MP3: Discussion with Jay Taylor taped October 7, 2014.
Topics
1. Using US Bureau of Labor Statistics (BLS) CPI inflation method from
1980 as at www.shadowstats.com, real
economy is in decline
Even using the understated CPI figures of today, the economy is experiencing
very modest growth.
According to the Goldman Sachs index of global leading indicators
the global economy is decelerating toward contraction http://www.zerohedge.com/news/2014-10-01/gold...firmed-slowdown
2. Austrian School of Economics theory of 'time preference'
- Higher interest rates required to pull economy out of post credit-binge
economic slow-down through (1) clearing excess debt (debt burden and cause
of economic distortion) and also (2) finance only highly productive enterprise
that can clear higher interest rate hurdle and generate high returns in the
near term
- Easy credit policies such as Quantitative Easing merely capitalize the
Too Big To Fail (TBTF) banks and lending at low interest rates finances inefficient
enterprise continuing prior easy credit economic distortion.
- Higher interest rates focus financing of productive enterprise on only
capital projects that can contribute in the near term and give high returns
- this then helps pull the economy out of slowdown as in early 1980s
- Secular low interest rates result in continued slow / non-growth and does
not clear bad debt from economy resulting ultimately in economic decline
and currency failure
3. Historically stable debt levels at ~ 150% of GDP.
- Wall Street Journal in 2013 estimated global debt at $223 trillion or 313%
of GDP target="_blank" http://blogs.wsj.com/economics/2013/05/11/...-at-313-of-gdp/
- US current Z1 flow of funds credit market debt at $58 trillion or ~ 340%
of GDP
- Global excess debt of $114 trillion
- US has excess debt of $32 trillion
4. TBTF banks are levered 15:1 and will not allow organized write-down
of outstanding debt as writing-down their assets by more than 6.7% would result
in bankruptcy of the TBTF banks that control the economic and monetary system
and central banks
Larry Summers paper in 1988 with Barsky re. Gibson's Paradox found that rising
rising interest rates associated with rising gold prices - Summers had awareness
of inter-relationship of gold and interest rates
5. If gold is suppressed then that would allow loose monetary policy
to be effected and a series of economic bubbles while gold and interest rates
kept low.
1991 J. Aron & Co. of Goldman Sachs given first "bona fide hedging" exemption
to allow a US dealer to speculate in commodities
Summers and Robert Rubin (former Chairman of Goldman Sachs) joined Treasury
in 1993
Dimitri Speck's statistical work shows strong gold price intervention starting
in 1993 on the Comex:
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http://seekingalpha.com/article/2...the-gold-cartel
http://www.safehaven.com/artic...or-dodge-part-1 target="_blank"
http://blog.milesfranklin.c...acular-analysis
Gold intervention through (1) NY Comex virtual gold trading and (2) LBMA trading
of "unallocated" gold (virtual gold) trading on LBMA where 85% of daily gold
trading volume occurs. 200 M oz. per day traded in London
Shutting down the golden inflation warning system by rigging the gold price
has the global impact of rigging interest rates worldwide as gold is a globally
traded asset.
- Loose monetary policy can be run without impacting gold price when paper
gold traded in London & Comex as well as BIS coordinated gold leasing
from central banks
- Results in excess debt and speculative bubbles globally - we ultimately
face collapse of the global debt market inflated by the manipulation
of gold allowing gross distention of the global debt markets
Need higher gold prices to stop flow of gold (wealth) out of the West as well
as restructuring of debt markets
6. There will be no recovery with low interest rate policy. Only
bubbles and ultimately currency failure.
John Exter - Exter's pyramid shows end result is deflationary (paper asset)
crash with gold going to extraordinary target="_blank" levels
http://en.wikipedia.org/wiki/ target="_blank"John_Exter
http://www.goldmoney.com...-of- target="_blank"sound-money
http://www.goldmoney....S target="_blank"EASONS-PART-II
http://www.goldmon...easons-part-iii
7. In summary - Low interest rates and intervention in
markets prevents normal market function of gold market and flow of physical
gold from primarily paper Western gold markets to Global physical gold markets.
Because London LBMA and NY Comex markets levered 100s:1 virtual gold : physical
gold, will be no physical gold available in crisis; even now shortness of physical
gold is appearing
Gold market intervention facilitates the ultimate extraction of wealth from
the West before currency crash or reset.
