Mucks’ Note: The Woodpilereport can be found at: http://www.woodpilereport.com/.
‘Ol Remus is spastic with his post filings and you never know when one will show up and what it’s going to be about (kind a’like TBP) Since he allows unrestricted reposting of his newsletter with credit, I will be taking advantage of that and bring his “reports” over to TBP whenever a fresh one shows up. You might check the website directly now and again because ‘Ol Remus tends to stuff in baskets of interesting blurbs, quotes and such along with the main posts.
How you all enjoy.. Please let me know if it’s worth the trouble..
Old MuckAbout
Curtesy of The Woodpile Report 8/12/14
This train wreck isn’t simply going to hit a wall out of the blue. Actually, it has been forming and accumulating and expanding for many years now, and yet it has simply been ignored, particularly by the financial markets which have ridden this bubble to these extreme and historic heights. The only issue is, when does it hit the wall? The answer to that question is it’s not very far down the road, and I can promise you that is when all hell is going to break loose.
David Stockman at davidstockmanscontracorner.com
There’s good evidence our current inflation is artificially induced to stave off an underlying deflation. Deflation is a slowing of the “velocity of money”—a measure of how often a dollar passes from one hand to another. Deflation theorists say the velocity of money became near-catatonic in 2007-2008. The ongoing “money printing” is intended to compensate for the lack of real circulation. It’s this “money printing” that accounts for such inflation as exists, and even at that it’s not been effective. More technically, in the last twenty five years the M2 money stock has gone up 700% while prices have gone up 200%. It’s the dormant 500% we should worry about.
In a classic deflation like the Great Depression of the 1930s, currency becomes all but unobtainable, everyone sits on it, in part because they believed “everything will be cheaper tomorrow.” They weren’t wrong. Faith in the currency was justified by real events so it became more valuable over time. The question is, if we revisit real deflation, what happens to the price of gold and silver? The only honest answer is, nobody knows. History says the price for precious metals—including coins—will drop just like prices for everything else. And that’s the key, just like everything else. At minimum their relative value will be maintained and they’ll probably do better in terms of purchasing power.
Paper traders and promise holders will take inescapable losses because debt doesn’t fall with everything else, it becomes unpayable. Deflation incurs a relentless repudiation of debt—touchingly called “restructured debt” in its final phase—and the stair-step crumbling of everything connected to debt, including prices. Yes, gold and silver prices too.
1930s-style deflation is an economy’s rigor mortis, proof it’s well and truly dead and good evidence the regime may be next. Government will do anything to counteract deflation—or even talk of deflation. Which is about where we are now. The policy has been aggressive inflation—they call it stimulus or bailouts or quantitative easing—and it’s done in the sorriest strongman’s pest-hole and name brand empires. Political flavorings aside, there comes a time when inflation devolves into a frantic torrent of nearly worthless paper. It’s here the purchasing power of gold and silver go to escape velocity while that of currency soars twenty feet into the ground and disappears. Long before that, gold and silver won’t be on offer for any amount of currency.
By the time the handwriting is on the teleprompter it’s already too late. Holders of precious metals are ahead of this curve. They know it can take mere weeks for ordinary inflation to metamorphosize into an outright repudiation of the currency, meaning hyper inflation.
Hyperinflation arises as a result of money printing leading to a currency collapse and not from demand pull. The slight deflation that we are experiencing currently is a prerequisite for hyperinflation. The fear of a deflationary implosion forces governments to print money, leading to a collapsing currency which historically has always been the cause of hyperinflation.
Egon Greyerz, Matterhorn Asset Managament AG
In passing, there are other dimensions to all this. Given our lawless police state, our institutional corruption and the collapse of official ethics and personal values 
, we’re closing fast on third world status. Already the lives of much of the population are indistinguishable from the bottom reaches of the Third World. This protected subset of society, these professional voters, are paid to consume, know only consuming and despise all else. The coming debacle will be much less orderly than the one of the 1930s.
Don’t imagine DC‘s ‘public servants’ would perform acts of selfless heroism in a currency collapse. They’ll lack motivation, credibility and legitimacy, perceived or otherwise. One last note. It was rebellions and secessions that finally dissolved the Soviet Union, long in the making, short in the doing. They succeeded because police and armed forces are fractional like bank reserves—not enough by orders of magnitude. It’s said the United States is nearly ungovernable even in times of stability and prosperity. Some states may save themselves in whole or in part. It’s the least happy of unhappy endings for our former republic, but the most likely.
Deflation is historically more relentless than it is swift, typically it takes a year or two for the last holdouts to topple into the abyss. Inflation is historically as patient as rust, festering as a low-grade infection for decades. But hyper inflation goes from hint to full stride like a drag racer, typically blindsiding layman and professional alike. If deflation is a return to honest bookkeeping, hyper inflation is a book burning. And when the confetti blows away and takes its imaginary wealth with it, what remains are those things of enduring value: land, food, houses, clothing, tools, medicine—and gold and silver. History tells us this is so. All of history. In all places.
There’s no predicting these things, but be aware socialist regimes consider any asset subject to eminent domain, including life itself. Government doesn’t give, it takes. It’s foolhardy to rely on government, ever, especially when things get sketchy. Whatever dire events lie ahead and however they unfold, precious metals will have their place, and bullion in the form of recognized coins is likely to have the widest acceptance. It may be wise to make them a part of your discreet holdings before government makes itself a party to every transaction.
Only a complete and irredeemable fool will store coins in a bank or any other off-premise location not under his direct control and personal access. Even the minimally prudent will keep them in a location unknown to anybody whose interest is not identical to his own. Nor will he generate avoidable documentation. We are deeper into the storm than most admit and many can imagine. While our well being is not assured by taking such measures, it’s imperiled if we do not.
Mucks’ Note: You might try a visit the website directly every now and then. ‘Ol Remus tends to throw in bushel baskets of nifty thoughts, comments, quotes and other verbiage (all good) along the edges of his main post. It’s a fun site to just browse.
Please let me know if you enjoy it enough for me to take the time to pick up new posts and bring them over to TBP
MA
