Gold Backwardation vs Hyperinflation vs Hyperdeflation: What are the differences?

Permanent gold backwardation is the sudden withdrawal of all sellers from the physical (cash) gold market. So you wake up one morning to find that there are plenty of BIDS, but zero ASKS. In a flash, the entire quadrillion dollar bond and derivatives pyramid is no longer exchangeable for a single gram of physical gold, because the gold futures market is no more. The world’s monetary payment system just evaporated. Now it’s all about barter. Think: cash-and-carry (but cash = physical gold, or something highly marketable). 

While “barter” may sound cool to all you hipsters, we are talking about a global catastrophe.

Backwardation is the predictable denouement of the United States’ serial defaults on the gold-redeemable US Dollar. What is the value of a broken promise? Zero. Backwardation puts an exclamation point on that fact.

Continue reading Gold Backwardation vs Hyperinflation vs Hyperdeflation: What are the differences?

Portrait of Deflation

We are careening into the Black Hole of Zero Interest Rates (and zero capital), unless permanent gold backwardation short-circuits the process and forces the world to rebuild from barter.

Or we could just open the Mint.

The Black Hole of Zero Interest
Graph showing 30+ year decline in US 10YR Treasury bond yields

Avert your eyes or grab some popcorn. Bond bears will be gored.

Can anything other than gold coin settle real bills of exchange?

Max Photon’s question to Antal Fekete and FOFOA

(last modified: 2013/09/06)

Dear Prof. Fekete and FOFOA:

It appears you two are in direct opposition on a fundamental issue concerning monetary gold.

I would like to offer the opportunity for the two of you to present to the public your best, cleanest, most concise* responses to a carefully selected question that I believe pierces the hearts of the Keynesian, Austrian, New Austrian, and FreeGold schools.

Can anything other than gold coin settle real bills of exchange?

Continue reading Can anything other than gold coin settle real bills of exchange?