http://www.economic-undertow.com/2012/07....

Can someone break this down for me. I have long expected that the peg will eventually completely break down but expected that it will be of the choice of the Chinese government.

So is it actually:

1. EZ implements capital controls
2. EZ bank runs
3. Collapse of Euro
4. Euro can't buy enough oil anymore, EZ further collapses
4. China GDP collapse
5. Tide goes out, China tries to kick can with central bank shenanigans
6. Chinese capital tries to escape
7. Chinese capital controls instituted
8. Mad rush for US dollars in China already on top of Euro collapse
9. Noone wants yuan, speculative attacks begin
10. China gets starved for oil because it can only be purchased in dollars anymore
11. Chinese economy ****naps, growth not possible
12. Chinese sell off Treasuries and other USD denominated assets to raise Dollars
13. USA Government TEOTWAWKI
14. China moves on mideast and/or siberia
15. WWIII

That about right?

Capital controls, not inflation, is what I think will make gold and silver skyrocket.

Precious metal is one of the few ways to have your wealth off the grid, so it cannot be confiscated to buy cell phones for the Gimme Free **** Army, pay overpromised government pensions or bail out criminal banks.

Hey Boz Do you really think gold/silver/precious metals are safe from .gov? Not picking on you here, just asking if you really, really believe that?

I do not believe that. I think .gov will at some point ask people to turn over their gold, just like they did last time. And if you don't turn over your gold, you won't be able to get rid of it, maybe to a jeweler? And as jewelers will be the only ones that can legally buy gold to make jewelry, I see gold going down, down, down. But before it goes down, I see it going to the moon.

As people are convinced that precious metals will save them... hell, people thought the dollar would always be good, haven't noticed the way it has inflated over the years or anything.... Their pay may not have gone up with the inflation but they still got a raise and thought they were doing good.

Dreams are good. It's all in the perception. And my perception is....

I no longer trust what they say, trust what they do, trust anything about them. Hell, at this point, even if I could see they had on green pants and told me they were green.... I would be looking around for the green light that is shining on those white pants making them appear green.

I say I own property but I am also prepared to leave if I have to. They will probably take me out, my small problem with authority.

I've lived on the streets. It's not as hard as it seems. The worst part is no climate control and no shower. Sweating in the heat makes you stink and swimming in the river in the winter, well, you stink because you ain't a seal and have no blubber. You get used to the stink and who cares about what others think.

One can carry a fortune through customs in gold forged to look like common things like belt buckles, pens, keys, suitcase hardware etc. Or you can bury it and wait out the insanity.

They caught someone recently carrying gold bars into Switzerland from Italy. That's just an incident that indicates a deeper flow of assets that are moving out of Europe into safer havens. However, if the Free **** Army demands asset confiscation to pay for cell phones, HBO and crack cocaine, well, your bank account and recorded assets are going to get taxed heavily. If you haven't already lost them when the bank holding them went under.

Don't trust banks either. My Grandma did that to me when I was a teenager. She lost money in a bank during the depression when the bank closed up. No money was returned to any depositor. I'm not even sure I trust money anymore.

I've seen other countries take their money to the trillion dollar bill and I forget which country it was, in Africa?, that money inflated at such a fast rate that you didn't keep money, you spent it as soon as you got it on something, anything... Take dollars and exchange them without your input wanted or needed. I see .govs doing what they want.

I think some people thought they would wait it out too the last time gold was 'turned in'. I know some did not turn in their gold pieces and buried them. But they could not do anything with them for what? around 70 years or more. http://www.the-privateer.com/1933-gold-c....
That's a lifetime which I don't think I'll survive.

I think that this has all been planned a few generations ago. I don't think the Chinese are the only ones with the long range plans. It's amazing what otherwise intelligent people will believe. I don't know what TPTB are thinking. I do know if we, the common peon, can see it, they certainly have more info and plans than they are telling us and it's not a secret to them.

I think you can move your stuff any where you want it but what I have learned through the years is... If it ain't on your person, you don't really possess it. You can be moved, forced or not, and somehow never get back..... Imagine being a Jew in Germany or a Cherokee on the Trail of Tears. Neither of them thought it would go that far, they were sheep to slaughter and they never went back to collect their treasure if any survived the looting anyway.

I think moving your possessions into another country when this entire system is going to crash is insane. And if you are smart, you will be with others just like you. You will not want to be the 'odd' man out. Diversity only works when things are going really well and even then it's a constant battle. Just going to intensify in a collapse I would think.

I think the FSA was created for the collapse. They will cause a commotion and distract most people. Because they have been groomed, they will have to be put down which will give .gov an excuse to clamp down everywhere. Without them, the crackdown might not be possible. Because the rest of the country is civilized, as long as they have food and shelter and their kids are warm, they will go along with the plan, just like the average German and American did back in the day. Still do today....

If you think about it. Gold was illegal and they started the 'great' experiment of social security and stuff around the same time. Slow boil..... I'm thinking that a lot of people will just commit suicide. Death is easier than living after all......

Quote:

1. EZ implements capital controls
2. EZ bank runs

The actual sequence so far has been (and rightfully so)

1. EZ bank runs
2. EZ implements (limited) capital controls
3. Euro becomes less and less fungible

The key is "so far" - it remains to be seen how long this paradigm holds

Personally I don't believe my wealth store should have a margin call attached to it so I presently don't own gold. But that's me, lets consider that I am wrong

As the Euro becomes less and less fungible then either/or:

Euro collapses
Gold becomes more fungible than the Euro

I personally don't see gold becoming more fungible first (if ever), thus gold will not have a place until well after the collapse.

On a related note it should be mentioned that massive printing has not stopped bank runs or (some amount of) capital controls from happening so far. Does this imply high/hyper inflation odds are greater (Euros become worth less)? Or does credit money evaporate first, creating a deflationary environment even as Euros become less fungible?

Is it even possible to implement true capital controls? Capital controls so far have targeted just sheeple. Banks and large corporations have no controls whatsoever as the TARGET2 channel has remained wide open so far. How does one determine the difference between TAREGT2 transfers needed simply for day-to-day operation vs. "getting the hell out of Dodge" transfers? Is it even remotely possible to implement true capital controls (via TARGET2) without bringing commerce to a screaming halt? I don't think so; the question then becomes how much fungability will be lost before it just collapses (assuming it actually collapses)?

And one last thought...
Q. What's the best way to actually increase fungability within the EZ once things get really bad?
A. Leaving the Euro and establishing your own fiat

When do you sell gold? Before this happens? Right after it happens? Or after the dust has settled and the fiat crosses have stabilized? Can holders of gold wait it out? Is the answer the same for Germans as it is for Greeks (likely no)? What happens the the "value" of gold in the meantime? Frankly I do not know, just askin'

Quote:

4. Euro can't buy enough oil anymore, EZ further collapses

I question whether we actually get to this step as it presumes that the EZ remains intact. More likely scenarios (there are many, I'll pick two as an example) IMHO are:

1. Germany leaves the EZ and adopts the DM

and/or

2. Greece leaves the EZ, adopts the Drachma

In #1 Germany has a strong current account surplus going into the dissolution and a market perception of strength. It likely gets all the oil it needs. You can absolutely count on a German exit happening before it cannot get oil. #2 is another matter altogether. They have a horrible current account deficit and uncompetitive labor coupled with a fine history of trashing its fiat with uncanny efficiency. Greece likely doesn't get oil and hell freezes over there.

There are other scenarios being floated in the blogsphere like a split, "north" vs. "south" but I think the scenario is always the same - some continue to get oil and some don't.

One last last thought... China as Goldilocks. Does China remain firmly pegged to the Dollar knowing full well that the consequences are walking away from European market share? Does it remain offically pegged, but move the peg aggressively to maintain some competitiveness in Europe (at the expense of giving away a little in the US)? Does it throw in the towel and float? Certainly China's economy gets hammered either way, but does the world dump Yuan en mass? I think not.

1. EZ implements capital controls
They always have in one way or another.

2. EZ bank runs
Already started.

3. Collapse of Euro

4. Euro can't buy enough oil anymore, EZ further collapses.
Not so sure about that. They are bringing online other energy sources at a fast pace. Their energy policies look like they are leaning toward other sources. It will take them years to accomplish it but they are going for it.


4. China GDP collapse.
I would think it's already collapsing. It's customer base is broke and the Chinese are probably overrun with junk. What they produce and can not sell to others goes where? An outlet store in China? A scratch and dent store? It's always seemed to be cheaper to buy junk where it's made. Transport is what seems to cost ya. I hear the Chinese save their money. I also hear they are buying more and more cars and that will make for more travel in farther away places so maybe tourism will take off in China? But they don't take vacations do they? Things are going to change in China but I have no idea which way the wind blows there. Ben???

5. Tide goes out, China tries to kick can with central bank shenanigans.
Just like everyone else.

6. Chinese capital tries to escape.
They are already I've heard. http://www.forbes.com/sites/gordonchang/....
http://www.telegraph.co.uk/news/worldnew....

7. Chinese capital controls instituted.
You mean to say more controls institued.

8. Mad rush for US dollars in China already on top of Euro collapse.
Not sure about that. China is starting to trade to other countries with the yuan. The Chinese seem to be buying gold too. And the rest of the world is not sure the dollar is a safe investment either I don't think.

9. Noone wants yuan, speculative attacks begin.
Don't think this will happen.

10. China gets starved for oil because it can only be purchased in dollars anymore.
China is making sure that does not happen. They have made arrangements with Iran and Venezuela to bypass dollars and both those countries have lots of oil. China is also talking to Australia about bypassing the US$. http://www.ft.com/cms/s/4b6c4ab6-7404-11....

11. Chinese economy ****naps, growth not possible.
They will try Anything to keep the peace, even killing their own people, just like all other .govs.


12. Chinese sell off Treasuries and other USD denominated assets to raise Dollars.
This is already happening.

13. USA Government TEOTWAWKI.
Still waiting but not having much hope. They seem to be able to defy all the odds as we sit back and watch with fascination. I don't see anyone doing ****, not even me...

14. China moves on mideast and/or siberia.
What?!? Naw.... Don't see that. If anything I see China becoming allies with the source of their oil. And as they are going to the ones that are the USA/NATO are war-mongering on..... I see them being 'on the other side'. I do not see China as being imperialist. I don't think China wants to 'take' the place by force. They have found a better way, through trade. Saves them a lot of propaganda work.

15. WWIII....
Yeah, unfortunately, I can see another war. WWW3.. In my lifetime, the USA has always been at war. ALWAYS. I can not remember a time when we were not in some other war-torn country shooting off our guns... The locals and names change but it's the same old thing. I don't think they called any of them wars. Police actions or humanitarian missions. Whatever... Ask anyone that went to one if they thought they were at war. Hell, we lost lots of guys in 'Nam, another police action, not a declared war BTW. The populace got tired so they just changed the tactics of the 'police actions'......

The weapons got more sophisticated and medical got better and we don't see or hear of the locals that die in these affairs. They got better at hiding what they are doing. So good in fact, that I heard a retired high-rank (forget what he was, high general something) guy say that the USA has 2 groups of people, the military and the civilians. And the experience was completely different than when the entire country was involved in the engagements of the military.

Some USA towns are starting to have parades for the vets and all. Little late of course. And I protested the 'Nam engagement and on down the line. I don't think they are heros. I think they are brain-washed along with most of the USA populace. I also think they willingly signed on the dotted line for the paycheck. They're getting paid for a job. I do not have a good opinion of the military and I grew up an AF brat....

Quote: China as Goldilocks. Does China remain firmly pegged to the Dollar knowing full well that the consequences are walking away from European market share? Does it remain offically pegged, but move the peg aggressively to maintain some competitiveness in Europe (at the expense of giving away a little in the US)? Does it throw in the towel and float? Certainly China's economy gets hammered either way, but does the world dump Yuan en mass? I think not.

I do not think the yuan will replace the dollar. I do not think gold will replace the dollar. I do not know what will replace the dollar but I think someone has it planned. I do not think it will be what anyone expects. I think money is heading toward an electronic type of system if they can keep the world humming along. I'm not sure we will collapse back to the stone ages anymore. Could if some fluke like a plague that takes out half the population or something. But barring a major, worldwide famine or something, I don't think we will collapse to dirt. Nothing would surprize me anymore though. Sometimes I wish I weren't so cynical about affairs of the world.