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The Gold Debt Bomb
Our Government Making Rain on America Parade
We’re back from our Ag Tour to report we could have record 2010 crops if higher fertilizer and fuel prices, government programs or torrential rains and floods do not derail it.
As the 136th Kentucky Derby gets ready for an 80% chance of rain, with favourite leading horses dropping out of what could be a sloppy upset race, we note American financial markets became a betting parlor instead of engine for real economic development and growth.
This means higher profits for companies delivering what real markets want.
It may mean the end of false demand created by Bank credit lines, government programs and Madison Avenue.
http://www.sportsmemo.com/blogs/view/?blog_id=4188
Things are so wild at Churchill Downs, fillies and grey horses are gaining promising headlines. (Only four fillies ever won the Derby.)
Betting on a grey horse for a grey day has to be the ultimate hype over hope and substance.
http://www.ajc.com/sports/derby-devil-may-care-506368.html
Meanwhile, our thoughts turn to another hype, that of perpetual deficit war using ghetto farm kids as IED fodder. America, once the home of the brave and land of the free, rained destruction on Dark Age Crusade tribes that government media headlines described as a noble pursuit while disguising broken economies and promises.
May 2nd, 2010 at 12:43 am
90% change in adjusted monetary base is a measure of the rate of change, no? it is still positive, meaning that base money is still expanding even if at a significantly slower pace.
appreciate the blog. thank you!
May 3rd, 2010 at 6:51 am
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1id=AMBNS&s1range=10yrs
90% decline?
May 4th, 2010 at 1:06 pm
A few – thanks for the query/comment that more than a few may have.
You are correct the monetary base is still increasing, albeit at a drastically reduced pace, from over 115% to 20%. The deceleration of the monetary base suggests the Fed may think the worst is behind us.
With a money multiplier (M1/MB) less than 1, currently at 82.5%, the broader money supplies and economy are still contracting relative to the monetary base.
Your link did not show any graph.
From the title of the link, perhaps you were referring to the adjusted monetary base for the last 10 years?
Yes, it is still increasing, as the Fed monetary base is the engine of monetary inflation. But the MB deceleration may be a sensitive leading indicator of what is to come.
Here again the link from the post showing the change in the annual rate of change (second derivative) in the adjusted monetary base from about 115% to 12%, closer to -103%, coinciding with what the Fed may think was the end of the recession in 2009:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1id=BASE&s1transformation=pc1
The Gold Debt Bomb post referred to the greater than -90% decrease in the annual rate of monetary base change as a possible sign of accelerating deflation/implosion.
Although today’s -250 loss in the Dow is suggestive, and continuing headlines touting buying dips may confirm the top may be in, skepticism at market turning points may be something the fullness of time may correct.
Having recovered 83%, very few who did not buy in March of 2009 may expect a significant decline from here. In fact, with the aggressive 86% devaluation of the dollar since 2001, despite the money mirage, we are still underwater in real terms since 2000, when deflation to correct Jubilee Generations of Fed inflation gearing began with all assets.
We repeat our unpopular assertion precious metals, seen somehow by the masses as a simultaneous hedge against inflation and deflation, may offer the most profits to the downside here, popular silver down -4% today so far.
When we hear the train a coming, we get off the tracks…
Regards*Rich
May 4th, 2010 at 1:09 pm
PS Here’s the link to the current Money Multiplier:
http://research.stlouisfed.org/fred2/series/MULT
Appreciate your intelligent interest…
May 4th, 2010 at 1:20 pm
a few:
went back and reread the post to find sloppy editing on my part. You are entirely correct the monetary base is not down -90%, It is the annual rate of change that is down -89.6%.
Thanks for an alert eye and agile mind…
May 18th, 2010 at 7:03 am
thanks for the kind words, Rich. meant to post this:
http://research.stlouisfed.org/fred2/graph/?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=630&height=378&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=true&fo=ve&id=AMBNS&transformation=lin&scale=Left&range=10yrs&cosd=2000-04-01&coed=2010-04-01&line_color=%230000FF&link_values=&mark_type=NONE&mw=4&line_style=Solid&lw=1&vintage_date=2010-05-18&revision_date=2010-05-18&mma=0&nd=&ost=&oet=&fml=a
May 18th, 2010 at 2:27 pm
Good chart af, without seasonal adjustments.
Time will tell if it has peaked,
with deflationary price trends and insolvency abounding
everywhere for the great Jubilee Winter cleansing of fiat debt usury…
Regards*Rich