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Author: EddieLuck Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 454774  
Subject: Triffin's dilemma. Date: 10/6/2012 4:00 PM
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http://www.zerohedge.com/news/2012-10-05/guest-post-gold-and...

<<"It was the outcome of an unbelievable collective mistake, which, when people become aware of it, will be viewed by history as an object of astonishment and scandal"
-Jaques Reuff 1972>>

<< Triffin exposed serious flaws in the Bretton Woods monetary system and perfectly predicted its inevitable demise yet his work remains largely ignored and unstudied by today's mainstream economists. This "flaw" became known as the Triffin dilemma, and many believe Triffin's dilemma has as serious implications today as it did 50 years ago. In short, Triffin proposed that when one nations currency also becomes the worlds reserve asset, eventually domestic and international monetary objectives diverge. Have you ever wondered how it's possible that the USA has run a trade deficit for 37 consecutive years?>>

This fairly concise article by Joe Yasinski and Dan Flynn is as macro as you can get, and provides a clear understanding of our present world fiat monetary system that replaced Bretton Woods, and how it is certain to run off the rails just like Bretton Woods did. It posits that the system failure is already underway. Very clear and logical stuff.

Ed.
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Author: loveoldcars Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405425 of 454774
Subject: Re: Triffin's dilemma. Date: 10/6/2012 6:26 PM
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Hi Eddie,

Austrailia has run a trade deficit for over 30 yrs. The 'club-med' countries have been either running an extended trade defecit, or defaulting on it, for time out of mind. I don't see that being the 'reserve currency' country makes any difference. Do you?


Interesting article:
http://www.pimco.com/EN/Insights/Pages/Australias-Second-lar...

rk (long AUD)

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Author: namkato Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405445 of 454774
Subject: Re: Triffin's dilemma. Date: 10/6/2012 11:51 PM
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http://www.zerohedge.com/news/2012-10-05/guest-post-gold-and......

<<"It was the outcome of an unbelievable collective mistake, which, when people become aware of it, will be viewed by history as an object of astonishment and scandal"
-Jaques Reuff 1972>>

<< Triffin exposed serious flaws in the Bretton Woods monetary system and perfectly predicted its inevitable demise yet his work remains largely ignored and unstudied by today's mainstream economists. This "flaw" became known as the Triffin dilemma, and many believe Triffin's dilemma has as serious implications today as it did 50 years ago. In short, Triffin proposed that when one nations currency also becomes the worlds reserve asset, eventually domestic and international monetary objectives diverge. Have you ever wondered how it's possible that the USA has run a trade deficit for 37 consecutive years?>>

This fairly concise article by Joe Yasinski and Dan Flynn is as macro as you can get, and provides a clear understanding of our present world fiat monetary system that replaced Bretton Woods, and how it is certain to run off the rails just like Bretton Woods did. It posits that the system failure is already underway. Very clear and logical stuff.

Ed.
================================================

So, the takeaway is that human devised systems are inherently flawed.

This may come as a shock: they ALWAYS will be.

John Mauldin and Zerohedge and Matt Taibbi and Peter Schiff will ALWAYS have major complaints about something. That is how they make their livings.

The world will ALWAYS be going to hell in a handbasket.

Knowledge of this kind of information will never make it possible for speculators to time the markets on a consistently profitable basis. Never. There is not a SINGLE metar poster who can claim this ability (it makes me laugh that a poster would make a big deal about her stock picks, when it turns out that they only comprise 20% of her investable funds, and the rest is in bonds earning less than 1%; even if her picks beat the indexes, she is still a loser).

Buy assets when they are cheap, with a margin of safety. Nothing else works.

The rest, like the OP, is just noise.

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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405450 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 1:08 AM
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I don't know if it makes a difference, but I can't help but notice that the authors of that article are also brokers of precious metals.

And that their conclusion is to buy gold.

--Peter

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Author: namkato Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405456 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 2:30 AM
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I don't know if it makes a difference, but I can't help but notice that the authors of that article are also brokers of precious metals.

And that their conclusion is to buy gold.

--Peter
================================

you have just identified the tacit predominating them of metar posts

the last bubble was housing; the next one is gold and bonds

the housing bubble broke about four years after it logically should have (in 2004, I thought, this can't go on much longer, and from 2005 on, my bubble calls are WELL documented on the Real Estate Investing Board), so the next bubble will probably feature irrational extremes far beyond what we would otherwise imagine, exactly like RE did

metar provides an excellent venue for spectators watching the current bubbles as they unfold, because we get access to the inner thought processes of the bubble participants: the gold and bond buyers themselves

the driver of these bubbles is psychology, not valuation, and ever higher prices of the bubbly objects only reinforces that psychology, which is why the scope of the irrationality is indefinite

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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405469 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 9:34 AM
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Have you ever wondered how it's possible that the USA has run a trade deficit for 37 consecutive years?>>

nice try.....it is called supply side economics......

Dave

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Author: EddieLuck Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405474 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 10:50 AM
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<<Australia has run a trade deficit for over 30 yrs. The 'club-med' countries have been either running an extended trade defecit, or defaulting on it, for time out of mind. I don't see that being the 'reserve currency' country makes any difference. Do you?>>

No, it's the same thing in any country. Owning the world's reserve currency just enables a greater degree of excess, and makes it possible to put your country in an even worse position, and drag much of the rest of the world down with you. Who could bail out the US?

There are movements emerging around the world promoting alternative fiat monetary systems but they all have the same Achille's Heel in that they all require responsible people with pure hearts and consistent altruistic purpose to watch over them. That would be OK for say the baseball commission because it's only a game, but only gold money works for the world financial system because it is by its intrinsic nature incorruptible and does not need good shepherds to watch over it. Greed and fear do the trick just fine with gold money.

Ed.

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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405478 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 11:01 AM
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Who could bail out the US?

here comes Truman's 92%.......so the other 99% can pay less in taxes.....

Dave

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Author: EddieLuck Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405483 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 11:46 AM
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<<I don't know if it makes a difference, but I can't help but notice that the authors of that article are also brokers of precious metals.

And that their conclusion is to buy gold.>>

Large precious metal dealers commonly commission writers to produce pro-gold articles and publish them where they can. The article was a gold ad. Very many gold articles are.

I used to read the articles at gold-eagle for a decade or more, marveling at how biased they were. Towards the end of the 'nineties they remained just as biased, but started making a lot of good sense. That is, they were able to produce good, logical pro-gold articles because circumstances had changed and gold actually was by that time a good investment. That's how I got into gold and silver.

Jim Rogers' persuasive arguments for commodities during the same period reinforced the case for gold, as a proxy for the undervalued commodities complex as well as a pure play on monetary folly. Rogers was of course also "talking his book".

So you are right to be suspicious of the author's motive in the case of this article: doubtless he gets paid to produce pro-gold stuff. Articles like this (that is, probably most articles) must be judged on the worth of their reasoning, rather than on who's paying for them. Think of the author's commercial motivation as an enabler for the dissemination of information that you might otherwise not receive. Writers have to make a living after all. Never believe what you are told though unless you see the logic in it. If you assume that everyone is lying for their own benefit until they prove otherwise, you will cut a smoother path through the financial landscape.

Good luck,

Ed.

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Author: yttire Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405485 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 12:09 PM
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Their conclusion is to buy gold.

I would think assets that actually produce value (land, property, real estate, and companies that create goods) would be better than gold, which is subject to things that have nothing to do with creating value.

If you read "Last Resort" as the author watches his parent survive through and then thrive in an extreme inflationary state- would his parents have been better off buying real estate (as they did) or gold?

In that case, real estate. It feeds you as it shelters others. Gold is only the hope that someone else will want it more later.

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405495 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 3:27 PM
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I don't know if it makes a difference, but I can't help but notice that the authors of that article are also brokers of precious metals.

And that their conclusion is to buy gold.


In my opinion, the boom in gold is at least temporarily over, but it hasn't definitively hit the peak before a slump. So the price of gold will be more or less steady at least until after the US election and probably through the end of the year.

My rationale: I sort-of-listen to the TV while DW is watching it. I haven't heard many commercials encouraging people to sell their gold lately. On the other hand, I also haven't heard many commercials encouraging people to buy gold as an investment. These commercials are aimed at the stupid money, so if there's a clear preponderance and surge on one side or the other, you probably should do the opposite - and at the moment there's hardly any of either side.

(Rigorous analysis? Try the door down the hall.)

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405504 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 4:52 PM
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So you are right to be suspicious of the author's motive in the case of this article: doubtless he gets paid to produce pro-gold stuff. Articles like this (that is, probably most articles) must be judged on the worth of their reasoning, rather than on who's paying for them. Think of the author's commercial motivation as an enabler for the dissemination of information that you might otherwise not receive. Writers have to make a living after all. Never believe what you are told though unless you see the logic in it. If you assume that everyone is lying for their own benefit until they prove otherwise, you will cut a smoother path through the financial landscape.

How to tell if an investment advisor or celebrity investor is talking his book:

If he's awake, he is. Whatever he's saying (or is allowing to stand without challenge from him), it's good for him if you believe it and act on it.

However this does not automatically mean it would be bad for you.

Particularly in the case of people who always say the same thing: like a broken (non-electronic) clock, it's sometimes right.

(There's a webcomic I read where one character, the principal owner and chairman of a large department-store chain, has a reputation for being ruthlessly manipulative... but not for hurting people through her manipulation. She manipulates people into doing things that benefit her and/or her friends, and also benefit them.)

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Author: EddieLuck Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405513 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 5:56 PM
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<<I would think assets that actually produce value (land, property, real estate, and companies that create goods) would be better than gold, which is subject to things that have nothing to do with creating value.

If you read "Last Resort" as the author watches his parent survive through and then thrive in an extreme inflationary state- would his parents have been better off buying real estate (as they did) or gold?

In that case, real estate. It feeds you as it shelters others. Gold is only the hope that someone else will want it more later. >>

In the typical currency crisis, with its associated monster inflation, gold outperforms real estate and stocks as the crisis develops and for good reasons. The best outcome belongs to the investor who owns gold going in, and comes out at the end with real estate or stocks bought when their real value reaches its low point. Remember, real estate income depends on tenants being able to pay. Many tenants, residential and commercial, can't pay the rent during crises. Since real estate is typically leveraged, real estate owners have great difficulty paying their loan coupons, and that brings a lot of real estate onto the market when things are at their worst. That is the time for the investor with gold to deploy it for its intended purpose: to buy things when no one else's money is working.

I remember seeing a photo of a beautiful class A type five story office building for sale in downtown Buenos Aires for less than a million US dollars at the end of their last little screwup. It had tens of thousands of square feet in rentable space.

Rental real estate in the best locations that is fully paid for can keep the wolf from the door just fine as long as you don't have to sell it before its real price eventually recovers. It depends, as always.

Ed.

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Author: mauser96 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405515 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 6:54 PM
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EddieLuck,are you referring to the book "last Resort" by Douglas Rogers?

With enough upheaval owning real estate just puts a target on your back. Somehow I don't think owning an office building did much good for the owners in 1918 Russia. Another trouble with real estate is that it is very illiquid.

But you make some excellent points.

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405516 of 454774
Subject: Re: Triffin's dilemma. Date: 10/7/2012 7:10 PM
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metar provides an excellent venue for spectators watching the current bubbles as they unfold, because we get access to the inner thought processes of the bubble participants: the gold and bond buyers themselves

This presupposes that the observer has left their own biases at the door before coming in to critique how everyone else is wrong but themselves.

I happen to think that certain posters are indeed sign posts for when a mania is close to reaching a peak.....those who have told me for years that I've been wrong to accumulate gold and then, when I announce I'm starting to sell, are equally energetic in trying to convince me that I'm wrong to do so, that used paper with used ink on it will never have value again.

I wonder which folks that would be?

Poz

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Author: rubberthinking Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405539 of 454774
Subject: Re: Triffin's dilemma. Date: 10/8/2012 9:46 AM
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I happen to think that certain posters are indeed sign posts for when a mania is close to reaching a peak.....those who have told me for years that I've been wrong to accumulate gold and then, when I announce I'm starting to sell, are equally energetic in trying to convince me that I'm wrong to do so, that used paper with used ink on it will never have value again.

I wonder which folks that would be?

Poz


Poz,

we all know the top was in last year......for gold.....

http://stockcharts.com/freecharts/gallery.html?$GOLD

with a weekly chart like that it takes some steel to make a call like that.....but it will play out and one of us wont be happy.....

Dave

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Author: PosFCF Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 405545 of 454774
Subject: Re: Triffin's dilemma. Date: 10/8/2012 10:30 AM
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with a weekly chart like that it takes some steel to make a call like that.....but it will play out and one of us wont be happy.....

I don't see either of us being unhappy at whatever the outcome. You have no skin in the game by your own position so why would you be unhappy if gold ran to some astronomical number? My position is up so far in dollar terms, that gold would have to go below $700/oz for me to lose any money and I'd be out before that would happen.

Don't mistake the fact that I see only one outcome for the fiat regime as one of the diehard grasping my bullion until it is pried from my cold, dead hands. It is protection for me, like bonds used to be before the central bankers started buying bonds to ensure low interest rates.

With the major central bankers either committed to printing currency as fast as possible or in buying gold for the day when the fiats collapse, the future for the shiny metal has never been brighter. In fact, what appears to be happening is a huge wealth transfer from the OECD countries to the ASEAN and BRIC countries and one measuring stick of that transfer is the growing stockpiles of gold in the latter.

Since you like the weekly view, I took the chart out to the beginning of this bull and kept the periods weekly. The correction that just ended didn't even beggin to approach the severity of 2008-2009. Corrections are healthy in the stronger bull markets. It is when things get parabolic that one has to become a bit more alert.
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&yr=12&...

Poz

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