Prechter and Puplava interview

32 posts / 0 new
Last post
investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: Prechter and Puplava interview

interview print added

Prechter's Deadly Bearish Big Picture:

http://www.financialsense.com/Experts/ewave/2010/0618.html

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: Prechter and Puplava interview

I read and listened to a lot of the deflationist camp reasoning and I just can see it as being plausable at all.

Jim says the dollar can't devalue because its not pegged to anything? That's defies common sense. The dollar is pegged to oil and oil, as we have seen, can be radically manipulated.

There are numerous ways to devalue the dollar i.e. interest rates and quantitive easing.

This idea that because there is so much debt out there that it will counter inflation is naive. Debt can be forgiven or just simply taken off the books as is the case with the central banks bailout 'loans' and OCD.

Just use common sense. Do you really think the end game is going to be that your dollars are worth more due to deflation? C'mon.

Do you really believe that the government is going to allow deflation so its own debt goes through the ceiling? Absolutely not.

Jim's belief that 'the people' are going to rise up and kick the corrupt politicians out and say enough is enough is so naive. He really underestimates the powers that be.

goldcountry's picture
goldcountry
Status: Member (Offline)
Joined: Nov 2 2008
Posts: 8
Re: Prechter and Puplava interview

Prechter has been so 100% wrong for so many years now that it just amazes me he has any shred of credibility left - the main reason I rarely listen to Puplava's show any longer. Thank God for Eric King's site, this is a guy who really gets it when it comes to understanding the big picture in global economics and finance; www.kingworldnews.com Interviews with all the best minds in the business that you won't hear anywhaere else very often; Jim Sinclair, Jim Rickards, Pierre Lassonde, Bill Laggner,  Chris Whalen, John Hathaway etc. etc.

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Prechter and Puplava interview

I called and left a message on the Q-line for next week, but I'll share the punchline here:

The most significant thing to come out of this interview was Prechter's prediction that by the time this is over, an ounce of gold will buy the Dow. Despite having radically opposing views on how and why this will happen, Bob Prechter and Peter Schiff (prominent Inflationist and prominent Deflationist) agree on this one critical point. The opportunity created by the convergence trade (long gold, short S&P) cannot be understated!

Johnny'O, respectfully, I have to disagree with your characterization of Prechter here. As an inflationist myself, I don't agree with the deflationist prognosis. But frankly, I think Prechter does a better job than any of the other deflationists at arguing the case for deflation. IMHO, his point about there being no clear and obvious way to devalue the USD was spot on. His argument does NOT defy common sense, and was well reasoned. For several other reasons, I disagree with Prechter but I still think you're trying to over-simplify a complex subject. As strongly aligned with the Inflation camp as I am myself, Prechter is the one guy I always learn something from each time I hear him argue the deflation case.

Goldcountry, I'm sorry to hear that you'rve fallen for Eric King and his sham site. King has been completely snowed by the charaltans at GATA, and IMHO his interview style leans far too hard toward conspiracy theories and other nonsense. He also has an extremely bad habit of asking leading questions that imply an answer or press his guests to concur with his own sensationalist views. To even compare him with a bona fide financial journalist like Jim Pulava is ridiculous in my opinion. Several people including both myself and Jim Puplava have tried to call the facts to Eric King's attention, but he continues to pursue hype and sensationalism over facts and reason. It's a pity, because he does indeed get some excellent guests on his show. But IMHO he's not doing the world any great service because his own personal biases are both strongly apparent and also devoid of rational, objective analysis. But hey, that's just my opinion and I respect your right to have yours as well.

Best,

Erik

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview

I submitted an article to FSN about one point of this - the devaluation. Prechter is 100% wrong when he states that the currency or currencies can't be devalued because they float and aren't backed by anything.

I don't want to post my entire article until they put it up - or reject it, but here is my contention and (one of many) airtight historically proven events that totally refute Prechter's position.

The trick to camping is preparation. Nothing is worse than getting to the campsite and realizing that you forgot to put something in your backpack. Line to hang the food at night, an electric fence, pepper spray or a gun to keep safe from bears. A seasoned camper can usually substitute matches for a magnifying glass and a dry leave and paper, boiling drinking water for 3++ minutes can take care of the forgotten water filter pump.

Leaves can, to some extent replace the roll of forgotten - well you know. But personally, I prefer preparation to Preparation H.

What I think the Deflation Campers neglected to put in their backpack is the possibility of a governmental or IMF or G-20 or G-Some Other Number imposed devaluation. I recently listened to one podcast while hiking of one of the smartest Deflation Campers who was adamant in insisting that devaluation could not happen for two reasons:

  1. All currencies are floating, they are not backed by anything so therefore they can NOT be devalued
  2. No matter how much they printed more credit was being destroyed than could be printed

And, in my opinion, this is the roll of missing toilet paper that MAY send them reaching into the medicine cabinet after a painful hike back home.

In the 1980s Mexico had trouble after the 1970s Oil Crisis and around 1982 it defaulted on it's external debt. On January 1, 1993 Mexico devalued it's floating currency by issuing a Nuevo Peso (N). They told their citizens that they could bring in 1,000 "old" and now suddenly very obsolete Pesos (MXPs) and get 1 Nuevo Peso. THAT IS A MASSIVE DEVALUATION!

earthwise's picture
earthwise
Status: Platinum Member (Offline)
Joined: Aug 10 2009
Posts: 846
Re: Prechter and Puplava interview
Erik T. wrote:

 

The most significant thing to come out of this interview was Prechter's prediction that by the time this is over, an ounce of gold will buy the Dow. Despite having radically opposing views on how and why this will happen, Bob Prechter and Peter Schiff (prominent Inflationist and prominent Deflationist) agree on this one critical point. The opportunity created by the convergence trade (long gold, short S&P) cannot be understated!

 

Actualy I think they agree on a lot more than that. And I don't think their respective opinions are all that radically opposed althought it seems that way. The deflationists subtly concede that inflation will take hold but only after a deflationary cycle, while the inflationists argue that the end result will be inflation but almost under their breath acknowledge that we'll see deflation first. I first noticed this last year when Puplave had a inflationist/deflationist debate for two consecutive weeks featuring Schiff, Prechter, Amerman and another guy whose name I forgot. Again in this Prechter interview we have at around the 9:30 point where he says "...at that time we'll be at the deflationary nadir & it'll then be time to look for an inflationary outcome." Prechter also notes that the evidence for inflation/deflation is "fractured", meaning that both sides  can adduce facts to support their own thesis.

Just my take on it FWIW.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview

Well one thing is for certain: If this is an insurance policy, and like a reservation on a plane (book now or you won't get a seat later) I really don't care if I could have purchased my policy for $200 or for $1200.

All I care is that I CAN purchase it. Holding dollars when everyone wakes up to the fact that the best looking horse was the best looking horse in the glue factory and wasn't strong but just stiff from Rigor mortis may equate to buying gold when it ignites.

2

Nate's picture
Nate
Status: Platinum Member (Offline)
Joined: May 5 2009
Posts: 572
Re: Prechter and Puplava interview

Davos,

My parents died in 2006.  In the process of cleaning out the house, I found 3 German notes. (it's a long story, but I'm very German)

date                            face value

November 1920     100 Mark

July 1923                  10,000 Mark

August 1923             50,000,000 Mark

I assume these were commonly circulated notes of the day, and they clearly outline what can happen.

We also found 3 US gold coins - $1, $5, and $10.  Many years ago I asked my grandmother why they didn't turn them in.  She said, "we didn't trust the government then either."  She also told my not to fall in love with my bank account - it could dissapear in a heartbeat.  This was in the 1980's. 

History doesn't repear itself, but it rhymes.

Nate

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview

Hello Nate: Neat! And I agree!

goldcountry's picture
goldcountry
Status: Member (Offline)
Joined: Nov 2 2008
Posts: 8
Re: Prechter and Puplava interview

Goldcountry, I'm sorry to hear that you'rve fallen for Eric King and his sham site. King has been completely snowed by the charaltans at GATA, and IMHO his interview style leans far too hard toward conspiracy theories and other nonsense. He also has an extremely bad habit of asking leading questions that imply an answer or press his guests to concur with his own sensationalist views. To even compare him with a bona fide financial journalist like Jim Pulava is ridiculous in my opinion. Several people including both myself and Jim Puplava have tried to call the facts to Eric King's attention, but he continues to pursue hype and sensationalism over facts and reason. It's a pity, because he does indeed get some excellent guests on his show. But IMHO he's not doing the world any great service because his own personal biases are both strongly apparent and also devoid of rational, objective analysis. But hey, that's just my opinion and I respect your right to have yours as well.

 

Erik, I'm not surprised you feel that way after reading your completely emotional and irrational rant against Michael Ruppert a while back. I'm not a huge Ruppert fan myselt but your complete lack of objectivity was all too evident as it is again in your criticisms of Eric King. Its kind of comical that you think of yourself as being factual and rational when all you do is accuse him of things like sensationalism, believeing in conspiracies, hype, sham charlatan, biased etc etc. You didn't mention a single fact, nothing but hysterical opinions and heresay. Character assanation is the typical strategy that is used when someone can't come up with anything real.

BTW in case you didn't know Eric King is a multimillionaire from trading the commodities and precious metals markets, especially silver over many years and funds his site totally with his own money. He gains nothing financially from it.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview

No one is right 100% of the time. Bright people dork up and make stupid falls. Look at how Xerox gave Apple their OS and then how Steve Jobs loaned the GUI box to Bill Gates or how Gates got IBM to license not buy the DOS OS which he didn't even have in his possession, or how the DOS writer sold it for 50k.

Even Ben Bernanke can teach himself calculus but is an absolute economic moron. 

Prechter made a bonehead remark about the devaluation but Puplava let him go on talking and the next sentence was brilliant: Credit is what lead to high housing and student tuitions. 

I'm not a deflationist but I read Mish and listen to these discussions because I can always glean some good. My advice is don't drink any Jim Jones Cool-aide. King had a super interview a few weeks ago about the IMF and gold standards. I think GATA is a joke, but they did point out a lot of things that a lot of folks take for granted (LBMA paper and gold is like any other commodity (more traded than exists)). Prechter may be a moron at times but some of the stuff he comes out with is brilliant.

Pick the cherries.

LogansRun's picture
LogansRun
Status: Diamond Member (Offline)
Joined: Mar 18 2009
Posts: 1443
Re: Prechter and Puplava interview
Davos wrote:

No one is right 100% of the time. Bright people dork up and make stupid falls. Look at how Xerox gave Apple their OS and then how Steve Jobs loaned the GUI box to Bill Gates or how Gates got IBM to license not buy the DOS OS which he didn't even have in his possession, or how the DOS writer sold it for 50k.

Even Ben Bernanke can teach himself calculus but is an absolute economic moron. 

Prechter made a bonehead remark about the devaluation but Puplava let him go on talking and the next sentence was brilliant: Credit is what lead to high housing and student tuitions. 

I'm not a deflationist but I read Mish and listen to these discussions because I can always glean some good. My advice is don't drink any Jim Jones Cool-aide. King had a super interview a few weeks ago about the IMF and gold standards. I think GATA is a joke, but they did point out a lot of things that a lot of folks take for granted (LBMA paper and gold is like any other commodity (more traded than exists)). Prechter may be a moron at times but some of the stuff he comes out with is brilliant.

Pick the cherries.

Davos,

I think this attitude is what many on this site (as well as many others) are unable to do!  If someone makes one or two stupid comments they are at that time labeled as 'idiots' and are never listened to again.  Or if there could be some truth to a story, they'll discount the whole thing because of their inability to dissect.

As you said, no one's perfect.  Everyone is going to make stupid decisions or say stupid things in their lives.  But just because someone has a theory that's half wrong, the other half may be right.  So do you discount the whole thing or do you learn from the half that's right?  I'm finding far too many people on here that don't learn that second half because they've decided that if half is wrong, the other half isn't worth listening.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview
LogansRun wrote:
Davos wrote:

No one is right 100% of the time. Bright people dork up and make stupid falls. Look at how Xerox gave Apple their OS and then how Steve Jobs loaned the GUI box to Bill Gates or how Gates got IBM to license not buy the DOS OS which he didn't even have in his possession, or how the DOS writer sold it for 50k.

Even Ben Bernanke can teach himself calculus but is an absolute economic moron. 

Prechter made a bonehead remark about the devaluation but Puplava let him go on talking and the next sentence was brilliant: Credit is what lead to high housing and student tuitions. 

I'm not a deflationist but I read Mish and listen to these discussions because I can always glean some good. My advice is don't drink any Jim Jones Cool-aide. King had a super interview a few weeks ago about the IMF and gold standards. I think GATA is a joke, but they did point out a lot of things that a lot of folks take for granted (LBMA paper and gold is like any other commodity (more traded than exists)). Prechter may be a moron at times but some of the stuff he comes out with is brilliant.

Pick the cherries.

Davos,

I think this attitude is what many on this site (as well as many others) are unable to do!  If someone makes one or two stupid comments they are at that time labeled as 'idiots' and are never listened to again.  Or if there could be some truth to a story, they'll discount the whole thing because of their inability to dissect.

As you said, no one's perfect.  Everyone is going to make stupid decisions or say stupid things in their lives.  But just because someone has a theory that's half wrong, the other half may be right.  So do you discount the whole thing or do you learn from the half that's right?  I'm finding far too many people on here that don't learn that second half because they've decided that if half is wrong, the other half isn't worth listening.

Took me a month off to come to this realization, I still toss the moron word around way toooooo much. On FB I called Prechter a moron for his devalue comment, but I do realize he has a lot of smarts and comes up with a lot of neat stuff - so even though I think he is wrong about deflation I need to compartmentalize the moron bit to where I think he is off.

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: Prechter and Puplava interview

Bob Prechter's assertion that 'you can't devalue without a benchmark to devalue against' is badly expressed. As he later admits in the interview, a currency can be devalued in terms of purchasing power -- how many hams, iPhones, or cups of coffee it equates to. He claims that countries can't just 'decree' an overnight devaluation, as they did during the fixed-exchange rate days. But in fact, those who choose to manage (instead of float)  their currencies can. China just 'decreed' a revaluation this weekend. How do you like them apples, Bob? The U.S. could do the same, if it chose to engage in constant foreign exchange intervention.

Prechter goes on to assert a common deflationist myth, that inflation can't occur if total debt is contracting. But if one examines hyperinflationary incidents such as Germany in 1923, or Zimbabwe in the late double-oughts, these economies were shrinking, and so were debt levels in real terms. No new borrowing can take place when interest rates soar to the inflation rate of thousands or hundreds of thousands of percent. Existing debt gets devalued to worthlessness. Debt disappears during hyperinflation. Governments resort to printing, because they lose access to borrowing.

Nevertheless, the drastic debt shrinkage during these incidents did not stop the inflation. In Zimbabwe, the government was simply printing large-denomination bills and using them to pay its employees and contractors. As this 'thin-air' currency inflated the cash money supply, prices zoomed. Then government employees demanded wage hikes, and the government responded with even larger denomination bills. This inflationary process did not depend on expanded bank lending or debt levels.

Where does the deflationists' misunderstanding come from? Many people have read an idealized description of the 10:1 fractional-reserve money-multiplier process, in which banks are the key agents in expanding the money supply through their lending. The mistake is to think that banks are the ONLY agents of money supply expansion. Not so!

The ancient world -- the Roman Empire, for instance -- was almost entirely unbanked. Money was something you kept in your sock, under the mattress. There was no 'money multiplier,' and almost no debt other than trade debt among merchants and collateralised pawn shop lending. Yet the circulating medium, Roman coinage, underwent a drastic devaluation during the final centuries of the Empire via direct coin clipping and metallurgical degradation, leading to heavy price inflation. This had nothing to do with debt levels.

OECD nations, instead of resorting to Zimbabwe-style currency printing, are more likely to do more of the same -- have their central banks buy securities and pay for them with bank reserves created out of thin air. Inflation occurs with a time lag -- typically 18 months -- and depends on the cyclical state of the economy. Excess capacity, as we have now, damps price rises for awhile. But eventually an expansion cycle will take up the excess capacity, or the owners will mothball it, and then the full inflationary potential of an expanded money supply is realised.

In my world, the price of postage stamps, tolls, bus and train tickets, park passes, state college tuition, and local property taxes -- these somewhat 'sticky,' government-set prices -- go only upward. There are no examples in my lifetime of them ever going down. And they are still rising today, despite the CPI having briefly gone negative last year.

Deflationists can speculate all they want about the coming debt-driven price collapse. My derisive response: show me the price cuts! The ones from government, the currency issuer. When does the government's deflationary blowout sale begin? Bob, y'all wake me up so I can get in line the night before, ya hear? Wink

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Prechter and Puplava interview
goldcountry wrote:

Erik, I'm not surprised you feel that way after reading your completely emotional and irrational rant against Michael Ruppert a while back. I'm not a huge Ruppert fan myselt but your complete lack of objectivity was all too evident as it is again in your criticisms of Eric King. Its kind of comical that you think of yourself as being factual and rational when all you do is accuse him of things like sensationalism, believeing in conspiracies, hype, sham charlatan, biased etc etc. You didn't mention a single fact, nothing but hysterical opinions and heresay. Character assanation is the typical strategy that is used when someone can't come up with anything real.

Ha! Hi goldcountry, and thanks for a good laugh.

There was nothing "emotional" or "irrational" about my criticism of Ruppert. It was admittedly a subjective character assessment and I made no qualms at the time about it being my own subjective opinion. I find the guy to be an obnoxious, pompous, self-important buffoon. As I said then, I think he makes a very poor role model, and although he's describing a very good cause, I think he's the wrong guy to lead it. When an observation has to do with the credibility of an individual because of their personality and style of leadership, you really can't expect any more "objectivity" than an acknowledgment that what's being said is just an opinion.

For the record, I wrote a fact-filled article that was published both here on this site and on FinancialSense, which thoroughly debunked GATA and to a lesser extent Eric King for their roles in precious metals-related fear mongering. The publication of that article was the impetus that led to the recent debate between Bill Muphy and Jeff Christian, in which GATA was thoroughly exposed for the charlatans they truly are (but I suppose you probably heard the debate and thought Murphy won... No surprise there either). In any case, my arguments in the article were numerous and well supported by facts and objective arguments. I don't feel any need to repeat them here.

My earlier comments in this thread made specific reference to Eric King's tendency to ask leading questions and focus on sensationalism. They were not personal character attacks, and it is your response, goldcountry, that ignores reality and supposes facts not really in evidence.

If you want the facts, go read the article. If you want to continue your baseless personal criticism of me here in ignorance of the facts, please feel free. I enjoy the entertainment...

Best,

Erik

bluestone's picture
bluestone
Status: Gold Member (Offline)
Joined: Dec 29 2008
Posts: 263
Re: Prechter and Puplava interview

Davos

Do you happen to know if the US debt to GDP ratio is the same, greater, or less than that of Weimar German in the early 1920s?

thanks

Brian

goldcountry's picture
goldcountry
Status: Member (Offline)
Joined: Nov 2 2008
Posts: 8
Re: Prechter and Puplava interview

"pompous, self-important buffoon"

Best,

Erik

Ha ha ha to you too, sounds like you are describing some one else we know. Good thing I haven't been listening to all those ignoramouses you so love to deride because just about everything they have said was going to happen over the last ten years HAS HAPPENED, imagine that? God forbid someone should tell us the truth, WTF? Oh yeah I have been listening to them I almost forgot. Your genius buddy Prechter has also been right on the money. Oh wait, when gold was at 300 he said it was going to 100, then when gold was at 450 he said it was going to 200, then at 700 he said its going to 300 now at 1200 he says 700. He's been consistently wrong over and over again, those are facts bud. On the other hand you still haven't provided a single fact to back up any of your silly allegations against King, GATA or any of the others you love to nullify because of your own arrogant biases. Do you have any facts at all or are full of something other than facts, hyperbole and opinions - is that all you can spew? Lets hear it. Ha ha again, anyone whose listened to the brilliant postulations of your buddies Prechter and Puplava is probably living in a tent city and out on the street corner begging for money, brilliant strategy there, yes please tell me more. 

GC

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Prechter and Puplava interview

GC,

Ok, the entertainment value is wearing off, so this will be my last post on the subject.

I most certainly have provided an entire article full of facts and well reasoned arguments to support my criticisms of GATA. If going and reading the article before making more assinine comments in this thread was too much for you to handle, that's your problem my friend. As I've said previously, I feel no obligation to restate my numerous factual criticisms of GATA and Eric King here, because they are already well documented in published works.

By the way, I'm strongly bullish on gold and have always strongly disagreed with Bob Prechter. My views are well documented on this site. Jim Puplava is also a devout inflationist and is bullish on gold, and while he allows a guy like Prechter a chance to say his peace, Jim is in strong disagreement with Precter's views. I suggest you go do your homework before making any more foolish statements here.

Best,

Erik

 

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview
bluestone wrote:

Davos

Do you happen to know if the US debt to GDP ratio is the same, greater, or less than that of Weimar German in the early 1920s?

thanks

Brian

Brian I'll take a look. Usually I don't pay any attention to GDP as it is sooooo baked and irrelevant. To me, even the debt is a waste to look to deeply at, the most important numbers in my estimation is money in to money out. We take in 2 trillion and spend well over 4 trillion.

I know Germany couldn't service it's debt and they couldn't print. Take care

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: Prechter and Puplava interview
Erik T. wrote:

I called and left a message on the Q-line for next week, but I'll share the punchline here:

The most significant thing to come out of this interview was Prechter's prediction that by the time this is over, an ounce of gold will buy the Dow. Despite having radically opposing views on how and why this will happen, Bob Prechter and Peter Schiff (prominent Inflationist and prominent Deflationist) agree on this one critical point. The opportunity created by the convergence trade (long gold, short S&P) cannot be understated!

Johnny'O, respectfully, I have to disagree with your characterization of Prechter here. As an inflationist myself, I don't agree with the deflationist prognosis. But frankly, I think Prechter does a better job than any of the other deflationists at arguing the case for deflation. IMHO, his point about there being no clear and obvious way to devalue the USD was spot on. His argument does NOT defy common sense, and was well reasoned. For several other reasons, I disagree with Prechter but I still think you're trying to over-simplify a complex subject. As strongly aligned with the Inflation camp as I am myself, Prechter is the one guy I always learn something from each time I hear him argue the deflation case.

Goldcountry, I'm sorry to hear that you'rve fallen for Eric King and his sham site. King has been completely snowed by the charaltans at GATA, and IMHO his interview style leans far too hard toward conspiracy theories and other nonsense. He also has an extremely bad habit of asking leading questions that imply an answer or press his guests to concur with his own sensationalist views. To even compare him with a bona fide financial journalist like Jim Pulava is ridiculous in my opinion. Several people including both myself and Jim Puplava have tried to call the facts to Eric King's attention, but he continues to pursue hype and sensationalism over facts and reason. It's a pity, because he does indeed get some excellent guests on his show. But IMHO he's not doing the world any great service because his own personal biases are both strongly apparent and also devoid of rational, objective analysis. But hey, that's just my opinion and I respect your right to have yours as well.

Best,

Erik

 

Erik, you seem determined to be right at all costs! I have watched the markets for years and have invested since 1999. I have to say that there are many analysts who feel that manipulation is going on in the Gold markets. Not just Gata and Eric King. As Puplava himself has said in "Crime of the Century" regarding naked shorting, that it is illegal, but doing so in the futures markets are okay? We both know that Government and banksters have an agenda and thats to take down gold. You can't be that naive.  I believe there is market manipulation at every corner of the markets, how else do you explain the massive "Ponzi" scheme going on across the planet? The press is determined to tell us that gold is in a bubble. Now the New Times.  At least we can agree on one thing. Gold. As to Hyperinflation or Deflation, only time will tell. As both Prechter and Puplava have stated, both will come-just which will be first seems to be the debate. Jon

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Prechter and Puplava interview

Jon,

Like I told GC, my views are well documented elsewhere and I'm not going to waste my time repeating them here for those who are too lazy  to do their homework. As I said in the article, I do believe that manipulation occurs in the PM markets, but that doesn't excuse the fact that Eric King and GATA have engaged in a fear mongering campaign based on ignorance rather than fact. I substantiated that contention in gory detail in the article.

I stand by my arguments in the article. If you want to dispute them, please tell me where you think I'm wrong, citing references to the article. The facts are the facts, and one of them is that GATA are fear-mongering liars who have repeatedly exploited the naivity of retail investors by misrepresenting the workings of the metals markets by represently easily disproven faslehoods as facts. They are liars, they are not bona fide experts in the metals markets as they claim to be, and they are not helping their own cause by adding fear and misinformation to an already complex puzzle.

I'm all for disclosure and investigation of market manipulation. But the GATA/Eric King crowd are hurting that cause, not helping it.

Best,

Erik

 

goldcountry's picture
goldcountry
Status: Member (Offline)
Joined: Nov 2 2008
Posts: 8
Re: Prechter and Puplava interview

By the way, I'm strongly bullish on gold and have always strongly disagreed with Bob Prechter. My views are well documented on this site. Jim Puplava is also a devout inflationist and is bullish on gold, and while he allows a guy like Prechter a chance to say his peace, Jim is in strong disagreement with Precter's views. I suggest you go do your homework before making any more foolish statements here.

Best,

Erik

 

Erik, did you listen to the Puplava show this weekend? I did. Maybe you should do your own homework before you start calling others foolish. You're great at namecalling and equally bad at coming up with anything of substance.

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: Prechter and Puplava interview
Erik T. wrote:

Jon,

Like I told GC, my views are well documented elsewhere and I'm not going to waste my time repeating them here for those who are too lazy  to do their homework. As I said in the article, I do believe that manipulation occurs in the PM markets, but that doesn't excuse the fact that Eric King and GATA have engaged in a fear mongering campaign based on ignorance rather than fact. I substantiated that contention in gory detail in the article.

I stand by my arguments in the article. If you want to dispute them, please tell me where you think I'm wrong, citing references to the article. The facts are the facts, and one of them is that GATA are fear-mongering liars who have repeatedly exploited the naivity of retail investors by misrepresenting the workings of the metals markets by represently easily disproven faslehoods as facts. They are liars, they are not bona fide experts in the metals markets as they claim to be, and they are not helping their own cause by adding fear and misinformation to an already complex puzzle.

I'm all for disclosure and investigation of market manipulation. But the GATA/Eric King crowd are hurting that cause, not helping it.

Best,

Erik

 

by DeepCaster LLC, deepcaster.com | June 15, 2010

“…Consensus, Wall Street, Administration and Federal Reserve hype of a "V" shaped economic recovery should begin to fade, as data in the next several months tend to confirm a re-intensifying economic contraction. I would describe the shape of this recession/depression as one tracing out the path of an inept skier trying out a ski jump: sharp decline, then some leveling out with a brief up-blip, followed by a renewed plunge with the potential for an unexpectedly disastrous landing…” “Ski-Jump-Shaped Depression” 
John Williams’ Shadow Government Statistics, Commentary Number 302, 6/11/10

The Friday June 4, 2010 Market Action for Gold (Bullion and Shares) and Equities was especially revealing of Profit Opportunities in Precious Metals.

It also revealed the Threats to Precious Metals Profits and Prices, and Keys to insulating oneself against Price Takedowns.

On that Friday, when Equities prices were getting crushed, Gold Bullion opened down nearly $12, but rallied and closed up $20.

But the Gold Shares had a lousy day with both the HUI and XAU down over 2%.

What gives?

Such a Divergence – Bullion Prices Increasing Dramatically while Gold Mining Shares are Taken Down Dramatically is no surprise to us.

Several weeks ago we explained why it was likely that Cartel* Attempts to Suppress Gold (and Silver) Bullion prices would likely encounter increasingly heavy resistance from here on out. (See Deepcaster’s recent Articles in “Articles by Deepcaster’ Cache at www.deepcaster.com.)

Among the reasons were that Gold and Silver Bullion Price Suppression by a Fed-led Cartel* of Key Central Banks and their agents and allies was

  1. Becoming ever more widely known via Deepcaster, GATA (see below) and others, and
  2. Increasingly widely distributed Revelations that some of the largest Gold (and Silver) Repositories likely do not have nearly as much Physical Bullion as they claim they do. Thus, this is leading more and more buyers to demand delivery and possession of Physical.

Result: Record demand for Possession of Physical Bullion (i.e. not merely Paper Certificates ostensibly evidencing bullion ownership), with Consequent Robust Prices.

BUT Gold Shares prices, being “Paper” (i.e. more likely, electronic data on some remote server) are much easier for The Cartel* to manipulate.

Thus, The Explanation for the Divergence in June 4 Market Price Action as between Bullion and Shares.

*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.

But the Market Action on the following Monday June 7, was in our view a Harbinger of The Strengthening Golden Bull Market. Both Bullion and the Shares were up strongly.

Nonetheless, although The Cartel has been weakened considerably in recent months, it is still Potent and increasingly stressed.

And an increasingly stressed Cartel is Dangerous, and will take any opportunity to take down the prices of paper Gold and Silver as far as they are able. (The Silver, and Golden, lining, as it were, is that Premiums for Physical remain 5% to 20% or more over Spot for reasons we earlier explained.) The mid-May Takedown is a good example.

In any event, we should continue to expect periodic violent Precious Metal Price Takedown Attempts. And Deepcaster has developed a Strategy to minimize the adverse effects of these attempts (See “Defeating the Cartel... With Profit, Part 2” (6/19/2009) and “Defeating the Cartel... With Profit, Part 1” (3/28/2008) in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com).

It is in The Cartel’s interest to try to delegitimize Gold as The Ultimate Monetary Metal and Authentic World Reserve Currency, in their ongoing attempt to legitimize their Fiat Currencies and Treasury Securities.

In sum, given the recently diminished potency of The Cartel in their attempts at Precious Metal Price Manipulation, other factors loom somewhat larger as price determinants.

Thus, for example, Short Term, we expect Mining Shares to move somewhat in harmony with the anticipated next move in Equities (see Deepcaster’s Recent Alert in the ‘Alerts Cache’ at www.deepcaster.com for our specific Forecast).

Even so, we expect further Cartel Takedown attempts in Shares Prices to the “resisted” by Bullion Prices, with Bullion moving perhaps modestly lower at worst, but not nearly as much as the Shares. That said, we believe the days when The Cartel can effect dramatic and sustained Takedowns of Precious Metal Prices are over.

Most important, we should regard any Price Takedowns as Buying Opportunities for both Bullion and Shares. Indeed, we relish the prospect of the Buying Opportunities which are being created by prospective mini-Takedowns.

In sum, consider any such Takedowns in Bullion or Share Prices as a Gift and an Opportunity. Stay tuned for timing.

Copyright © 2010 DeepCaster LLC

http://www.financialsense.com/fsu/editorials/deepcaster/2010/0615.html

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
Joined: Nov 7 2008
Posts: 1182
Re: Prechter and Puplava interview

A little history:

Brien Lundin: Gold's (Almost) Free at Last

Bookmark and Share

Source: Brian Sylvester of The Gold Report  06/18/2010
The U.S. dollar may only look good because its fiat currency brethren look bad, but declining confidence in paper money has thrust gold toward a position it hasn't enjoyed for a century or so— freedom from its seesaw relationship with the U.S. dollar. In this exclusive Gold Report interview, Gold Newsletter Editor and Publisher Brien Lundin—who also hosts the New Orleans Investment Conference—says that mounting troubles in Euroland threaten to end the traditional inverse correlation between the price of gold and the value of the U.S. dollar. Of course the dollar decoupling can only go so far. "Gold stands as the one currency that governments cannot debase or debauch," Brien says, but "the dollar is the only currency accepted by margin clerks."

The Gold Report: You've said that it would be "foolish to think officials aren't manipulating the gold market." Could you tell our readers why you say that?

Brien Lundin: I've never been a big believer that the government manipulates the gold price on a day-to-day basis. By and large you can't blame everyday fluctuations on the secret hand of some government bureaucrat. My feelings that they don't do this every day has nothing to do with motivation, but rather government inefficiencies. I don't think they could do it. However, they're certainly motivated to manipulate gold prices in a broader sense. That's something they have done, and I think they are doing it now.

The reasons I think it's foolish to believe that governments aren't manipulating the gold market in some broader sense are: 1) it suits their purposes; and 2) they've done it in the past. Gold serves as the barometer not only of government mismanagement of the currency but of investor and saver confidence in the currency. As such, the gold price has been marching higher relentlessly, which certainly can be interpreted as a decline in confidence in the dollar and in government management of finances.

Both overtly and covertly, government manipulation of the gold price dates back to 1933, when Roosevelt confiscated private gold that U.S. citizens owned and proceeded to revalue it, raising the official gold price from $20.67 an ounce to $35. That, in effect, devalued the dollar; but, because they did it after confiscating the gold, it's an example of overt manipulation.

After Bretton Woods, following World War II, in concert with foreign governments the U.S. government routinely manipulated the gold price, primarily with the establishment of the London Gold Pool in the 1960s. They tried in vain to suppress the price, to keep the exchange rate closer to the official rate of $35 an ounce. As with all such manipulations of the market, that eventually failed and the London Gold Pool collapsed.

After legalizing gold ownership again in 1974, the U.S. government immediately cratered the price through Treasury sales of gold, which resulted in tremendous gains for the U.S. Treasury and tremendous losses for private investors. Throughout the 1970s, those efforts continued through public Treasury auctions of gold, which obviously were designed to suppress the gold price. Of course, ultimately these efforts failed as well, because the gold price broke free in 1979 and hit record levels.

After that, gold leasing through bullion banks was used to depress the gold price for some time. That was the primary tool throughout the 1990s.

TGR: Did that work?

BL: As detailed in research by Frank Veneroso, which we first published in the late 1990s, gold from central government vaults was loaned to the market either through fabricators or miners using gold hedges to protect the price they received for gold and thus their profit margins. That's still being done to some extent for project financing, although not nearly as much as in the 1990s and the early 2000s. But bullion banks essentially hedged their positions with gold miners and gold fabricators, borrowing gold from central banks at very low interest rates and selling it into the market, which would depress the price. Then they reinvested the proceeds into more leveraged investments—at least T-bills, but often using T-bills as collateral for even riskier investments. In that manner, the official central bank gold holdings dropped from about 30,000 tons to less than 15,000 tons.

TGR: Wow!

BL: In effect, that's a large, accumulated gold short position. Citizens of a lot of nations don't realize that much of the gold they think sits in the vaults of their central banks is really a pile of IOUs that can't be settled with gold. These IOUs would have to be settled with cash at some level. That's a lit fuse, and it's been out there for some time. It's a potential X-factor in the gold market that could send prices higher much more quickly.

TGR: Any other examples of how government manipulation is manifesting itself now?

BL: One of the ways is simply through manipulation of the futures and options markets and gold derivatives.

TGR: Europe's problems also seem to be influencing the gold price. This week, just after Moody's downgraded Greece's credit rating to junk bond status there was a late—though small—rally in gold.

BL: Right. As you know, gold and the U.S. dollar were on opposite sides of a seesaw for some time; when one rose, the other one fell and vice versa. I've been arguing that gold's real breakout would come when gold could rise regardless of what happened to the U.S. dollar. That actually happened with the early troubles with the euro. Early this spring, when we saw the first signs of this, we reported on them in Gold Newsletter. For brief periods, gold began to rise even when the dollar was strong. It wasn't a very pronounced trend, but it was the first sign that the inverse correlation between gold with the U.S. dollar was weakening.

As troubles began to mount in Euroland, especially Greece's sovereign debt troubles, gold began to trade completely independently of the direction the dollar—in fact, both were acting as safe havens. The real impact of these problems, particularly among the PIIG nations, is that gold has regained its status as a reserve currency, not only in the minds of central banks, but also with individual investors and savers around the world.

Gold's been a currency for some 5,000 years of human experience, but in the last century or so it lost much of its allure as a reserve currency. Now, as the rest of the world's currencies lose favor, gold is rising as a more favorable alternative. We still have the dollar as a reserve currency, and probably right behind the dollar we have gold.

However, while gold may be the "ultimate currency," the dollar is the only currency accepted by margin clerks.

TGR: Is that what you meant in your June newsletter when you said the fact that gold that cannot be created at will—as dollars and euros are—is the most important factor in any secular bull market?

BL: Exactly. And it is the factor that has come to the fore.

TGR: What range are you forecasting for the gold price through the rest of this year and into next?

BL: The rest of this year looks very interesting. Once gold passed $1,000 again last fall, the breakout was so powerful and so similar to two previous breakouts during this bull market that Gold Newsletter began tracking the rally against them. Those breakouts occurred in 2005 and 2007, with a year of consolidation in between.

Our tracking made it appear that this rally would carry gold up somewhere between previous rallies' gains—which were around 75% and 57%—taking it to between $1,350 and $1,500. When the rally faltered in December and January, we thought the analogy might not hold, but then gold really got back on track this spring. Projecting this rally to the average length of those two previous rallies, we could get up to $1,400 by the end of this year. Even by the early fall.

TGR: Wow! And then do you see it going even higher than that in 2011?

BL: Another period of consolidation is very likely, but that's just looking at it from a technical standpoint, not in terms of fundamentals. It's very possible that we could see gold around $1,600 in 2011. But that's in current dollars. Based on the official CPI, gold would have to reach around $2,300 in today's dollars to equal its record price in 1980. However, the government has changed the CPI. People don't realize that in the 1980s and then again during the Clinton administration, the government jiggered the CPI to minimize reported inflation. Economists can argue whether these changes were justified, but the point is that they changed the unit of measurement.

If you look at the gold price measured in previous versions of the CPI, you're talking about far higher gold prices in current dollars. John Williams of Shadow Stats has gone back and recalculated what he calls the "Alternate CPI," which takes out the government's changes to the index. As it turns out, when you use the historical CPI that was actually in effect during the 1980s, that $850 gold price record in 1980 is equal to $7,576 in 2010 dollars.

TGR: Yikes! That's if we measured inflation by exactly the same methodology the U.S. Department of Commerce used in 1980. But that $850 level didn't hold for very long, did it?

BL: Oh, no. It gained a few hundred dollars in the span of a month to get to $850, and $850 actually just was a hyperbolic blow-off price. Even so, the current gold price has a long way to go before it even approaches such a blow-off stage.

TGR: One way you're taking advantage of this gold bull market is through gold equities. Could you update us on some of the companies you talked about when we interviewed you in March?

kennyq's picture
kennyq
Status: Bronze Member (Offline)
Joined: Jul 30 2008
Posts: 82
Re: Prechter and Puplava interview

I thought I understood deflation and inflation laterly.

Deflation and inflation are directly by emotion. When there is a fear of economic down turn, people start to hoarding the cash, "Liquidity" drys up. asset price goes down (including gold.?)..So government(s) starts to print more money from thin air to liquid the market until people realized their cash value being 'diluted",or realized the entire economic system was a Ponzi scheme.  Next, people stop hoarding cash and exchange (buy) to real assets after they realized the cash value went down. This is how inflation starts.

From above conclusion, next few months, cash will be the king.(gold and the $ will go up at the same pace). Price of goods will go down as deflation sets in, then gold will go down with it as same as the stock market. Therefore I personally stop buying the farm, solar system..etc. now ,except "long term food storage" . I am waiting price of goods go down further. However, inflation may come very fast within weeks, and dark age starts.

BTW. I found a pastry land farm with owner finansing at 5k per acre. The owner offered 5 yr. bloom loan or 6% fix interest with 30% down. later I found the owner owes last year real estate tax on the farm. The seller was desperated to sell. The entire real estate market is not moving since it is very hard to get a loan. I think price of farm land still going down. Unemployment will go way higher in the future. we're better off with cash in hand instead of a piece farmland.

Please correct me if I am wrong.

Erik T.'s picture
Erik T.
Status: Diamond Member (Offline)
Joined: Aug 5 2008
Posts: 1234
Re: Prechter and Puplava interview

I should know better than to feed the trolls, but this is really just getting silly now...

goldcountry wrote:

Erik, did you listen to the Puplava show this weekend? I did. Maybe you should do your own homework before you start calling others foolish.

Ok, GC, let's see if we can figure out the answer to your question together...

I made very specific comments about this past weekend's show and its content in post #4 in this thread. I know you read that post, because you responded to it directly, commencing this exchange.

Now you want to know whether I listened to this past weekend's show. GC, can you see the connection here? If not let me know and I'll try to make it clearer for you...

GC wrote:

You're great at namecalling and equally bad at coming up with anything of substance.

Excuse me, but I have provided you with a reference to an article with quite a lot of substance on the subject, but you seem to have ignored that several times now. You just keep on repeating the same inane accusation that I am guilty of name calling and incapable of providing substance, each time ignoring the substantive reference I already provided.

I didn't provide a link earlier because I assumed that finding something after I told you where it was posted would be within your abilities, but apparently I erred there too. Here's the link: http://www.financialsense.com/editorials/townsend/2010/0419.html. Each time you ignore the substance I've provided (the article which I've referred you to several times now) and make another baseless assertion that I have failed to provide substance, you further reinforce my other comment to which you seem to have taken objection.

Best,

Erik

 

James Wandler's picture
James Wandler
Status: Martenson Brigade Member (Offline)
Joined: Aug 11 2008
Posts: 219
Re: Prechter and Puplava interview

All,

I thought this was an excellent interview from opposing viewpoints.  However ultimately in the end they both see hyperinflation.

Bob Prechter works from a theory that shows the bottom in June 2016 so he forecasts near term austerity for the US by incumbents in congress who fear for their jobs because of money printing - those in congress would finally try hyperinflation once the June 2016 cycle is done.

Bob admitted to being surprised by gold's strong upward movement but still believes that you ride the cycle out in T-bills (short dated US debt) to be as near cash as possible and then wait to buy assets (stocks) at the bottom.

I watch what Chris has to say so I am currently expecting a more near-term hyperinflationary environment where if $1.X trillion has been used by the Fed to allow the economy to function while the housing bubble deflates then what is to stop them from increasing this to $3 trillion to continue the bubble's deflation?  [This U.S. housing bubble is still deflating as 2010 and 2011 will see the unwinding of the Adjustable Rate Mortgages that were issued in similar quantity to the subprime debacle with 1/3 being principal and interest payments, 1/3 being principal only payments, and 1/3 being negative amortization - so many many more mortgages will go bad driving house prices lower.]

Could Bob be correct?  Yes, I think Chris allows for this possibility.  It all depends on the way that political scenarios unfold.  Cash wins if austerity occurs.  However Chris discounts this possibility in favor of more and more printing being the easier approach.  Even with more Quantitative Easing some hard assets aren't coming back quickly (e.g. real estate in general - on the other hand, agricultural land could do quite well depending on quality and not too close or too far from urban areas).    

Ultimately the story is gold.  I think the reason Bob is surprised by gold's move is that people are beginning to see that it is a real hard asset and that even cash is just paper with nothing behind it.  It doesn't have to be that way but it looks like the end of the credit bubble will come.  When?  Chris allows for next week to five years out.

As always, better a year early than a day late.

My 2 cents.

Cheers,

James

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Prechter and Puplava interview
James Wandler wrote:

 I am currently expecting a more near-term hyperinflationary environment 

 

+1 and it could come about as the result of a devaluation and or currency crisis. The devaluation Bob has demonstrated an absolute and utter clueless for. He should read about Mexico and many other countries that have pulled this stunt. T-Bills and cash will destroy his followers if this happens.

James Wandler wrote:

Could Bob be correct?  

I think the real question is: Has Bob thought of everything? There are a lot of dogs that can bight us in the *$$ and from that interview I can assure you he has NOT thought of everything.

We are as bad off as Greece. T-Bills?

The USD is the best looking currency - in the glue factory.

 

LogansRun's picture
LogansRun
Status: Diamond Member (Offline)
Joined: Mar 18 2009
Posts: 1443
Re: Prechter and Puplava interview

FYI:  I wasn't typing about you as far as being open minded and all. In fact, that's probably why I missed you the most this past month!  You say it how it is but also listen and change with education.  Shoot, I remember a Davos over a year ago that was as strait laced as they come!  Thank goodness that Davos is gone.

It's the rest of these yahoo's that have the issues.Tongue outLaughing

 

Davos wrote:
LogansRun wrote:
Davos wrote:

No one is right 100% of the time. Bright people dork up and make stupid falls. Look at how Xerox gave Apple their OS and then how Steve Jobs loaned the GUI box to Bill Gates or how Gates got IBM to license not buy the DOS OS which he didn't even have in his possession, or how the DOS writer sold it for 50k.

Even Ben Bernanke can teach himself calculus but is an absolute economic moron. 

Prechter made a bonehead remark about the devaluation but Puplava let him go on talking and the next sentence was brilliant: Credit is what lead to high housing and student tuitions. 

I'm not a deflationist but I read Mish and listen to these discussions because I can always glean some good. My advice is don't drink any Jim Jones Cool-aide. King had a super interview a few weeks ago about the IMF and gold standards. I think GATA is a joke, but they did point out a lot of things that a lot of folks take for granted (LBMA paper and gold is like any other commodity (more traded than exists)). Prechter may be a moron at times but some of the stuff he comes out with is brilliant.

Pick the cherries.

Davos,

I think this attitude is what many on this site (as well as many others) are unable to do!  If someone makes one or two stupid comments they are at that time labeled as 'idiots' and are never listened to again.  Or if there could be some truth to a story, they'll discount the whole thing because of their inability to dissect.

As you said, no one's perfect.  Everyone is going to make stupid decisions or say stupid things in their lives.  But just because someone has a theory that's half wrong, the other half may be right.  So do you discount the whole thing or do you learn from the half that's right?  I'm finding far too many people on here that don't learn that second half because they've decided that if half is wrong, the other half isn't worth listening.

Took me a month off to come to this realization, I still toss the moron word around way toooooo much. On FB I called Prechter a moron for his devalue comment, but I do realize he has a lot of smarts and comes up with a lot of neat stuff - so even though I think he is wrong about deflation I need to compartmentalize the moron bit to where I think he is off.

machinehead's picture
machinehead
Status: Diamond Member (Offline)
Joined: Mar 18 2008
Posts: 1077
Re: Prechter and Puplava interview
bluestone wrote:

Davos

Do you happen to know if the US debt to GDP ratio is the same, greater, or less than that of Weimar German in the early 1920s?

thanks

Brian

This is an excellent question. According to one source:

The [German reparations] terms were finalized in 1921 with a price tag of 33 billion USD or 133 billion gold marks, payable in cash or kind.  This represented about 340% of German GDP in 1921 and would have yielded an annual debt service of 2.5% – 7.5% of GDP for 40 – 50 years.

www.sfu.ca/~djacks/courses/globalhistory/Lectures/Week04_Interwar.doc

US government debt is certainly nowhere near the disastrous level that the Weimar German government faced. But total credit market debt, including the private and corporate sectors, is getting into that range.

All we can say for sure is that inflation benefits debtors, by reducing their obligation in real terms. When the debtor issues the currency in which his debt is denominated, a moral hazard exists.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments