    Posts: 8

    $57 Chicken Pot Pie

    Erik I have a bridge to sell you.

    Your example of $57 pie and intimating it is typical of highly inflated prices in Australia destroys the entire article for me. Here in Perth you could eat for a week on that $57 (our family of 4 – 2 adults, 2 teens – spends well less than $150 /week on food).

    Or you can dine out and have steak every night on less than $100 as this guy did: http://www.watoday.com.au/entertainment/restaurants-and-bars/one-week-seven-steaks-100-20120104-1pkni.html

    Our fuel prices have gone up recently in line with yours, but in general inflation is very subdued at about 2%.

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 12:15pm

    #13

    RJE

    Status Bronze Member (Offline)

    Joined: Aug 31 2008

    Posts: 868

    My day starts with the price of Oil and ends with Oil

    Is the economy a mess and how do I navigate its treacherous waters? I watch OIL, and that means the waters are getting really stirred up right now. Frankly, under a hundred and I’m less concerned, and making good coin. Over a hundred and I’m really concerned, and sitting straight up in my chair. Trailing stops, and paying myself a wage. That’s it for me.

    GOLD and Silver is my insurance for all other investments.

    Erik, was it the best chciken pot pie you ever ate? How about the salad? If the company of your Lady was rewarding then the meal was properly priced. Well, OK, maybe a little pricey. I had campbell’s tomato soup and grilled velveta cheese, butter on bith side that was delicious. Cost $3.79 plus $1.21 tip. $5 bucks and had the time of my life because I woke up after surgery…It don’t get better than that.

    BOB

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 12:30pm

    Reply to #8
    deanosscm

    deanosscm

    Status Member (Offline)

    Joined: Jun 06 2009

    Posts: 0

    Chicken pie

     Don’t know where he was eating but it definately wasn’t "working class"I live and work in Sydney, (city) probably the most expensive place in the country and I can tell you if that’s working class prices they’d run out of customers in 10 min. Unless we have a vastly different idea of whatworking class is.  Sounds like exaggeration .

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 1:39pm

    #14
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    Erik's Talk of Exporting Inflation

    Percisely 1 year ago today, there was an article on FSN that had a section called, "Bernanke’s crimes against humanity, exporting higher food prices to poor nations."  

    The $57 pot pie, IMNSHO (in my never so humble opinion), is a "boots on the ground" observation.  Might it be a just a little bit short sighted to say that we agree with ET, or we don’t agree with ET on the point that "Bernanke is is exporting inflation", by predicating it soley on the price of a pot pie?

    Big picture from 30,000 feet:

    • 54% [and declining] of all trades globally are transacted in U.S. Dollars.  
    • Joemanc just sent me a piece where Buffett wrote, "the dollar has fallen a staggering 86% in value since 1965."
    • One can also go to the BS, (oops, forgot the L), the BLS and use their CPI inflation calculator to get a trend for the purchasing power of our dollar.  When I do this I always watch CM’s chapter 16 first.  It’s one of my favorite chapters and probably why I continue to drop the L.
    • The bottom line is that our dollar, isn’t a dollar, at best it’s a "two-center".  Maybe we should start calling it what it is?  Inflation is the most missunderstood and also the most important topic today, and few get it.  Rising prices are a sympton of inflation, they are not inflation.  
    • High prices are caused by three things, and three things only: 1.) the value of the dollars—2 cents and falling–(use gold not pretty other pieces of paper from other countries as your "value measuring stick") 2.) the price of oil, it is in everything even food. & 3.) supply and demand-for which we have 7 billion people all, for some unexplained reason, vying to eat.
    • As mentioned in the FSN article, we, the 313 million, tend to view the rest of the world, the 6.7 billion through what we see.  What we spend out of our income, verses what the rest of the globe spends out of their income on food is very different.  Link to map that shows that the vast part of the globe (excluding fish) pay more than we do to eat.  Can you fathom paying half of what you earn on food? Link
    • Remember too that even if a country exports a lot of food, it still has to import food it doesn’t have or can’t grow.  Remember also that these countries are very poor, buying food is really buying gas. 

    While I agree with my friend JAG that the bankers blew the economy up, I think ET is correct, Bernanke is exporting inflation, or IMNSHO words from exactly a year ago,  "Bernanke’s crimes against humanity, exporting higher food prices to poor nations."  I don’t think we should be taking pot pie out of context.  I think, once again, ET has nailed it.

    I’d add that the most important words on this entire site right now for any of us wondering how this is going to (continue) to play our are (link):  

    According to Ludwig Von Mises: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. [Greenspan’s housing bubble] The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, [when Paulson cut the "700" billion check voluntary abandonment was tossed out the window] or later as a final and total catastrophe of the currency system involved.”

     

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 2:59pm

    #15
    gpoulsen

    gpoulsen

    Status Member (Offline)

    Joined: Aug 27 2009

    Posts: 6

    Exporting Inflation

    If Erik’s observation is that a $57.00 pot pie is outrageous, then I take it as his own personal and honest assessment.  I and probably many others would not only think it outrageous but out of our league.  I wouldn’t have even concidered buying it after looking at the menu.  The point is that there is definately a debasement of our currency and thus inflation.  Thus we have a need to buy more gold and silver, as someone said recently, a silver quarter can still buy a gallon of gas.  I helped my daughter buy some silver for her three boys yesterday.  A good start for those youngsters.

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 3:15pm

    Reply to #14

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Davos wrote:Big picture

    [quote=Davos]
    Big picture from 30,000 feet:

    54% [and declining] of all trades globally are transacted in U.S. Dollars.  
    Joemanc just sent me a piece where Buffett wrote, "the dollar has fallen a staggering 86% in value since 1965."
    One can also go to the BS, (oops, forgot the L), the BLS and use their CPI inflation calculator to get a trend for the purchasing power of our dollar.  When I do this I always watch CM’s chapter 16 first.  It’s one of my favorite chapters and probably why I continue to drop the L.
    The bottom line is that our dollar, isn’t a dollar, at best it’s a "two-center".  Maybe we should start calling it what it is?  Inflation is the most missunderstood and also the most important topic today, and few get it.  Rising prices are a sympton of inflation, they are not inflation.  
    High prices are caused by three things, and three things only: 1.) the value of the dollars—2 cents and falling–(use gold not pretty other pieces of paper from other countries as your "value measuring stick") 2.) the price of oil, it is in everything even food. & 3.) supply and demand-for which we have 7 billion people all, for some unexplained reason, vying to eat.
    As mentioned in the FSN article, we, the 313 million, tend to view the rest of the world, the 6.7 billion through what we see.  What we spend out of our income, verses what the rest of the globe spends out of their income on food is very different.  Link to map that shows that the vast part of the globe (excluding fish) pay more than we do to eat.  Can you fathom paying half of what you earn on food? Link
    Remember too that even if a country exports a lot of food, it still has to import food it doesn’t have or can’t grow.  Remember also that these countries are very poor, buying food is really buying gas. 

    [/quote]
    Excellent post old buddy, It’s great to have you back in the conversation.
    I want to ask you about one point that you made regarding using gold as the measuring stick for the dollar. I think this is a false, albeit very popular, argument. In this day and age, comparing gold to a currency is comparing apples to oranges. 
    Gold is a market asset and its market value is defined by its price in a given currency, not the other way around. 
    You don’t define the value of the dollar by how much AAPL stock that it can by, or any other asset for that matter. I can’t buy a loaf of bread with my Apple stock, just like I can’t buy it with gold bullion. 
    I think many people interpret the price action of gold in a macroeconomic context, when history (think of the 1990s) suggests that there is little to no correlation. The price of gold has everything to do with Wall Street profits, just like tech stocks and home prices did in the past. Like other assets, its price is correlated to credit-fueled market speculation, not the value of the dollar.
    And speaking of correlation…

    People buying gold to protect themselves from inflation are contributing to higher prices throughout the commodity sector, especially food. Wall Street has us by the short hairs. These days you don’t even have to play the markets to lose your money to the big boys. 
    Thanks for reading….Jeff

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 4:03pm

    Reply to #14
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    Admittedly, it has been

    Admittedly, it has been almost 10 years since I’ve trapsed around international airports, but a funny thing comes to mind, Gold was listed on every currency exchange window.AAPL wasn’t.
    Now one could argue, "Well Gold is a commodity that is traded on many exchanges such as the NYMEX."  
    And I could argue back that WTI Crude wasn’t listed on currency exchange window next to AAPL either.
    But, I’d rather not argue.  If you look at gold as an asset like IPE— which Amazon bought a 30 percent share of before it realized that pets dot com was in the gravel shipping buisness and people became opposed to paying 45 bucks to have UPS ship a 5 dollar bag of cat litter to the same zip—I understand your view.
    I don’t share it.
    But I realize it is your view.
     
    Mine is different.  I feel gold is a currency and has been for 6,000 years.

    As Egon von Greyerz says, ‘We;ve never, until now, had a situation where ALL soverign countriew were bankrupt and printing all at one time.’
    Time is a harsh judge of right and wrong—we’ll see who is right, I wish us both well.
     
     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 5:38pm

    #16

    Jim H

    Status Diamond Member (Offline)

    Joined: Jun 08 2009

    Posts: 1798

    JAG said...

    " The price of gold has everything to do with Wall Street profits, just like tech stocks and home prices did in the past. Like other assets, its price is correlated to credit-fueled market speculation, not the value of the dollar."

    and,

    "People buying gold to protect themselves from inflation are contributing to higher prices throughout the commodity sector, especially food."

    This thinking is so backwards that it boggles the mind.  Correlation does not imply causality.  The value of the dollar is ultimately tied to how many dollars (paper and credit) are emitted by the central bank.  Indeed, all the emission (liquidity) is fueling the stock market… and it is also causing the prices of Gold and Silver to rise as more (costlesslly) emitted dollars chase the limited ( by nature) stocks of Gold, Silver, and oil.  Since most CB’s are emitting their own credit money at a rapid pace (http://www.ritholtz.com/blog/2012/01/living-in-a-qe-world/) .. it is hard to see the depreciation while comparing the value of one currency against another (ala DXY)… this is why you must view the value through the lens of real assets, and this is why the PM’s are so heavily manipulated (for now)…. in order to distort that lens of last resort (or maybe oil is the true lens of last resort, since Western bankers don’t control that cartel).  As Chris said in the interview.. markets don’t provide meaningful information anymore.. neither stocks or bonds.  

    Blaming a Gold buyer for causing higher food prices….  I don’t even think that deserves a response.

    Thank you Erik for passing along your ideas and experiences.  I loved your simple point about how the markets are cheering the way TPTB are dealing with symptoms, but not the structural causes of this crisis. 

     

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 6:33pm

    Reply to #9

    SagerXX

    Status Gold Member (Offline)

    Joined: Feb 11 2009

    Posts: 393

    Black sparrow?

    [quote=SingleSpeak] 
        Erik, you can have a pot-pie at my place anytime, no charge. Looking forward to the Financial Sense interview.
        Erik looking for black swan, Chris postulates perhaps a dark brown would suffice, I’m thinking off-white could possibly do the trick at this stage.
        SS

        Nice 

         to have Sherman on the board. 
    [/quote]
    Things are so far out of whack and seem to be teetering so precariously, that a single black sparrow could land on the top of the pile and bring it all crashing down. 
    One man’s opinion…
    Thanks for the interview.  Always interested when Chris and Erik get to talking…
    Viva — Sager

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 6:35pm

    Reply to #16
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

     The value of the dollar

     

    The value of the dollar is ultimately tied to how many dollars (paper and credit) are emitted by the central bank.  

     

    In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.~Greenspan autographed the original sometime in the 2000s for Dr. Ron Paul and told him he believed in everyword he wrote, JAG knows Paul’s kid so maybe he can score me a copy of that autograph?

     
    I find it amazing how people understand counterfeiters should be arrested because they debase our dollar, or "dawler" as my favorite Canadian female reporter calls it, (and I think I made her cry when I emailed her a "Your a moron" email with a link to all the comments she got on 0-Hedge).  But anyway, when Bernanke decides to print people think because he is smart that it won’t debase the currency and that holding paper is a good idea.

     
    Thanks Travlin & Single Speak

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 6:46pm

    #17

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    Welcome back Davos

    Davos — Welcome back. It is good to see you here again.

    Erik — Thanks for sharing your views. They are always interesting.

    Travlin

     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 6:58pm

    #18
    David Phillips

    David Phillips

    Status Member (Offline)

    Joined: Oct 29 2009

    Posts: 111

    Canada

    Erik,

    How has Canada scored in your world tour study? 

    David

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 7:27pm

    Reply to #16

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Jim

    [quote=Jim H]The value of the dollar is ultimately tied to how many dollars (paper and credit) are emitted by the central bank.  
    [/quote]
    Sorry Jim, but you are so wrong on this one it’s a shame. The credit that the central bank creates is a pittance compared to the credit created in the banking system, especially the shadow banking system. 
    And before you counter with age old "money multiplier" farce, try reading something that isn’t marketing on a goldbug blog. 
    My dollar today buys a lot more house than it did in 2005.
    Price inflation is relative to who gets the credit and what they buy with it. The only people gettting credit in America are the investment bankers who invest in the commodity and equity markets. 
    Have a good one…Jeff

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 7:46pm

    #19

    RJE

    Status Bronze Member (Offline)

    Joined: Aug 31 2008

    Posts: 868

    Inflation and chicken pot pie (this story could go viral btw)

    Clearly, inflation has been exported by Ben Bernankster, and Erik (with a k not a c) found himself paying $90 bucks for a salad and a chicken pot pie ( SUPER-DUPER HYPER-INFLATION), and that is unfortunate (Truth: plain silly). I believe however that Mr. T paid too much, and should have left the table , and politely (or not) went somewhere else.

    BOB

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 7:56pm

    Reply to #7
    David Phillips

    David Phillips

    Status Member (Offline)

    Joined: Oct 29 2009

    Posts: 111

    Canada

    Mark BC,I want to thank you for responding to my previous post.  You warned me about Dutch Disease several months ago when I was asking questions about Canada.  I appreciate your frankness. 
    Sorry to make your worse fears come true, but my family is set to migrate to Canada from the US next month.  We are not fleeing the US out of desperation. Our migration has been planned out over eight years and we are excited about starting a new life in Victoria, BC.
    We saw a long time ago that the US was making some bad decisions and that Canada offered a better future for our children.  Our goal is to obtain duel citizenship so that all four of us will have the option of living in both countries.
    Of course  I am curious to learn more from you.
    Do you have any further words of wisdom that wish to share before we depart on our journey?
     I am seeking truth and reality, not just pretty pictures.
    David
     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 8:17pm

    Reply to #19

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

    More on the pie...

    I’m surprised by how much the Chicken Pie has dominated the conversation! For the record, I never described Donovan’s on the Beach as a "working man’s" restaurant. That description found its way into the base post by Adam, probably because I was not as clear as I could have been when I described the restaurant. What I meant to say was that it was more a casual dining than a fine dining restaurant based on what I know of that industry’s terminology, and it certainly wasn’t the fanciest place in town. When we walked in we were thinking it was going to be "burgers on the beach", but it turned out to be a gourmet casual affair instead. But it was a LONG way from a Michelin-starred fine dining restaurant.My $57 price quote was in USD. The actual price was $54 AUD. I notice on their website that the menu now says $46AUD – I’m not sure if the price came down since we visited or if that’s just an old menu on the website.
    Donovan’s was clearly not the most thrifty option available, but my intended point was that the problem is across the board. For example, last night we stayed in and ordered Pizza here in New Zealand. Two individual-size (~12") pizzas were $25 and $27 (one was veggie, one had meat toppings), and there was a $9.50 delivery surcharge. We’re staying in an upscale town without a lot of competition, so I’m sure there must be cheaper pizzas elsewhere in New Zealand. But one way or another, our "cheap night staying in" involved a $61.50 payment to the Pizza guy.
    Erik
     

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 10:44pm

    #20

    RJE

    Status Bronze Member (Offline)

    Joined: Aug 31 2008

    Posts: 868

    Come home Erik, drop what you are doing and come home....

    …I am so relieved to know that here in America we can still eat rather cheaply, and compared to most everywhere our price for a gallon of gas is still on the cheap side too (Yes, I am aware of how heavily we subsidize our gasoline).

    $61.50 for pizza!!!!!!!!!!!!!!! What the %$#%$^*&&()**)(_)+_ Man!!!!!! LOL

    Was the pizza pie bigger than the chicken pot pie?

    I can’t wait for the next episode of Erik and his Lady’s excellent adventure.

    BOB

    Login or Register to post comments

  • Sat, Mar 03, 2012 - 11:09pm

    #21

    Jim H

    Status Diamond Member (Offline)

    Joined: Jun 08 2009

    Posts: 1798

    Jag..

    Your dollar buys more house because housing is still in the process of mean reverting off a huge mortgage credit fueled bubble, and there is way more housing stock than is needed, or affordable by the populace… so this will probably continue.  Housing is not a good reference point for the buying power of your dollar.  Rents are going up though.  If the CB’s were not enabling the status quo through all their outright printing and dollar swaps, then dollars would be a pretty good place to be for savings.  Until that time comes, I will remain a Goldbug, and you can choose to be a Paperbug if you like.   

    I understand how fractional reserve banking works.. what the CB’s are creating now is high powered money that can, and probably will be the tinder for the ultimate hyperinflationary firestorm…. this coupled with all the dollars that have been emitted abroad, and that will ultimately find their way back to our shores in the end game.  

    I am not a banker, but I sure as heck took advantage of this cheap credit with my new 3.87 % 20 year fixed mortgage.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 12:33am

    #22
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    More on: Your dollar buys more house because housing is still in

    Your dollar buys more house because housing is still in the process of mean reverting… 

    Bernanke says here that "Housing is no longer a safe investment".  Probably the only thing he ever got right in his life.  Housing has a lot more to fall. 

    • Last I recall shadow inventory was 1.6 million…
    • BUT there were 3.5 million seriously delinquent mortgages (over 4 months late) as of January of 2012.
    • So we’re looking at 2.6 million shadow inventory, probably by years end.  They can’t (really wont) cram all 3.5 million in this year.
    • I suppose regular inventory is what? 2.27 million I think in 2011.  Like I said, my RE finger is off the pulse.
    • So back of the envelope we have 1.6m+1.0m+2.3m=4.9m and many more too follow.
    • Of course, an easy way about this is there are about 70 million homes in the U.S. and 12% of them are vacant.  So inventory is 8.5 million, or will be soon.

    Like CM says " Given the propensity of bubbles to overshoot to the downside, we can’t discount that a 40% to 50% decline is in store."

    Here is what Moron Bernanke wrote in his crud book, good for kindling if you don’t get the electronic edition.   

    The “debt crisis” touched all sectors.  For example, about half of all residential properties were mortgaged at the beginning of the Great Depression…

    The proportion of mortgaged owner-occupied houses with some interest of principal in default was in none of the twenty-two cities [surveyed] less than 21 percent (the figure for Richmond, Virginia); in half it was above 38 percent; in tow (Indianapolis and Birmingham, Alabama) between 50 percent and 60 percent; and in one (Cleveland), 62 percent. For rented properties, percentages in defaul ran slightly higher.

    Now here he is on CNBS contradicting what he published in his book years after it was published.

    2005: http://youtu.be/HTzMY5lYlJk

    And we can even add to this if we so choose.  

    During the FOMC 2005 meeting these (ehems) were laughing about the housing bubble that this ehem chairman was lying (when he was at the White House (pre-Fed Chairman but post Llyodd Blankfein’s housemate at Winthrop in Harvard)) on CNBS about.

    “–I offer one more piece of evidence that I think almost surely suggests that the end is near in this sector. While channel surfing the other night, to the annoyance of my otherwise very patient wife, I came across a new television series on the Discovery Channel entitled “Flip That House.” [Laughter] As far as I could tell, the gist of the show was that with some spackling, a few strategically placed azaleas, and access to a bank, you too could tap into the great real estate wealth machine. It was enough to put even the most ardent believer in market efficiency into existential crisis. [Laughter]~David Stockton, Dec. 13, 2005, economist and Fed comedian.

    And wait…there’s even more!

    Remember this guy?

     

    Education: Julliard School.  Hitler taught us the world needs more artists, even if their art (ehem).  N.Y.U. B.S. economics, M.A. economics, dropped out of Columbia (to follow Burns to DC to learn how to chase power and powerful positions). PhD N.Y.U.  His NYU dissertation—removed upon his request when in 1987 he became Chairman of the Fed.  One copy remains out there and it includes a discussion of soaring housing prices and their positive effect on consumer spending. It even anticipates a housing bubble and collapse.  He noted that homeowners were refinancing for larger amounts than their original mortgages, monetizing their appreciation and then spending the excess cash on goods and services.  Economists had missed this trend.  He also wrote in his now secret dissertation,

    “There is no perpetual motion machine which generates an ever-rising path for the prices of homes.” …”break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building.”

    _________________________________________________________________

    The entire problem is that most people don’t have a clue what deflation is.  FY2006 30% of the buyers were sub-prime, they’re gone.  The negative externalities derivatives created wiped out about as many prime borrowers.

    People run around saying money dried up, there is no credit.  Bee-s!  The buyers are GONE.  It is supply and demand.   Not "deflation."

    It pains me because I have a lot of good friends who are deflationists.  They are incredibly uber-intelligent, but they have this one flaw being able to wrap their minds around this and the bottom line is that in this sense they are different from horses.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 1:07am

    #23

    JAG

    Status Silver Member (Offline)

    Joined: Oct 26 2008

    Posts: 240

    Jim & Davos

    LOL…..I need my Saturday night beer.

    All the best….Jeff

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 1:10am

    #24

    Mark_BC

    Status Bronze Member (Offline)

    Joined: Apr 30 2010

    Posts: 275

    With interest rates so low

    With interest rates so low why would anyone purchase real estate in the US as an investment? It can ONLY go down! Why not take advantage of something that will hold its value and maybe even appreciate? There’s millions too many houses. They are made of plywood. They rot and get looted when not maintained by OWNERS. I can understand if you want to refinance your own house but I sure wouldn’t buy one for investment. I look at all these glass condos going up in my City of Glass, gawd why would anyone pay half a million bucks for a closet?

    I got an electric car and I think that within 10 years (more likely 2) when we see where gas prices are going it will have turned out to be a very good investment. There are very few electric cars in the world right now.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 1:10am

    #25
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

     My head hurts just

     My head hurts just watching…get me a copy of that Greenspan autographed 1966 Ayn Rand Objectivist piece from your doctor frined and maybe I’ll forgive you.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 3:20am

    #26
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    The # 3 Search at my little blog?

     

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 4:06am

    Reply to #26

    Jim H

    Status Diamond Member (Offline)

    Joined: Jun 08 2009

    Posts: 1798

    Enough about chicken pot pie already...

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 4:20am

    #27

    goes211

    Status Gold Member (Offline)

    Joined: Aug 18 2008

    Posts: 287

    Is gold money?

    First I would like to say it’s nice to see some of the old-timers on this thread.  If you guys actually stick around, it would make CM.com a more interesting place.

    As for the question of if gold is money, the truth must lie somewhere in between.  Gold certainly has a history of being money but it is hard to say that is what it is acting like as now.  Maybe it is in the process of reemerging as money but it is hard to see how that can fully happen when it is measured against an entity that can be created without cost and then is taxed on the basis those artifical gains.

    One thing is for certain, it is not as simple as Jim saying "The value of the dollar is ultimately tied to how many dollars (paper and credit) are emitted by the central bank. ".  One look at a chart for monetary/credit growth vs gold price between 1980 and 2001 should make that pretty obvious.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 4:39am

    Reply to #27
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    Where the heck is MachineHead??????

    First I would like to say it’s nice to see some of the old-timers on this thread.  If you guys actually stick around, it would make CM.com a more interesting place. 

    Where the heck is MachineHead??????
    David Rosenberg: “The Best Currency May Be Physical Gold”
    &

    “You know why Warren Buffett doesn’t like gold, doesn’t understand gold, because gold has out performed his stock in the last ten years by three and a half times.”~Egon von Greyerz (KWN link)

     Link to Zero Hedge for the chart.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 5:06am

    Reply to #24
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    pass on early generation electrics

    [quote=Mark_BC]I got an electric car and I think that within 10 years (more likely 2) when we see where gas prices are going it will have turned out to be a very good investment. There are very few electric cars in the world right now.
    [/quote]
    For good reason.  You never want to buy first generation technological devices.  It almost always turns out to be a bad economic choice.  They’re already recalling the Volt.  There will be other unanticipated problems as well until they get the bugs worked out.  And if it is a pure electric, the range problem would be a deal killer for me. 

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 5:10am

    #28
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    inflation

    You boys may want to review this little gem from our old timer friend strabes.

    http://csper.org/lesson-61-sovereign-money.html

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 6:17am

    #29

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    David Stockman dynamite

    [quote=Davos]

    Where the heck is MachineHead??????

    David Rosenberg: “The Best Currency May Be Physical Gold”

    [/quote]

    Davos

    MachineHead left soon after you. I miss him very much. I PMed him with no reply. If anyone can contact him to encourage him back, then please do.

    David Stockman gave a dynamite interview to the AP. He wants to go on record with a national audience. I found it via the first poster in the David Rosenberg article. The first time I ever found a post that was worthwhile after a Zero Hedge article! You all need to read this.

    http://www.usatoday.com/money/economy/story/2012-03-03/david-stockman-says-economic-disaster-lurks/53339644/1

    Travlin 

     

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 6:42am

    Reply to #8

    nickbert

    Status Silver Member (Offline)

    Joined: Jan 14 2009

    Posts: 260

    agility

    [quote=Poet]And I really love Erik Townsend’s take on agility. I hadn’t really thought about it that way before. My focus has always been about trying to find a way to build up resiliency, when agility is obviously just as important. Thank you.
    [/quote]
    +1
    Agility and flexibility is my family’s focus as well.  For us and at our stage in life and available resources, we have a selective advantage in mobility and flexibility over trying to buy and establish a home.  If one is young, odds are that agility is your biggest advantage!
    Another selling point of the "agility path" is if one has close family that is in the other position, and you and they are willing to pool efforts and resources.  This is the case with us, where our extended family have established homes they own outright with gardens and a couple other modest resiliency measures, but little mobility or flexibility in the economic sense.  I think we are better off complementing each other’s strengths & weaknesses rather than us weakly duplicating what they already have (and having to go into debt to do so).  I kind of suspect that their retirement means will not live up to the promises and eventually they will need any income we can bring them, and we can’t do that very well if we’re working through mortgage payments or can’t move to take advantage of opportunities.
    Lastly, I like Erik’s outlook on traveling to see what place he and his significant other might like to eventually settle down and comparing pros and cons of each place.  You never know what you might be missing if you don’t go out there and see new places.  Even if after all that you find that the place you originally called home is the best place for you after all, you will still have acquired some great experiences.
    – Nick

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 7:09am

    #30
    Sabco

    Sabco

    Status Member (Offline)

    Joined: Sep 28 2008

    Posts: 7

     The Aussie Dollar was

     The Aussie Dollar was around 0,60-0,70 US$ About 5 years ago. Now it is 1.08 US$ I don’t think the US has exported its inflation. They have devalued severly which will feel like inflation whenever you buy something overseas.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 9:58am

    #31
    derelict

    derelict

    Status Member (Offline)

    Joined: Aug 13 2008

    Posts: 15

    Sanity

    I sense some confirmation bias going on wrt the food/menu prices issue. So many folks want to believe the end is near – and maybe it is! – that the story of a 50+ dollar "pot pie" gains traction.

    First of all, Erik needs to get out more.There are plenty of great places to eat in Melbourne that will be $20/main, or there’s a huge Chinatown area filled with authentic, tasty and inexpensive places to eat. At Donovan’s you’re in St Kilda, it’s trendy, and you’re overpaying. Maybe sitting on an outdoor patio with a view of the ocean is worth something extra, I don’t know. Lot’s of people think it is, at least for special occasions.

    OK, New Zealand has Pizza Hut and Dominos like everywhere else. You can look up their prices on the net. But maybe the gold standard for designer pizza is the Hell’s pizza chain. hellpizza.com. Pick a 12" nice pie like Lust or Wrath click through the menu and you’ll find it’s $15.50. "Pepperoni, Salami, Ham, Bacon & Cabanossi, Lashed With Your Choice Of Sauce. e.g, BBQ, Sweet Chilli, Smokey BBQ or Tomato."

    So again we must be talking about something extra special at $25+. Nuff about that.

    Yes you do pay for delivery in NZ. It’s $7 from Hell’s, though you’ll sometimes see free delivery added in as an offer. Let’s talk about this, and about why it is so. In NZ the minimum wage is $13. So if you work a 5 hr shift as a pizza delivery guy, say from 5-10 PM, you’re going to earn $65, plus you may need to cover vehicle costs if it’s not a company vehicle. Well, in NZ people don’t tip, so the pizza company can’t count on hungry (desperate?) employees willing to work basically for tips plus a minimal salary.

    When I waited tables in the states I was paid $2.01/hour. Don’t know if this is still the practice, or if this is in all states, but you were essentially free labor to the restaurant. You could work a lunch, have your station shut down after a few tables, and walk out of a shift with ten dollars in your pocket. That’s unfettered free enterprise for you.

    So as we globetrot around the world it’s interesting to look at the nitty gritty details of life and how things work in different places. What would it look like to raise the minimum wage in the USA to a liveable amount? What would that do all the way down the – literally – food chain.

    But the idea of a $50 pot pie has legs, because it sounds so outrageous. Hopefully it was a good pie. But the fact is, if you’re not choosy, you can buy a classic meat pie in any dairy (Stop n Go) for under 5 dollars. These are the frozen burritos of australasia –  but you won’t get the ambience, you won’t impress anybody, and don’t mind the petrol fumes while you unwrap it and gobble it down on the sidewalk.

     

     

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 11:18am

    Reply to #29
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    David Stockman dynamite

     Thanks Travlin,  I’ll check out Stockman.  I’m going to email Mike P, I had dinner with him over the summer, and I’ll email Farmber Brown and 2 Beers With Steve.  Stockman is a good guy, he reads the blogs, he donated support money to Jim Quinns burning platform too.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 3:46pm

    #32
    joemanc

    joemanc

    Status Silver Member (Offline)

    Joined: Aug 16 2008

    Posts: 138

    Prices

    Erik is right. I traveled to Sydney several years ago and was shocked at some of the prices. Even the Subway sandwich shop was expensive, and this was when the US dollar was buying 1.20 Aussie dollars. And I’m used to high prices as I live in an expensive state and work in one of the most expensive places in the US. I went to Quebec last month and again, some of the prices I saw on things like food, drink and fuel(high taxes) just made me scratch my head how folks can afford to live. I think Schiff said it: The US biggest export is inflation.

    As for prices in the US – other than houses, I’m still waiting for those to come down. Just bought a roll of insulation at Home Depot the other day. Was less than $10 in the winter, now it’s $15. I need to invest in tissues for the deflationists, they are going to need them.

    Welcome back Davos. Who knew my little weekend getaway down to Virginia would get both you and Dogs back to the site. We need machinehead back too.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 4:26pm

    #33
    Davos

    Davos

    Status Silver Member (Offline)

    Joined: Sep 17 2008

    Posts: 811

    Prices

     Thanks Joe, it was great to finally me you, Dogs & Cat.

    Travlin, that was a super read.  

    Here you have Stockman the ex-budget director holding gold and totally out of the stock market.

    And check out the crew slamming gold.  

    1. You have a moral degererate wall decorator  (don’t click on this link if you don’t want to see disgusting skulptures).  Roubini’s investment research firm is on the block after loosing $2 million.
    2. You have Buffett whose stock has for the last 10 years been out performed by gold by 3 and a half times.
    3. And Bernanke.

    I hate gold, but I wouldn’t even let them look for me when crossing the street.   Barbourous relic?  Barbourous wall decorator.  

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 4:29pm

    #34

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    Round ‘em up

    Davos and Joemanc

    By all means, round up the old stalwarts. The lull before the storm is coming to an end. We’re going to need them.

    Travlin 

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 6:22pm

    Reply to #7

    KugsCheese

    Status Gold Member (Offline)

    Joined: Jan 01 2010

    Posts: 815

    Mark_BC wrote:I am

    [quote=Mark_BC]
    I am wondering, why is it that QE exports inflation? Shouldn’t the US also be experiencing it? Is it that the deflation from the collapsing economy is offsetting it? Then why have we not seen $57 pot pies in Canada, since our economy is booming on commodity extraction and definitely not in deflation? Does China feel it more because commodities are a bigger portion of daily expenses?
    I applied for New Zealand immigration but was rejected. I guess it helps if you’ve actually been to the country… Actually, apparently Chile is one of the best bets right now I think. They dealt with a lot of their corruption issues in the previous decades. We have put down some roots there. I think S America is the best overall place to be. My concern about Canada is that although we have the biggest oil reserve left on the planet and a very low overall population density, we are right next door to the US. I could see us being flooded with millions of desperate American refugees. Maybe we’ll be taken over by the US, actually that sounds almost inevitable considering the way the media is able to justify the most heinous acts to the American population and get them to buy into it..
    [/quote]
    Well, the US reported inflation is under-reported (see John Williams Shadow Stats).   Then the Velocity of money is not very good so that is keeping a lid on the hot money.  But Velocity could take off at any time so the US would be in real trouble then.   Think $50 pot pie one week then $100 pot pie 3 months later.

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 8:33pm

    #35

    Jim H

    Status Diamond Member (Offline)

    Joined: Jun 08 2009

    Posts: 1798

    Kugs is right.. it's all about the big V

    For Velocity.  And my prediction is that this will be spun in a very counterintuitive way… and I have said this before… when V increases.. it will look very much like a RECOVERY.  The MSM and TPTB will be all over the numbers.. not noting Velocity per se, but interpreting the numbers in a very positive way, vs. the underlying reality of people using their savings (or the last of their available credit) to buy some stuff they need, or will need in the future, now while they can still afford to.  Retail sales will be great!  This will be the last, great misdirection.  Gold and Silver will probably get a beat down when this report comes out to paint the tape and support the propaganda;  Wow.. we are recovering… who needs Gold and Silver… sell, sell, sell!  

    I will continue to point out that, not one person in a hundred will understand what we are talking about here.. and that is why the propaganda has been, and will continue to be so effective.  There are so many parallel downward spirals happening now that all are part of the same, holistic ponzi unwind;

    *  Tightening Financial repression; endless, and ever extended ZIRP

    *  Loss of free markets;  Gov’t/FED/Banker interference 

    *  Loss of USD reserve currency status (by 1000 cuts)

    *  More and more veiled QE/money printing

    *  Loss of Rule-of-Law/breech of contract law (the subject of this piece Chris wrote)

    *  Deepening falsification of data by BLS, etc, MSM propaganda

    *  Capital controls, loss of personal freedom, loss of constitutional freedoms. 

    *  Budgetary madness, fiscal instanity.. inability to make necessary/meaningful cuts in Federal budget

    As you look at these categories… do you see things improving on any front?  No?  Then some kind of endgame is coming.        

    Login or Register to post comments

  • Sun, Mar 04, 2012 - 9:32pm

    Reply to #19

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    More on the pie...

    [quote=Erik T.]My $57 price quote was in USD. The actual price was $54 AUD. I notice on their website that the menu now says $46AUD – I’m not sure if the price came down since we visited or if that’s just an old menu on the website.[/quote]
    Hi Erik, that $54 AUD quote must be at least a year old, our Aussie dollar is now well above parity with yours, $1AUD today buys ~$1.08US.
    Also, Aussie pies are something else! But I usually pay $4.50 for them….
    Mike

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 4:09am

    Reply to #35
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    repression, resistance, or reform?

    [quote=Jim H]For Velocity.  And my prediction is that this will be spun in a very counterintuitive way… and I have said this before… when V increases.. it will look very much like a RECOVERY.  The MSM and TPTB will be all over the numbers.. not noting Velocity per se, but interpreting the numbers in a very positive way, vs. the underlying reality of people using their savings (or the last of their available credit) to buy some stuff they need, or will need in the future, now while they can still afford to.  Retail sales will be great!  This will be the last, great misdirection.  Gold and Silver will probably get a beat down when this report comes out to paint the tape and support the propaganda;  Wow.. we are recovering… who needs Gold and Silver… sell, sell, sell!  
    I will continue to point out that, not one person in a hundred will understand what we are talking about here.. and that is why the propaganda has been, and will continue to be so effective.  There are so many parallel downward spirals happening now that all are part of the same, holistic ponzi unwind;
    *  Tightening Financial repression; endless, and ever extended ZIRP
    *  Loss of free markets;  Gov’t/FED/Banker interference 
    *  Loss of USD reserve currency status (by 1000 cuts)
    *  More and more veiled QE/money printing
    *  Loss of Rule-of-Law/breech of contract law (the subject of this piece Chris wrote)
    *  Deepening falsification of data by BLS, etc, MSM propaganda
    *  Capital controls, loss of personal freedom, loss of constitutional freedoms. 
    *  Budgetary madness, fiscal instanity.. inability to make necessary/meaningful cuts in Federal budget
    As you look at these categories… do you see things improving on any front?  No?  Then some kind of endgame is coming.        
    [/quote]
    Good post Jim.  The question now is all in the timing.  Things will be forestalled until the presidential election but it’ll be interesting to see what happens afterwards.  My gut feeling for the longest time has been that events will peak in 2015.  We’ll see.  There’s certainly no real recovery.  In my mind, the most likely outcome will be repression and subjugation rather than resistance and revolution.  Another alternative though, a wiser one in my mind and therefore the least likely to occur, would be widespread non-violent, passive civil non-participation (as opposed to active and overt civil disobedience) to bring about reform.  I’ve been mulling over some thoughts along these lines but it’s late and I’m heading to bed.  Tomorrow, if my day allows …    
     

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 5:20am

    Reply to #19

    Arthur Robey

    Status Platinum Member (Offline)

    Joined: Feb 03 2010

    Posts: 1814

    Greasy Joe's.

    I have never been dissapointed by Greasy Joe. He builds a generous hamburger at a reasonable price.Who is Greasy Joe? He is that un-syndicated caravan parked on the side of the road. He goes by a many nom-de-plumes, and you will find him throughout the world.

    Go, Go Greasy Joe.

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 5:24am

    #36

    thatchmo

    Status Silver Member (Offline)

    Joined: Dec 13 2008

    Posts: 319

    bring it on ao!

     

     …widespread non-violent, passive civil non-participation (as opposed to active and overt civil disobedience) to bring about reform

     

    I, like many I’m sure, have been looking for some action to feel like I’m doing SOMETHING to be a positive force for change.  Stuff beyond my own personal preps and choices.  Would love to hear your take on what that might be for you, and others.  Maybe a new thread?  Aloha, Steve.

     

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 5:29am

    #37

    thatchmo

    Status Silver Member (Offline)

    Joined: Dec 13 2008

    Posts: 319

    Greasy Joe's under pressure

    Greasy Joe’s under pressure in Oakland, CA, USA.  Check out today’s DD.  Aloha, Steve.

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 6:08am

    #38

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    Intriguing thoughts Ao

    [quote=ao]

     

    In my mind, the most likely outcome will be repression and subjugation rather than resistance and revolution.  Another alternative though, a wiser one in my mind and therefore the least likely to occur, would be widespread non-violent, passive civil non-participation (as opposed to active and overt civil disobedience) to bring about reform.  I’ve been mulling over some thoughts along these lines but it’s late and I’m heading to bed.  Tomorrow, if my day allows …    

    [/quote]

    In my mind, the repression and subjugation are already here and accelerating. I expect them to get much worse. I too doubt we’ll see serious resistance and revolution. The last two generations of “consumers” have been conditioned to be very passive and conformist to fit into our corporate and bureaucratic culture. They have too much to lose to “rock the boat”. It takes real desperation to risk it all. The last time we had a revolution we were a nation of small farmers, craftsmen, and merchants. People were much more independent in every sense of the word, but especially their livelihoods.

    I am intrigued by your idea of passive civil non-participation as opposed to active civil disobedience. How does that work? As Thatchmo said, this deserves its own thread. I’d love to hear more of your thoughts on these issues.

    Travlin 

     

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 7:47am

    Reply to #38

    nickbert

    Status Silver Member (Offline)

    Joined: Jan 14 2009

    Posts: 260

    Travlin wrote:I am

    [quote=Travlin]
    I am intrigued by your idea of passive civil non-participation as opposed to active civil disobedience. How does that work? As Thatchmo said, this deserves its own thread. I’d love to hear more of your thoughts on these issues.[/quote]
    How about taking one’s money and labor more or less out of the US ‘official’ economy?  Either by participating primarily in the shadow economy or by taking your money and labor overseas, whichever is your cup of tea.  I’m taking the latter approach, but let me say Uncle Sam sure isn’t making it easy for me to take my money or do business out of the country.  Which makes me think that I’m probably doing something right (and I will know for sure that’s the case once they start making it illegal).
    I can’t think of many better ways to hit them where it hurts than to take money and skilled people out of their system.  They can try all they want, but people WILL find ways to either participate in underground/shadow economies or pack their s*** and head elsewhere 
    – Nick

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 4:57pm

    #39

    RJE

    Status Bronze Member (Offline)

    Joined: Aug 31 2008

    Posts: 868

    Passive resistence, I think

    Passive resistence, I think not. All of Europe, China, North Africa, Middle East,UK, rumblings in the United States all add up to one serious blow back from the bend over types as they truly are fed up with everything that was known to be true is no longer true. Arms sales and ammo have increased tremendously since Obama took office, why is that?

    BOB 

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 6:26pm

    #40

    Septimus

    Status Bronze Member (Offline)

    Joined: Aug 20 2008

    Posts: 35

    Prices in Wellington, New Zealand

    I’ve lived in Wellington for a year and a half now after living in the states my entire life to that point (other than the odd trip).  I think there are a few things to keep in mind, not the least of which is that Wellington is to New Zealand as Washington, DC is to the U.S. Prices, on average, are higher than most other places in the country.

    That said, you can easily find high quality food for fair prices (from the U.S. perspective). When eating in a restaurant:  All prices quoted already count the GST so nothing is added to the bill above the price on the menu. When I used to live in Kentucky, you would add the 6% sales tax (low compared to some places) and I a ways added a 20% tip. When those factors are taken into account, we have found that all nice casual and better restaurants are very comparable to the same places in Louisville, KY, so I imagine they are comparable or cheaper than the same types of places in Washington, DC. There is virtually no tipping in restaurants here. All staff make at least the minimum wage of nearly $13/hour or more so I guess that is how the tipping expectations evolved differently compared to the U.S.  For eating out, I have found that “fast food” places are notably more than in the U.S. So when you are going to spend $10 at McDonalds, why not spend $10 at the sole proprietor or mo and pop café next door for better food for lunch?

    Quality: With very few exceptions, food quality in New Zealand is very high. Locally grown or raised food is not GMO is one biggie for us. Most grazing animals actually graze grass instead of being feed GMO grains in stressful feedlots.  Chicken tastes like chicken in the U.S. used to taster 40 + years ago, beef the same, eggs, cheese, etc. Very amazing after being used to the bland versions of everything I had gotten used to in the U.S.
    Prices: You can get a wide range of Dominos pizzas for $6 to $10 each. It is true that Pizza in nice casual or better restaurants is expensive from my POV, with average size pizzas costing $18 to $25, depending on where you are going.

    Fresh food prices from last Saturday at the local farmer’s market, buying strait from the producer or, in some cases, one step removed (at most): $1.50 for two cantaloupes/musk melons, $2.00 for a very large robust head of romaine lettuce, $1.00 for about ¾ pound tomatoes, $5.00 for about a pound of nice Portobello mushrooms, $1.50 for a kilo of carrots, Large leeks only $1.00 each or 2 for $1.50, large bunch of spinach at $1.50, about a pound of beets $1.50, 2 kilos (about 4.4 pounds) of plums for $4 to $6, depending on variety and vendor, same or less for apples, oranges, mandarins. Beautiful varieties of artisan style baked breads, large loaves between $5 and $7.

    At a local food distributor, you can buy very large bags of most spices for $4 to $7, where I remember the small cans in the U.S. being $3 to $6 or more. These bags contain 10 to 30 times what is in one of those cans. I could go on. The point is that food prices, once you are familiar with where to buy, are reasonable.  On yes, all prices are in NZ dollars. So would seem cheaper from a U.S. perspective.

    On the other hand, there are lots of opportunities to leverage differences in prices for cosmetics, clothing and shoes which is middle of the road and better stores are very expensive (most of the time) compared to the U.S. I think this is due to the smaller market and lower competition for these more durable goods (compared to food).

    As the frequently say in NZ,

    Cheers,

    Septimus.

    PS – We were honored to entertain Erik and his friend a few times while they were in Wellington and hope they come back!

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 10:53pm

    #41
    SteveW

    SteveW

    Status Silver Member (Offline)

    Joined: Jan 21 2010

    Posts: 140

    Great interview

    Great interview and thread and nice to hear from you again Erik. I found your comment about the secondary market in Treasuries interesting but as I understand it that is not a feature of the contract, although clearly the law of contracts is bent if not broken. As I understand it the market for US Treasuries in the most liquid in the world. If it should start to dry up or China planned a dump wouldn’t the Fed simply buy and monetize even more debt and isn’t that their plan? One wonders how much cooperation there is with China, at least when it serves the purpose of China, as for example in the closure of the PAGE gold exchange.

    I concur with ao that it looks as if 2015 is the date for the endgame. I’ve been seeing it suggested all over the net and the ECB’s LTRO extends until then. I sense it is getting traction, so much so that it could become a self fulfilling prophecy.

     

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 11:00pm

    Reply to #40
    Millie Pickle

    Millie Pickle

    Status Member (Offline)

    Joined: May 08 2009

    Posts: 2

    Inflation in New Zealand

     I find Erik’s observation that inflation has been exported around the world very insightful. It certainly places my last 10 years in New Zealand into better perspective. Access to high quality and durable products is limited, although the costs of of everything from furniture to garden tools are formidable. The manufacturing sector in NZ was gutted in the 80’s and 90’s and now relies on imports, mostly from Asia. The niche, European-quality products are priced at a premium to the already high prices. People here expect to pay high prices and they don’t expect things to last.I have to disagree with Septimus about food prices and quality in Wellington and New Zealand in general, notwithstanding specific favorable comparisons between US and NZ. Many people find Welllington a reasonably priced city compared to Auckland or Queenstown. I myself have noticed various memes that circulate from time to time; that prices are very high or very low in certain places, but by my direct experience, there are no consistently huge differences. Prices are pretty high most everywhere. You can get a hotel room for about the same price in Auckland, Wellington and Dunedin, the same regarding a restaurant meal. And real estate does not vary as significantly as commonly believed. 
    New Zealand is the least regulated country in the OECD, and most times there is less oversight and less media coverage than anywhere else. Scratch the surface of the clean green image and NZ struggles with the same unscrupulous practices that most other countries face, albeit with reduced ability to fund remediation of the problems.
    Small business owners have been shoved out of the market in most business sectors. An independent stationery cannot afford to import office supplies competitively, so there are one or two chains which are featured in every town, and that theme is repeated everywhere. The dairy industry may be a cooperative, but it acts as a monopoly, manipulating prices of it’s various "brands" to move inventory. NZ is the national equivalent of  a one-horse-town. The national persona has declared itself passionately in love with its automobiles, and it’s public transport system has been systematically deconstructed.
    I would really like to hear more from people with experience in NZ who have an eye toward the issues we talk about on this site. It is hard not being a financial expert and trying to tease apart news reports for actual relavent information about how NZ is placed to weather coming storms. Many people, naively I believe, have a rosy perspective on NZ, whereas I see a goose that is still being fattened up for the eventual kill. In the last year or two we have seen "Goldman Sachs economists" commenting in the newspapers- it is a disturbing sign.
    To my mind, NZ is highly vulnerable to the coming oil price shocks, Japan collapse, and high overseas debt. Although just a short while ago it was well placed, it has now caught up to the rest of the OECD in terms of debt vulnerability. There sems to be a pattern here of having great solutions which are promptly abandoned in favor of falied solutions of other countries. It all feels so unnecessary, but inevitably it seems countries do not learn from other countries’ mistakes.
     

    Login or Register to post comments

  • Mon, Mar 05, 2012 - 11:48pm

    Reply to #19
    Millie Pickle

    Millie Pickle

    Status Member (Offline)

    Joined: May 08 2009

    Posts: 2

    Pizza-gate :)

     One of the biggest shocks I had when I moved to Waiheke Island (off the coast of Auckland) in 2002 was the cost of a pizza. As Erik says, an upscale town with no competition can charge what it likes, but it was still staggering. Because, coming from the US, where pizza is one of our food groups, it is hard to relate to the Kiwi view of pizza. You can find a Domino’s in Auckland for cheap, but that is about it. This country is aligned with Great Britain, and so the cheap takeout food is fish and chips, not pizza. Since moving to NZ I hardly eat out at all. When I think of how often I ate in restaurants in the US, it is a 180 degree shift. And yet, people here spend money with abandon, buy overpriced wine to go with (IMO) overpriced meals (or pay the restaurant $5- $60 "corkage fee" to bring their own wine, if that makes any sense at all), and do not complain. Those prices tend to go along with the house prices, rated behind only Canada and Norway at the moment as the most overpriced based on rent to house price ratio. The average wage in NZ is around $50,000. On Waiheke median income is $23,500. Median house sale price is upwards of $400,000. Something is not right, it just defies basic mathematics.
    I would love to hear from others how they consider that the NZ case is different than Ireland, because on the ground here it looks exactly the same. I think you take a bunch of people who have not made a lot of money historicially, and you puff them up with credit expansion leading to house price explosion which makes everyone feel and spend like Rockefellers, and they all fall into the same debt trap.
    On this site and especially this thread, I hear people saying they would not pay such high prices, because it doesn’t make sense. What I don’t understand is why the people here in this country don’t share that view. By and large, it seems, no one wants to admit that they can’t run with the big dogs. 
     

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 3:33am

    Reply to #38
    ao

    ao

    Status Platinum Member (Offline)

    Joined: Feb 04 2009

    Posts: 882

    imagine

    [quote=Travlin][quote=ao]
     
    In my mind, the most likely outcome will be repression and subjugation rather than resistance and revolution.  Another alternative though, a wiser one in my mind and therefore the least likely to occur, would be widespread non-violent, passive civil non-participation (as opposed to active and overt civil disobedience) to bring about reform.  I’ve been mulling over some thoughts along these lines but it’s late and I’m heading to bed.  Tomorrow, if my day allows …    
    [/quote]
    In my mind, the repression and subjugation are already here and accelerating. I expect them to get much worse. I too doubt we’ll see serious resistance and revolution. The last two generations of “consumers” have been conditioned to be very passive and conformist to fit into our corporate and bureaucratic culture. They have too much to lose to “rock the boat”. It takes real desperation to risk it all. The last time we had a revolution we were a nation of small farmers, craftsmen, and merchants. People were much more independent in every sense of the word, but especially their livelihoods.
    I am intrigued by your idea of passive civil non-participation as opposed to active civil disobedience. How does that work? As Thatchmo said, this deserves its own thread. I’d love to hear more of your thoughts on these issues.
    Travlin 
     
    [/quote]
    Travlin,
    I fully agree with your statement about repression and subjugation already being here and accelerating snd your other statements.
     
    To the group,
    With regards to what I’ve been pondering, here are some thoughts.  In considering the individuals (and the institutions and organizations they comprise and represent) who have lead us to the ruinous situation we face both nationally and globally, they are a small and rather select group.  The individuals I’m thinking of include chief executives, top aides, cabinet members, senators, congressmen, supreme court justices, international bankers (Rothschilds and Rockefellers topping the group), top multi-national corporate executives and boards (particularly in the banking and financial fields like the big 5 banks but also corporations like GE, Exxon, Rio Tinto, Monsanto, and others of a similar ilk), top consultants (Greenspan, Kissinger, Brzezinski, etc.), inner circle members (CFR, Bilderberg, Trilateral Commission, Club of Rome, etc.), the George Soros-type currency killers and nation destroyers, and the other narcissistic, sociopathic vampires who are sucking the life blood out of the middle and lower classes.  I’m guessing they number less than 10,000 total.  As such, numberwise, they really don’t amount to much.  And they can only express their power through others that are beneath them on the power hierarchy.  What if we could take that power away?
    They would have you think they are the most brilliant, the most talented, the most worthy, etc., created and destined to control the masses and without them, we would all be lost.  But the truth is, they need us but we don’t need them.  We’d have more life (i.e. less wars and conflict), more wealth and abundance, more freedom and liberty, and more of almost everything good without them.  The fact is, they need us.  That’s right, they need us.  Why?  Because we provide them with everything that makes their life worth living.  Virtually all the goods and services they use come from us.  Besides the physical aspects of what we provide, we also provide powerful emotional satisfaction for them, be it adoration, admiration, respect, etc. or more pathologically, someone over whom they can have a feeling of superiority, someone over whom they can have a feeling of power, or even someone in whom they can instill fear and suffering.  Both these physical and psychological needs are important to them. 
    While historically, such repression as is developing has virtually always eventually resulted in violent revolution and upheaval, perhaps we have evolved to the point where more effective tools can be used against this tyranny.  Just as in the area of torture, the perpetrators of this evil have progressed from the crude barbarities of Spanish Inquisition type tortures to the simple but severe effectiveness of sleep deprivation and water boarding, so too, from the standpoint of fighting for goodness, righteousness, and justice, perhaps we can adopt more elegant tools such as social distancing and ostracism and depriving the elite of the basic necessities of a comfortable existence.  When one looks at human fears, some of the greatest human fears relate to rejection and/or losing face and the loss of familiarity, comfort, and security. 
    Imagine tomorrow, Henry Kissinger wakes up to find he no longer has access to a housekeeper, a cook, a driver, or a body guard.  All those individuals tell him they are sick and tired of his complicity in the disastrous events that have befallen us.  His toilet gets clogged but a plumber refuses to come to his house.  He goes down to the local coffee shop to get a break from the smell but the waitress puts way too much sugar in his coffee and the cook visibly sneezes on his eggs (by accident of course) and leaves them runny.  It starts raining but the cab driver he hails down to go home refuses to stop when the cabbie recognizes him so he has to walk home in the rain.  He catches cold.  The doctor he calls tells him his schedule is booked, call back next week.  He goes to the dry cleaner to pick up his suit but the dry cleaner doesn’t have it ready for him or accident burns a hole in the seat of his pants with a cigarette.  His electric power and gas get turned off unpredictably due to unforeseen glitches at control desks.  His flight reservations get confused and cancelled by accident.  
    You get the drift.  What if there were a widespread boycott to deprive these people of goods and services and ostracize them in public and in private dealings, ostracize and deprive their children and family, etc.  What if they were treated, within legal bounds, in the same manner in which they have treated so many others, either directly or indirectly, with indifference or avoidance or callousness or disdain or disgust.
    Imagine the chinks that might begin to appear in their armor and what might be possible by this collective approach to pressure the elite towards reform. 
    There are other possibilities, of course, of both individual and collective action but time runs short and I have other things to do right now.  Hopefully, later in the week I’ll have time to explore other options of passive non-participation.
    Your thoughts are appreciated, as always.
     

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 4:28am

    Reply to #19

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

    Millie Pickle wrote: One

    [quote=Millie Pickle]
     One of the biggest shocks I had when I moved to Waiheke Island (off the coast of Auckland) in 2002 was the cost of a pizza. As Erik says, an upscale town with no competition can charge what it likes, but it was still staggering. Because, coming from the US, where pizza is one of our food groups, it is hard to relate to the Kiwi view of pizza. You can find a Domino’s in Auckland for cheap, but that is about it. This country is aligned with Great Britain, and so the cheap takeout food is fish and chips, not pizza. 
    Since moving to NZ I hardly eat out at all. When I think of how often I ate in restaurants in the US, it is a 180 degree shift. And yet, people here spend money with abandon, buy overpriced wine to go with (IMO) overpriced meals (or pay the restaurant $5- $60 "corkage fee" to bring their own wine, if that makes any sense at all), and do not complain. Those prices tend to go along with the house prices, rated behind only Canada and Norway at the moment as the most overpriced based on rent to house price ratio. The average wage in NZ is around $50,000. On Waiheke median income is $23,500. Median house sale price is upwards of $400,000. Something is not right, it just defies basic mathematics.
    I would love to hear from others how they consider that the NZ case is different than Ireland, because on the ground here it looks exactly the same. I think you take a bunch of people who have not made a lot of money historicially, and you puff them up with credit expansion leading to house price explosion which makes everyone feel and spend like Rockefellers, and they all fall into the same debt trap.
    On this site and especially this thread, I hear people saying they would not pay such high prices, because it doesn’t make sense. What I don’t understand is why the people here in this country don’t share that view. By and large, it seems, no one wants to admit that they can’t run with the big dogs. 
     
    [/quote]
    Hi Millie!
    You just made quite the entrance with these outstanding posts! Welcome to the site.
    We just came from 4 wonderful days on your beautiful island, and really loved the place. (Other readers, think Martha’s Vineyard but as beautiful as the california coast in the Hurst Castle region, and only a 45 minute ferry ride from downtown Auckland). The pizza mentioned earlier came from your island as well. The natural beauty just astonished us. So did the pizza and house prices.
    We were taken aback by the real estate prices, but not that much because we’ve been checking them out as we travel and they are through the roof across the world. Dirty money leaking out of China is driving a lot of it. We also had the impression Waiheke real estate includes a very substantial premium for being a beautiful island only a few minutes from a major international city. How does the rest of New Zealand compare? Would places like Napier and surrounds cost as much as the prices we saw in Waiheke? What about Coromandel Peninsula?
    To your specific question, the key lies in the long-term housing price chart for New Zealand, something I don’t have but I bet if we send out good vibes, someone on this thread will point us to one. You want to find the long-term price trendline BEFORE easy money started to distort the market. Then you compare that trendline to present prices. The other very critical chart to consider (again, ask and we may receive a pointer from others here) is the one that shows median household income against median mortgage principal. It’s different in every country, and the extent to which a market is over-extended will depend on how the easy money hit the market, how long it was available, and so forth.
    The reason people here don’t think of it as a bubble is that nothing has crashed yet. The extent to which the market is vulnerable to the downside if a "crash" develops depends almost entirely on how far current prices and debt to income rations have detached from the long-term mean.
    Anybody got the data?
    Erik
     
     

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 6:59pm

    Reply to #38

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    Intriguing ideas

    [quote=ao] 
    … perhaps we can adopt more elegant tools such as social distancing and ostracism and depriving the elite of the basic necessities of a comfortable existence.  When one looks at human fears, some of the greatest human fears relate to rejection and/or losing face and the loss of familiarity, comfort, and security.
    There are other possibilities, of course, of both individual and collective action …
    Hopefully, later in the week I’ll have time to explore other options of passive non-participation.
    Edited by Travlin.
    [/quote]
    Thanks Ao
    Your line of thought is very intriguing and has promise.  I know you have pondered these issues long and hard. I look forward to your next installment.
    Travlin
     

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 9:16pm

    Reply to #19

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    Pizza-gate :)

    [quote=Millie Pickle] coming from the US, where pizza is one of our food groups[/quote]
    LOL!  That was really funny…….!
    [quote=Millie Pickle]Since moving to NZ I hardly eat out at all.[/quote]
    Welcome to the future…..  it never ceases to amaze me how anyone not on a high income can eat out all the time.  Pizzas are a treat here, we can’t have one delivered, too far, and nor would I drive the 25 mile return trip to pick one up!  So we make our own if the wood stove is lit up…
    [quote=Millie Pickle]When I think of how often I ate in restaurants in the US, it is a 180 degree shift. And yet, people here spend money with abandon, buy overpriced wine to go with (IMO) overpriced meals (or pay the restaurant $5- $60 "corkage fee" to bring their own wine, if that makes any sense at all), and do not complain. Those prices tend to go along with the house prices, rated behind only Canada and Norway at the moment as the most overpriced based on rent to house price ratio. The average wage in NZ is around $50,000. On Waiheke median income is $23,500. Median house sale price is upwards of $400,000. Something is not right, it just defies basic mathematics.[/quote]
    Australia’s the same.  Don’t forget, we don’t tip in AUS/NZ.
    [quote=Millie Pickle]I would love to hear from others how they consider that the NZ case is different than Ireland, because on the ground here it looks exactly the same. I think you take a bunch of people who have not made a lot of money historicially, and you puff them up with credit expansion leading to house price explosion which makes everyone feel and spend like Rockefellers, and they all fall into the same debt trap.[/quote]
    It probably is the same as Ireland, it’s just that our housing bubbles are only now starting to burst, prices are slowly starting to come down, in Australia at least.
    [quote=Millie Pickle]On this site and especially this thread, I hear people saying they would not pay such high prices, because it doesn’t make sense. What I don’t understand is why the people here in this country don’t share that view. By and large, it seems, no one wants to admit that they can’t run with the big dogs. [/quote]
    They don’t know any different, that’s why.  How many Australians and Kiwis belong to this community?  SIX?  And when you tell sheeples the plain truth, they just don’t believe you anyway…  there are STILL people around me who think prices will pick up again, as asoon as the tooth fairy comes back.
    Sheeeesh……
    Mike

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 9:28pm

    Reply to #38

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    ao wrote:  To the

    [quote=ao]
     
    To the group,
    With regards to what I’ve been pondering, here are some thoughts.  In considering the individuals (and the institutions and organizations they comprise and represent) who have lead us to the ruinous situation we face both nationally and globally, they are a small and rather select group.  The individuals I’m thinking of include chief executives, top aides, cabinet members, senators, congressmen, supreme court justices, international bankers (Rothschilds and Rockefellers topping the group), top multi-national corporate executives and boards (particularly in the banking and financial fields like the big 5 banks but also corporations like GE, Exxon, Rio Tinto, Monsanto, and others of a similar ilk), top consultants (Greenspan, Kissinger, Brzezinski, etc.), inner circle members (CFR, Bilderberg, Trilateral Commission, Club of Rome, etc.), the George Soros-type currency killers and nation destroyers, and the other narcissistic, sociopathic vampires who are sucking the life blood out of the middle and lower classes.  I’m guessing they number less than 10,000 total.  As such, numberwise, they really don’t amount to much.  And they can only express their power through others that are beneath them on the power hierarchy.  What if we could take that power away?[/quote]
    Hi ao……  we CAN!
    Just stop making payments on your mortgages and credit cards.
    If even half the people did this, the Matrix would be on its knees in THREE DAYS!  The other half would soon catch on…….
    Puzzled as to why you included the Club of Rome in that list above though….
    Mike

    Login or Register to post comments

  • Tue, Mar 06, 2012 - 9:35pm

    #42

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    NZ housing trend

    Google is your friend…..

    http://www.interest.co.nz/news/40732/opinion-why-real-house-prices-are-25-above-their-long-term-trend

    By Rodney Dickens I wrote the first "housing hell" report in August 2007. It looked at what was likely to happen to real or inflation-adjusted house prices after the mega-boom, using NZ and UK experiences. In that report I concluded that "to get the rental yield back to the historical average of 7.7%, the average rental income will have to increase 71% or the median house price will have to fall 42%. Or, more likely, some combination of the two will unfold." In the second "housing hell" report, written in March 2008, I looked in more detail at the extent to which house prices were out of line with incomes and rents. These reports offered valuable insights for anyone serious about understanding the underlying economics of the housing market, which has implications to the long-term performance of house and section prices. They were not designed to quantify near-term prospects for house prices, but these reports also provided advance warning of the imminent fall in house prices. House prices and, to a lesser extent, section prices subsequently fell and in time-honoured fashion the media was there to tell the horror stories. In a 6 January 2009 article on the front page of the business section of the Herald I was identified as picking that house prices would fall 42% in 2009 from the peak level in 2007. 42 might be the answer to the meaning of life, the universe and everything, but it wasn’t my pick for house prices in 2009 (see here for my rebuttal).

    Ironically, in our January 2009 pay-to-view Housing Prospects reports I wrote that "interest rate cuts should underwrite a sufficient upturn in housing demand in the first half of 2009 to halt the downward pressure on house prices" and that "by which time the national median price should have fallen 10-12% from the peak". Based on the QV quarterly house price index, which is the most accurate measure of house prices, the national average house price fell 10% from the peak in the December quarter of 2007 to the March quarter of 2009. By the time May 2009 rolled around I was predicting in our Housing Prospects reports that "price increases could emerge in some places before year end", which demonstrates that I am not the moribund pessimist some property people paint me as, and that the analytical framework I have developed over many years is just as useful for picking near-term upturns as it is for warning about near-term pain. However, as was the case with the earlier "housing hell’ reports, the focus of this Raving is not on near-term prospects but is on the big-picture (i.e. how far along the adjustment process are real house prices). The left chart below updates the relationship between the national median house price and the national average annual gross rental income on rental dwellings that was shown in the first "housing hell" report. The fall in house prices in 2008 made a bit of a dent in the yawning gap between house prices and rents, which resulted in some improvement in the gross rental yield (blue line, right chart).

    See a bigger version of the chart here.

    However, based on the REINZ data the national median house price in December was up 2.3% on the peak level in 2007, while the recession has contributed to a stalling of growth in rents. The QV quarterly house price index is currently only available up to the June quarter of 2009, but when we finally get to see the March quarter of 2010 number it is likely to confirm that the rental yield has fallen almost back to the trough level experienced when house prices peaked in late-2007. Rental yields are useful in helping assess whether housing in general represents a good investment. However, the rental yield shouldn’t be viewed in isolation, but rather in the context of interest rates (both from the perspective of the cost of debt for housing investors and from an opportunity cost or alternative investment perspective), the prospects for rental growth and the prospects for capital

    Login or Register to post comments

  • Sat, Mar 10, 2012 - 4:15am

    #43

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

    $12.85 Cheeseburger - Inflation is alive at all levels

    As I was a batchelor for lunch today, I ventured to do some research on this question of whether the pot pie was unrepresentative of inflation in the broader food economy. So off to Burger King I went to sample the opposite end of the price spectrum.

    A double Whopper with Cheese and small french fry (no drink) set me back NZ$12.85.

    Methinks the inflation of which Chris and I spoke is both real and pervasive.

    Erik

     

    Login or Register to post comments

  • Sat, Mar 10, 2012 - 10:10pm

    Reply to #43

    Poet

    Status Platinum Member (Offline)

    Joined: Jan 20 2009

    Posts: 976

    Cost of Labor? VAT?

    ErikSo that NZ $12.85 is roughly USD $10.56. It may sound like inflation being exported. But is it?

    I just called a Burger King in Kansas City, Missouri:

    10517 Blue Ridge Blvd
    Kansas City, MO 64134
    (816) 984-6979

    USD $7.56 for a double Whopper with cheese, small french fry, no drink.

    Just to be fair, I also called Burger King in New York City:

    273 Canal Street
    New York, NY 10013-3515
    (212) 219-2516

    USD $7.09 for a double Whopper with cheese, small french fry, no drink.
    Better than the $57 pot pie, but still… Even my examples are mere anecdotes. Couldn’t there be other, perfectly reasonable causes of the difference in price between New Zealand and the United States?
    NZ Cost Of Labor
    Take for example the cost of labor. In New Zealand, the minimum wage for an adult 16 years of age or older is NZ $13.00 per hour (or roughly USD $10.68). In Missouri and New York, it is USD $7.25. Obviously I am not including other payroll expenses. But since labor costs are easily 30% of fast food restaurant sales, surely labor costs may have a larger influence on prices?
    NZ Value-Added Tax
    How about New Zealand’s Goods and Services Tax (GST), which is a Value-Added Tax (VAT), of 15%? VATs, unlike American-style sales tax, roll up.
    I haven’t brought up other possibilities – differences in business taxation, regulatory compliance, etc. But those could also be non-inflationary cost factors, right?
    Sir, if you want to make the claim that inflation is being exported, you have to be able to show some conclusive information specifically geared towards proving that. And that evidence has to be able to explain away other, very plausible causes.
    Poet
    [quote=Erik T.]
    As I was a batchelor for lunch today, I ventured to do some research on this question of whether the pot pie was unrepresentative of inflation in the broader food economy. So off to Burger King I went to sample the opposite end of the price spectrum.
    A double Whopper with Cheese and small french fry (no drink) set me back NZ$12.85.
    Methinks the inflation of which Chris and I spoke is both real and pervasive.
    Erik
    [/quote]
     

    Login or Register to post comments

  • Sun, Mar 11, 2012 - 1:42am

    Reply to #43

    RJE

    Status Bronze Member (Offline)

    Joined: Aug 31 2008

    Posts: 868

    I re-listened as I always do

    I re-listened as I always do the Podcast of this week or the one before. What a jewel to have heard this again for the first time (3rd time). We all should be aware of the inflation around us as a constant. Where there is food and Oil the price can fluctuate from the mornings drive to work, and on the way home. Business will begin to pass along the costs of fuel inflation if they haven’t started already. Why? The stock market is up, and everyone is feeling better about our economy. Even if it is all an illusion, which it is. Erik has surmised that we are in the next Great Depression, and that has been obvious for some time now. Imagine!, $110 a barrel WTI in the bowls of a DEPRESSION!!! Erik’s hypothesis isn’t to far reaching really.Erik, forgive me but I was upset that you didn’t get your ass up out of that chair and refuse to pay $57 bucks for a chicken pot pie! It was silly of me. Frankly, if I’m with my Lady, and a nice time was at hand then price wouldn’t get me out of my chair either. I know this though, I wouldn’t go back!!! I’ll look for you over at Financial Sense… 
    BOB

    Login or Register to post comments

  • Sun, Mar 11, 2012 - 7:29am

    #44

    Septimus

    Status Bronze Member (Offline)

    Joined: Aug 20 2008

    Posts: 35

    Whooper Price

    Fast food in NZ is about the same price as the sole proprietorship small cafe restaurants all over the country. I have gotten many nice meals at these cafes for $8 to $14 or about the same price as the American fast food chains. On the otherhand, in the U.S. the fast food chains compete so much and have gotten so used to having all types of value meals and dollar menus that most people on a budget and going for a quick bite to eat at lunch do go to them rather than the ever decreasing number of indivudual cafes. I rather have the variety of restaurants than the cheaper whooper.

    But, the fast food competition is coming to NZ… saw a Wendy’s commercial the other day and they are having a bunch of $5.00 value meal specials. Also just checked the wendys.co.nz web site and saw a "Steakhouse Garlic double decker" burger with fries and drink for NZ $6.90 for a half pound burger, etc.

    The NZ fast food chains generally use NZ ingredients too.

    Login or Register to post comments

  • Thu, Mar 15, 2012 - 12:51am

    #45
    plato1965

    plato1965

    Status Bronze Member (Offline)

    Joined: Feb 18 2009

    Posts: 86

    bye bye American Pi...

     re: chicken pi..

     warning – geeky.

     http://www.theregister.co.uk/2012/03/14/pi_day_2012/

     http://www.youtube.com/watch?v=VsZFiMo8TIc

     

     "the tau that can be halved is not the indivisible tau…" – tao-kerchiiiiiiing..

     http://www.youtube.com/watch?v=jG7vhMMXagQ

     

       and finally..

      "The Yen Buddhists are the richest religious sect in the universe. They hold that the accumulation of money is a great evil and a burden to the soul. They therefore, regardless of personal hazard, see it as their unpleasant duty to acquire as much as possible in order to reduce the risk to innocent people."  – Terry Pratchett.

    Login or Register to post comments

  • Mon, Mar 19, 2012 - 12:11am

    Reply to #19
    Gibber

    Gibber

    Status Member (Offline)

    Joined: Oct 04 2008

    Posts: 10

    Erik T. wrote:... some

    [quote=Erik T.]
    … some stuff deleted re nz……
    To your specific question, the key lies in the long-term housing price chart for New Zealand, something I don’t have but I bet if we send out good vibes, someone on this thread will point us to one. You want to find the long-term price trendline BEFORE easy money started to distort the market. Then you compare that trendline to present prices. The other very critical chart to consider (again, ask and we may receive a pointer from others here) is the one that shows median household income against median mortgage principal. It’s different in every country, and the extent to which a market is over-extended will depend on how the easy money hit the market, how long it was available, and so forth.
    The reason people here don’t think of it as a bubble is that nothing has crashed yet. The extent to which the market is vulnerable to the downside if a "crash" develops depends almost entirely on how far current prices and debt to income rations have detached from the long-term mean.
    Anybody got the data?
    Erik
    [/quote]
    Erik,
    just today the NZ Prime Minister was on breakfast TV stating his belief that House Prices were set to take off again
    http://www.interest.co.nz/property/58440/nz-housing-market-particularly-auckland-set-take-again-pm-key-says
    Some charts with recent housing market information for NZ
    http://www.interest.co.nz/charts/real%20estate
    Reserve bank NZ figure on household debt
    http://www.rbnz.govt.nz/keygraphs/fig5.html
    Reserve Bank NZ house prices and aggregate dwelling values
    http://www.rbnz.govt.nz/keygraphs/Fig4.html
    (you can download the graph data for the figures above from a link on those web pages)
    And if you want to look for some more stats from RBNZ then go to http://www.rbnz.govt.nz/statistics/az/2989605.html
    John Pemberton has analyzed some of NZ debt at
    http://www.johnpemberton.co.nz/html/debt_graphs.html
    His analysis of housing is at
    http://www.johnpemberton.co.nz/html/housing_debt.html
    And he has links to the RBNZ source data….
     

    Login or Register to post comments

  • Thu, Mar 22, 2012 - 2:07am

    #46

    Erik T.

    Status Silver Member (Offline)

    Joined: Aug 05 2008

    Posts: 213

    FSN Interview

    Here’s the Greener Pastures interview for those who asked about it…

    ET

     

    Login or Register to post comments

  • Thu, Mar 22, 2012 - 4:19am

    #47

    Travlin

    Status Gold Member (Offline)

    Joined: Apr 15 2010

    Posts: 524

    Good interview

    Erik

    Your interview with Jim was excellent. It was very interesting to learn about your past and your thoughts about your travels. I’m afraid you are right about the growing repression of the US government and where that may lead. I hope you’ll report further as you complete your journey.

    Travlin 

    Login or Register to post comments

Login or Register to post comments