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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: glenn_a who wrote (990)	9/24/2003 10:21:31 AM
From: el_gaviero	Read Replies (1) \| Respond to of 110194

Glenn, Good series of posts. I agree with your basic point that we should not overly personalize the actions of Alan Greenspan. He is an instrument of the powers that be and is only responding to pressure. My disagreement with you concerns the source of pressure. You talk about “capitalists elites.” Maybe you should be more precise here. In the good ole US of A it seems to me that Washington D.C --- i.e. the political class, i.e. “inside the beltway” -- is the center of power. Washington benefits from current financial arrangements. These arrangements give them, in effect, a third huge source of revenue. In addition to taxes and regulations (which allow them to shake-down capitalists) Washington gets a current account deficit (which creates a market for government paper, and allows expenditures of another 300-500 billions dollars a year without driving interest rates through the roof). But this third source of revenue is breaking down, for all the reasons we talk about here. It seems to me, however, that Washington has not really focused on the fact that a breakdown is occurring. (And it seems to me also that Washington does not understand that once a breakdown occurs, and this third source of income disappears, competition for money, power, etc. will turn fierce, precisely because the competition will determine real winners and losers.) I predict that soon Washington will wake up and realize that the foundation of their power is eroding. Then the crisis commences. Weird and drastic things will start coming from the Potomac. I hold gold in various forms, for all the usual reasons -- but without illusions. The person who thinks that a class of people with power will let power slip away and go to us --- just because we have claims to real money in the form of gold --- is living in a dream world. Don’t forget, the political class enforces property right claims. My feeling is that --- at crunch time --- gold keeps us in the game for another round or two, and maybe, just maybe, if nimble and lucky, gives us something to use to make a next jump.

To: glenn_a who wrote (990)	9/24/2003 10:38:13 AM
From: Silver Super Bull	Read Replies (2) \| Respond to of 110194

Glenn, RE: "My belief is that the Fed WILL stop the printing presses" Could you elaborate? What would cause them to do this? From the various statements they have made (especially Bernanke's famous "printing press" quote) "stopping the presses" doesn't seem to be the collective mindset. Also, per my earlier posts, the financial system has become highly accustomed to monetary/credit creation...it is very hard for me to envision how the financial system would painlessly adapt to any lessening of monetary/credit creation without serious negative ramifications. As JW just pointed out, it is taking more dollars of debt to create one dollar of GDP growth. And that assumes that you take the "GDP growth" figures at face value. DB

To: glenn_a who wrote (990)	9/24/2003 5:21:32 PM
From: David W. Taylor	Read Replies (1) \| Respond to of 110194

>> At this point, a run on the US$ could force the US to raise interest rates to continue to attract the capital the US require to finance its "twin deficits". In a world already prone to deflationary debt implosion, this could give rise to a truly terrible situation. To my mind, this is NOT an environment in which commodities would excel ... except for perhaps precious metals ... once the primary deflationary collapse had significantly run its course.>> Bingo! I tend to see gold, as I mentioned before, as simply another commodity. Yes, there are others out there almost frothing at the mouth in disagreement. It seems that one you have "seen the light about gold" that you stop questioning the validity. I'm far from alone in my doubts about its famous allure and I fully admit that it is simplistically attractive as the answer to the burning question of "where can I safeguard my savings?" but I just don't agree. If I am wrong, then I will suffer. It feels more logical to me to see it as simply another commodity, which will in due course see an uptrend in price. Until then I sit hunkered down waiting for a future that glenn_a seems to be able to see as well. David