Any news on when KA transitions to POOM?

[GRG55]

Re: Any news on when KA transitions to POOM?

http://www.itulip.com/forums/showthr...=9713#post9713

Well done bill!

[GRG55]

Re: Any news on when KA transitions to POOM?

I could not disagree more strenuously. Of course they are going to fuck it up before they get it right, did you think that they were going to do the right thing right off the bat? They will only do the right thing when they see that it is the only alternative. They are starting to see this. I'm more optimistic now than I have been in the last 5 years.

I think it was FRED that said that "we will do the right thing, after all other options have been exhausted".

The process of exhausting options is what we are doing now, that means we are CLOSER to doing the right thing, not farther away from it.

Right off the bat??? That Air Force base you spend time at must be in a time warp.

They started with "subprime is contained" how long ago?

Yep, way back in the spring of 2007. So "right off the bat" is hardly applicable to what's happening now. They are out of time to "do the right thing"...events have overtaken them.

[c1ue]

Re: Any news on when KA transitions to POOM?

If multiple countries and economic zones go into a prolonged and severe turmoil as in 1998 but with aftershocks lasting for as much as 2-3 years, this could result in the USD (and US equities markets after this shakeout!) maintaining top relative strength even for 2-3 years here? Is that a true or false potential premise? If it's a false premise, can iTulip unpack that idea for us?

If the US$ winds up still on top after everything falls apart, it will be because the US lost the depreciation beggar thy neighbor wars.

And how likely is the owner of the reserve currency to lose a depreciation war?

[Guest]

Re: Any news on when KA transitions to POOM?

Clue - I'm trying to get a handle on what you are saying here. If the US "lost the depreciation wars" it stayed stable, while other currencies continued to plummet against it.

But in this brave new world for the US, that is not a "loss" because a desperate debtor gains a fair bit more than it loses in extremis, by it's currency maintaining unnatural strength. A far better option than loss of all strength. That's in a world where A) USD stays very strong while getting massively overissued, B) all other currencies plummet vs. USD, C) gold rises sharply vs. all currencies other than USD, against which it only rises gradually. Then you have this ersatz game "win/win" monetary order parody going on, where all the other currencies "win" by beating the USD on the way down (they are dreaming dreams of yesterday, where this "boosts their exports"), and the USD "wins" by staying relatively strong - just enough to maintain it's financing bid, or at very least forestalling wholesale capital flight from the USD zone.

Has this "explosive cocktail" of a "re-cemented" USD global monetary order ( :rolleyes: ) achieved some sort of peculiar steady state in this configuration? Provisionally yes, if we start seeing a series of explosions occur in a few other minor currencies. And meanwhile, what the heck kind of description of global deflation is this? You've got an ersatz strong USD because it wins the "least ugly contest", you've got rest of world with a few random but frightening currencies exploding and doing an Iceland-impersonation, and this randomly repeating monetary terror is meanwhile keeping the entire globe's economies paralyzed, like deer in the headlights, bidding on the USD to avoid potentially worse landmines in other currencies?

Of course this whole claptrap global arrangement doesn't last any longer than a prolonged bad dream, and meanwhile I'm still trying to parse your cryptic reply. The owner of the reserve currency is likely to "lose" the depreciation war. Can't have a prayer of devaluing faster than the minor currencies. Ergo USD ideed "loses" the race to the bottom, exports suffer, etc. What it spells as the destination of this highly unstable transition, is an "abrupt break" type of situation (assuming one or two more minor currencies keep blowing up and keeping the world in a state of extended global panic), wherein every signal out there suggests the USD must still be the "place of refuge to escape to" . Meanwhile minor other markets are disintegrating in the tectonic shifts grinding away under the surface - and it lasts - until it doesn't last any more.

Then suddenly you've got monetary pandemonium where all the pools of global capital that have been huddling next to the USD during this hallucinatory "deflationary" period suddenly break away (I can't for the life of me figure out into what) and the USD is left standing alone, multiplied during this two or three year "deflationary" hiatus by maybe 300% or more of total USD in circulation, and all of this unravelling now under the ten thousand watt glare of the skeptical and terrified gaze of the world's large pools of capital reserves.

So what are you telling me? That the USD cannot exercise this type of "fatal attraction" upon the world in a scary transition where no-one has any alternative? This is the period I'd suggest, when gold goes to $3000 an ounce, and that formerly deflationista guy Rick Ackerman may not have had such a bad guess after all - the gold can go from $1000 an ounce to $3000 an ounce in maybe just a four week period, when the rest of the world fall back and realise that all the limpet and barnacle like clinging to the USD in this maelstrom was just clinging an illusion. Then thereafter it's total unleashed mayhem in the world's currencies, while the IMF convenes all the nations and hammers out some jury rigged "interim solution" which calms the gold price down.

It's almost enough to turn you into a gold bug, eh C1ue?

If the US$ winds up still on top after everything falls apart, it will be because the US lost the depreciation beggar thy neighbor wars.

And how likely is the owner of the reserve currency to lose a depreciation war?

By Luke Burgess | Thursday, October 16th, 2008

It's almost like something out of the Twilight Zone.

The American economy is breaking down. But the US dollar is one of the strongest currencies in the world right now.

U.S. investment vehicles are crashing. Retirement funds have lost trillions. America has significant unemployment and the Federal Reserve continues to inflate the US dollar. Yet the greenback has outperformed almost every major world currency since the middle of summer.

How can this be?

The reeling finance and banking sectors currently has investors running and screaming from the speculative equity markets.

Of the three major U.S. indices, the Dow Jones has performed the best, losing 21.8% since July 15th. The NASDAQ and S&P 500 are down 26.5% and 25.3% respectively over the same period of time.

With such significant risk in the American economy we should expect investors to be dumping their U.S. dollars.

But this just isn't the case.

And believe it or not: People are actually running toward the U.S. dollar for safety.

These investors will eventually get burned and a U.S. dollar collapse is inevitable. But in the meantime...

The U.S. Dollar is Now the Second Strongest Currency in the World

Governments, institutions, and private investors around the world have been selling their currencies for the U.S. dollar, pushing the value of the American money much higher over the past several weeks.

Except for the Japanese yen, which has just turned slightly higher against the greenback, every major world currency has lost significant value against the US dollar since mid-summer. Among the biggest losers have been the Australian dollar and Brazilian real, which have dropped 26.9% and 24.4% respectively against the U.S. dollar since July 15th.

Change in Value Against the US Dollar Since July 15, 2008
Australian dollar	-26.9%
Brazilian real	-24.4%
British pound	-12.4%
Canadian dollar	-13.6%
Euro	-13.6%
Japanese yen	+2.2%
Mexican peso	-15.9%
New Zealand dollar	-18.8%
South African rand	-17.6%
Swiss franc	-11.1%

It seems a bit strange that investors would be buying the US dollar right now, considering the myriad of problems currently facing the American economy. But the fact is the United States isn't the only country with financial problems.

Every country in the world is facing it's own economic challenges right now. As a result, foreign speculators have been rapidly selling their own domestic currencies and buying the U.S. dollar.

[lotep]

Re: Any news on when KA transitions to POOM?

Hi there I'm new to all this and have come across your interesting website. I understand little although I see the logic of an increase in the value of gold as inflation rises.
I gather there will probably be a period of deflation before inflation. What I don't seem to find anywhere is whether your readers think gold will go down in value before increasing.
I gather many readers had the foresight to buy gold in 2001, when it was less expensive. What I'm wondering is whether it is wise to buy now or to wait a while see if it decreases in value before buying?

[Chris]

Re: Any news on when KA transitions to POOM?

Hi there I'm new to all this and have come across your interesting website. I understand little although I see the logic of an increase in the value of gold as inflation rises.
I gather there will probably be a period of deflation before inflation. What I don't seem to find anywhere is whether your readers think gold will go down in value before increasing.
I gather many readers had the foresight to buy gold in 2001, when it was less expensive. What I'm wondering is whether it is wise to buy now or to wait a while see if it decreases in value before buying?

That depends on your circumstances. I started to accumulate in mid-2007 and wasn't too concerned about the price. Now I have a significant position (for me) and will only buy more when the price dips (and it usually does). Lukester could probably give you some better expected price levels for the next few months. I'm looking to accumulate small amounts below 780-770 (pretty soonish! ) but if I didn't have any gold I would probably look to grab some just for safety (or the illusion of safety).

Uncertainty is everywhere one looks at the moment. All financial decisions I've taken recently have been uneasy ones. But then nobody ever said a financial collapse was going to be easy. Good luck!

[Andreuccio]

Re: Any news on when KA transitions to POOM?

No, not I...

Had to scan the whole article to get to the money quote. It's not til the last line. Kudos on the six figure advance.

[c1ue]

Re: Any news on when KA transitions to POOM?

Lukester,

I don't know who this Burgess is, but if this article is any indication - he goes right to my "public morons" list.

The list of national currencies being shown are all prime movers in one of three categories:

1) Carry trade
2) Commodities boom
3) US MBS crap security scandal

Mexico is an failing state/oil deal.

But interestingly, Burgess himself lists a nation which has clearly demonstrated how keeping a currency cheap is eminently achievable: Japan.

Why is Japan still able to peg its currency vs. the dollar? Despite the relative CAD/CAS contrast and the recent massive dollar depreciation, the yen is still within 10% of its nominal range vs. the dollar from 1994 to 2007.

Without even having an interest rate to cut for 15+ years, Japan is somehow still able to keep its yen fairly stable vs. the US dollar both when the dollar was strong and when the dollar was weak.

To me it looks like someone taking the glaring standouts to make an existing thesis point, as opposed to someone trying to understand what is really going on.

As for gold - I've never said that gold wasn't a good investment in some sense. I merely stated that its short term price is a function of fear, not monetary expansion.

As it turns out, fear also has its downside for gold. I would not be surprised either if there were significant amounts of leveraged bets on gold made by hedge funds which are being deleveraged. That's the insidious nature of a credit bubble.

[The Outback Oracle]

Re: Any news on when KA transitions to POOM?

Whooopeee!!!! We're winning!!!! (a peculiarly Australian view of the world)

Change in Value Against the US Dollar Since July 15, 2008
Australian dollar -26.9%
Brazilian real -24.4%
British pound -12.4%
Canadian dollar -13.6%
Euro -13.6%
Japanese yen +2.2%
Mexican peso -15.9%
New Zealand dollar -18.8%
South African rand -17.6%
Swiss franc -11.1%

[Guest]

Re: Any news on when KA transitions to POOM?

Outback if I were in your shoes for the next couple of years I would be buying gold. Mortgage the wife and kids or whatever and buy more bling. For us it's not nearly that clear, but AUS > USD is going to remain favorable trade winds for you to be in gold I think for a good long while.

Ride this currency trend, it is just getting started. You can spend a couple of dollars to buy a su8bscription to Jack Crooks currency etf and he'll give you the tip off as to when the USD bull run is over.

EJ says it's days are numbered (like less than a year) I've got a strong feeling it's going to run longer. And anyone here is more than welcome to call me a flaming idiot when it collapses far sooner, as my investments will finally be pulled back from their near death experience.

If you have already mortgaged your own wife and kids then mortgage your neighbors, or mortgage some hapless relatives to raise moolah for more bling. [ OK, I've got it. When all your own relatives are committed, just mortgage all of your employees and their children. ]

Whooopeee!!!! We're winning!!!! (a peculiarly Australian view of the world)

Change in Value Against the US Dollar Since July 15, 2008
Australian dollar -26.9%
Brazilian real -24.4%
British pound -12.4%
Canadian dollar -13.6%
Euro -13.6%
Japanese yen +2.2%
Mexican peso -15.9%
New Zealand dollar -18.8%
South African rand -17.6%
Swiss franc -11.1%

[metalman]

Re: Any news on when KA transitions to POOM?

Outback if I were in your shoes for the next couple of years I would be buying gold. Mortgage the wife and kids or whatever and buy more bling. For us it's not nearly that clear, but AUS > USD is going to remain favorable trade winds for you to be in gold I think for a good long while.

Ride this currency trend, it is just getting started. You can spend a couple of dollars to buy a su8bscription to Jack Crooks currency etf and he'll give you the tip off as to when the USD bull run is over.

EJ says it's days are numbered (like less than a year) I've got a strong feeling it's going to run longer. And anyone here is more than welcome to call me a flaming idiot when it collapses far sooner, as my investments will finally be pulled back from their near death experience.

If you have already mortgaged your own wife and kids then mortgage your neighbors, or mortgage some hapless relatives to raise moolah for more bling. [ OK, I've got it. When all your own relatives are committed, just mortgage all of your employees and their children. ]

and what impact is that having on their respective economies? and what are they going to do about it? ka-poom theory is about the second order effects this: trade partners defending themselves with currency devaluations (pegs) etc. imagine the usa was going into recession AND the dollar was getting weaker, gas prices going UP! we're winning round 1. what's round 2?

[Guest]

Re: Any news on when KA transitions to POOM?

I don't know Metalman. Would you be inclined to spell it out for me?

and what impact is that having on their respective economies? and what are they going to do about it? ka-poom theory is about the second order effects this: trade partners defending themselves with currency devaluations (pegs) etc. imagine the usa was going into recession AND the dollar was getting weaker, gas prices going UP! we're winning round 1. what's round 2?

[Guest]

Re: Any news on when KA transitions to POOM?

I don't have any insights of my own. Because I have more invested in PM's than I probably should (I am looking for an opportunity in the next six months to lighten up overall) I simply rent as much intel as I can from a very eclectic mix of newsletter sources. I'm spending about $2K a year among six or seven provisionally right now to try to do something more than go forward on a prayer alone. There really are cycles of varying durations in asset classes. Anyone knows that just by looking at the large commodities / equities cycles that many have posted excellent century long charts about.

Therefore it certainly is not controversial that smaller cycles can and do exist. Among those is a 12 year cycle for gold. That cycle from a short term investor's viewpoint (say a five year time horizon) is due to bottom in March / April of next year, and a lot of different analysts (some of whom are pretty damned experienced with 35 years drectly in the commodity markets) are agreed that this will be the low point in this very large precious metals decline. It will match the recent September low, and the number I'm getting as the interesting one to watch for gold will be $725 or thereabouts.

Otghers are pointing straight to $675 on an anomalous plunge between now and then regardless.

We need to see a plunge and then a bounce off of $725 in March / April and that will have described a very large double bottom for gold (first bottom there was the one in late August this year). The consensus of all the stuff I read has a 12 year cycle bottoming around in there for a second time and then a long uninterrupted run back up from there. Don't shoot me if I'm wrong. If you see it mired under that level after March / April then it's flashing a red light that the larger bull market really and truly is in trouble. Lots of people here snigger about technical analysis. I think they are selling it short if they do. Especially the very long term charts can tell us a lot of valuable information.

Personally my bullishness in the past six months has taken a real beating. I remain extremely suspicious that this bull market will get back on track, due to the sheer size of the derivatives pile. I think anyone who professes to "know" that that pile detonating will be bullish for gold is winging it. No-one knows. Watching the March / April time window for a hard breakout in gold will be the most conservative strategy. I wish I were in a position to adopt that approach here myself.

[touchring]

Re: Any news on when KA transitions to POOM?

Whooopeee!!!! We're winning!!!! (a peculiarly Australian view of the world)

Change in Value Against the US Dollar Since July 15, 2008
Australian dollar -26.9%
Brazilian real -24.4%
British pound -12.4%
Canadian dollar -13.6%
Euro -13.6%
Japanese yen +2.2%
Mexican peso -15.9%
New Zealand dollar -18.8%
South African rand -17.6%
Swiss franc -11.1%

CAn you imagine the impact on American imports?

[Jim Nickerson]

Re: Any news on when KA transitions to POOM?

I don't have any insights of my own. Because I have more invested in PM's than I probably should (I am looking for an opportunity in the next six months to lighten up overall) I simply rent as much intel as I can from a very eclectic mix of newsletter sources. I'm spending about $2K a year among six or seven provisionally right now to try to do something more than go forward on a prayer alone. There really are cycles of varying durations in asset classes. Anyone knows that just by looking at the large commodities / equities cycles that many have posted excellent century long charts about.

Therefore it certainly is not controversial that smaller cycles can and do exist. Among those is a 12 year cycle for gold. That cycle from a short term investor's viewpoint (say a five year time horizon) is due to bottom in March / April of next year, and a lot of different analysts (some of whom are pretty damned experienced with 35 years drectly in the commodity markets) are agreed that this will be the low point in this very large precious metals decline. It will match the recent September low, and the number I'm getting as the interesting one to watch for gold will be $725 or thereabouts.

Otghers are pointing straight to $675 on an anomalous plunge between now and then regardless.

We need to see a plunge and then a bounce off of $725 in March / April and that will have described a very large double bottom for gold (first bottom there was the one in late August this year). The consensus of all the stuff I read has a 12 year cycle bottoming around in there for a second time and then a long uninterrupted run back up from there. Don't shoot me if I'm wrong. If you see it mired under that level after March / April then it's flashing a red light that the larger bull market really and truly is in trouble. Lots of people here snigger about technical analysis. I think they are selling it short if they do. Especially the very long term charts can tell us a lot of valuable information.

Personally my bullishness in the past six months has taken a real beating. I remain extremely suspicious that this bull market will get back on track, due to the sheer size of the derivatives pile. I think anyone who professes to "know" that that pile detonating will be bullish for gold is winging it. No-one knows. Watching the March / April time window for a hard breakout in gold will be the most conservative strategy. I wish I were in a position to adopt that approach here myself.

Luke,

From the prespective of my small mind this is one of the better, perhaps even the best, notes of yours in that it is to me understandable. This is a compliment in case any doubt arises. Your note shows some humility, which is good.

I think you made a mental typo when you put in August, as you had correctly noted the mid-September as having been the low.

Are you thinking that further unwinding of the derivative pile will continue to be deflationary, and thus not good for gold? A drop were it to happen to 675ish would be another ~14% down (using stockcharts.com 787.70 price for $GOLD). I see you wrote "no one knows," but what is your opinion?

My opinions for the greater part also are based on what I glean and remember from pundits, etc. I personally do not think deflation is over, and if one uses Finster's FDI, which I do, despite it's showing deflation upticking beginning at first of July with gold bouncing around both up and down, the trend in $GOLD of declining tops and bottoms since the March highs is still in effect--with everything since Sept representing a range that is yet to be broken decisively one way on the other.