A 90% plunge will translate into gold 8K or (much) higher.
18% M3 probably means monetization of mortgage debt. A
coupon pass is monetization of treasury securities. No
monetization of treasury securities is happening, but
I'm not so sure about monetization of mortgages, cause
how can one the explain sharply growing M3?
This is WEIMAR folks.
Posted On: Tuesday, November 27, 2007, 7:21:00 PM EST
Without A Practical Solution
Author: Jim Sinclair
Dear CIGAs,
In answer to many inquiries today, allow me to assure you that there is no difference of opinion between Monty and I.
Monty’s presentation was on what the government will feel necessary to present as the solution to the ever increasing unwinding of the credit markets.
Monty never said that what he foresees would in fact work. I believe Monty knows the implications of such a move, but prefers to address that at another time when the rescue is in fact launched as the last option of choice.
What I have repeatedly said to you is that there is NO PRACTICAL SOLUTION to the meltdown of credit derivatives that is occurring at the present time, or for that matter anytime.
Practical means:
a: of, relating to, or manifested in practice or action: not theoretical or ideal
b: being such in practice or effect.
A Solution is:
a: An action or process of solving a problem
Therefore a practical solution is not theoretical, and must be an action or process of solving a problem, not massaging or spinning it.
The reason you have not seen any plan but the miserly (in comparison to the size of the problem) fund of international investment houses is because the problem is so large that it cannot be addressed effectively by the Treasury or the Federal Reserve. We are talking trillions here, not billions.
Should the Federal Reserve attempt to buy up the bankruptcy debt they will unleash inflation without historical comparison. It is not to say they will not. In that attempt let us define precisely the mechanism of the action.
Bankruptcy Monetization:
To do this, the Fed cranks up the press, loads in some paper and green ink, and prints a brand new $200 billion or simply writes another check on its ever flowing, no balance checkbook. It is the same thing.
The Fed takes the $200 billion just created and purchases the bankrupt, securitized debt instruments at artificial prices from the well connected international investment banks, other banks or funds.
The money supply, even if hidden, goes up by $200 billion. The Fed now holds the bankrupt securitized vehicle at artificial prices. The instant increase in the money supply is hyper inflationary. This money benefits only the banks, funds and institutions, having no wealth effect for the consumer, and therefore hyper inflationary lacking economic stimulus. That is penultimate bamboozle.
Bankruptcy Monetization may well occur. You must recognize how this fits the Weimar Experience. Simply drop the reason why Weimar engineered their inflation, known as “War Reparations,” and replace that with the words “Securitized mortgages with embedded credit and default derivative driven Bankruptcy Monetization.”
My position is that there is NO PRACTICAL SOLUTION to the present and upcoming credit derivative meltdown.
FOR THAT REASON, I REITERATE, “THIS IS IT.”
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