UK is now "THINKING THE UNTHINKABLE" (with no Gold Backing!)

Remember how the Richard Nixon disassociated the USA from the Gold Standard? The rest of us eventually did the same.

Seems they're talking about Printing More Money again ... on the Financial Times of all places too ... money which has no Gold Backing as security. Witness the end of the world as we all know it... Might be good news for those with physical gold.

Read below if boring news articles interest you...

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Time to Think the Unthinkable and Start Printing Again
Published: Friday, 30 Sep 2011 | 1:02 AM ET

http://www.cnbc.com/id/44726342




It is the policy that dare not speak its name: the printing press. The time has come to employ this nuclear option on a grand scale. The alternative is likely to be a lost decade. The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

A recession looms close in the UK and other high-income countries, less than four years after the start of the last one. This would be a disaster for those who would lose their jobs or the young, who would find their hopes of work further postponed.


A big danger for the UK is a sharp fall in house prices, which would threaten the finances of households and banks. A new recession would also shatter fragile business confidence, which would reduce real business investment, still 20 percent lower in early 2011 than before the crisis. That would further delay the structural shifts on which sustained recovery depend. With UK gross domestic product still 4 percent below its pre-crisis peak, this depression would be longer and costlier, in terms of lost output, than the Great Depression of the 1930s, as I noted four weeks ago.

What is to be done? The first task is to abandon what Adam Posen, an outside member of the monetary policy committee, calls “policy defeatism”. As he argued in a new speech: “Throughout modern economic history . . . every major financial crisis-driven downturn has been followed by premature abandonment – if not reversal – of the . . . stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further stimulus.”

Up pops Spencer Dale, the Bank of England’s chief economist, as if on cue, with arguments that the UK’s sharp productivity slowdown indicates a permanent reduction in potential output and its growth. He also suggests that part of the recent productivity shortfall is due to reduced innovation by financially constrained smaller businesses. He offers no evidence for this theory. The striking fact, as Bill Martin at the Centre for Business Research in Cambridge has noted in an important paper, is that productivity slowdowns and output declines have occurred across the board. This makes it likely that the poor productivity reflects weak demand.

It is vital, then, to sustain demand. With fiscal policy set on kamikaze tightening and conventional monetary policy almost exhausted, that leaves “quantitative easing”. Mr Posen recommends a great deal more of it, starting with “a minimum of 50 billion pounds in gilt purchases in secondary markets” though he now boldly recommends something closer to 75 billion pounds or 100 billion pounds, in light of the dire external environment. Lowering long-term interest rates would surely provide at least some benefit.

But Mr Posen recommends two institutional innovations, as well, aimed at enhancing supply: a public bank or authority for lending to small businesses and an institution for securitising loans made to small and medium enterprises. An alternative would be for a new agency to take the tail risk on normal bank lending to SMEs. That would be a far more sensible way for the government to promote credit to small business than general guarantees to banks.

Personally, I would favor the “helicopter money”, recommended by that radical economist, Milton Friedman. This would be a quasi-fiscal operation. Central bank money could pass via the government to the public at large. Alternatively, the government could fund itself from the central bank, directly. Better still, the government could increase its deficits, perhaps by slashing taxes, and taking needed funds from the central bank. Under any of these alternatives, the central bank would be behaving like any other bank, creating money in the act of lending.

In current circumstances, a policy of direct financing of government by the central bank should recommend itself to monetarists and Keynesians. The former have to be worried by the fact that UK broad money (M4) shrank by 1.1 percent in the year to July 2011. The latter would have to be pleased that governments could run still bigger deficits without increasing their debt to the public.

Some will argue that a policy of direct financing by the central bank must be inflationary. This is wrong. No automatic link exists between central bank money and the overall money supply. Above all, the policy would be inflationary only if it led to chronic excess demand. So long as the central bank retains the right to call a halt, that need be no serious danger.

A far greater threat is that a prolonged period of feeble demand would undermine supply, impoverish the country and bequeath a legacy of huge public debts. The big risk, in short, is now of a lost decade. Act now. That must not happen.


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ALSO: New Zealand's Credit Rating was just downgraded from AA+ to AA by Standard & Poor.

http://hosted.ap.org/dynamic/stories/A/AS_NEW_ZEALAND_CREDIT_RATING?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-09-30-06-40-56

I do not pretend to be sophisticated as far as finances go
and because of that, I have a question.
Where did all the money go?
Or, it wasn't there in the first place?
or what...

Flakmagnet wrote:I do not pretend to be sophisticated as far as finances go
and because of that, I have a question.
Where did all the money go?
Or, it wasn't there in the first place?
or what...

Same here, I just figure there are a lot of fat cats around with lots of money that doesnt belong to them, also know as thieves.

"it wasn't there in the first place"

This is quite correct Flak, it's all just figures on a computer, like a score card.

If a bank has $100.000.00 it is allowed to lend $1000,000.00.
If it has $1000,000.00 it can lend out $10,000,000.00.

It works because no one walks out the door with the money!
You borrow a million and it is paid to someone, it is just figures going into his bank account, if he invests it just figures going into the account of whoever he invested with.

It all works well until we stop borrowing, when we can't pay the last loan back it all turns to crap.

Really just an enormous con job.

Eye opening and pretty scary stuff. Makes you wish you never borrowed any money hence had no debt, but how many can claim that luxury? I owe and I need a few kgs of gold to square it all off. Pretty scary as most trips I come back home empty handed except for the pleasant memories I've obtained. Oh well, back to the grindstone again tomorrow.....

You are right CostasDee, I reckon everyone should watch that you tube.

THE Australian share market fell by more than two per cent at noon on the back of a weak lead on Wall Street and fears China's economy could be slowing down.

More than $21 billion was wiped off the value of Australia's top 200 companies.



Mmmmm... Canberra keeps telling us we are doing ok... Frankly I just don't buy it, I think the Australian "feel good bubble" is about to burst...

Rgs HH.

Wonder how much was wiped off a huge number of families...
That bothers me most...us regular folks,
cannon fodder for all the fast buck artists, politico's, bankers, stock market "advisors"...
For all these sharks the worlds citizens are Big Mac Happy Meals, cheap and plentiful.

Flakmagnet wrote:Wonder how much was wiped off a huge number of families...
That bothers me most...us regular folks,
cannon fodder for all the fast buck artists, politico's, bankers, stock market "advisors"...
For all these sharks the worlds citizens are Big Mac Happy Meals, cheap and plentiful.

I have a few shares in CGT a small outfit that is renewing gold mining underneath Ballarat, and around Castlemaine and Tarnagulla, 4 weeks ago I was up 30% (I should have sold ), now I am down 16%, cant sell now Ill lose money.
If I had more spare cash Id buy more.....

It's the food chain thingy... The sharks get the lions share... And so it goes down to the ordinary folks level, us (sardines and such) Then to top it all off we have the lunatics running the asylum down in Canberra telling us we will all be better off by paying for a carbon tax that ensures that billions of $s go off shore to god knows where

I bet drug coys that make anti depressants are making a motza!!!!!!!!!!!!!

Cheers...

Just watched the vid, very very scary, I thought they had deposits to back up the dept, its a just a ponzie scheme just waiting to collapse.

The top 4 american banks have a total asset value of just over 5 trillion dollars but their derivate black pool plays are closer to $532 trillion dollars and some analysts believe it could be more than double this figure. That is leverage at the ratio 1.50 minumum and could be ast high as 1.100. As in some ETF funds for paper gold and silver ie 1 ounce of gold leveraged in the fund 100 times on paper.

It is a house of cards preparing to fall ( it just a matter of when)

Kiyosaki has got out of property and now owns gold, silver, and copper mines. In the video below he and his wife condone protecting yourself with firearms and having a supply of food on hand for what is coming down the line. A far cry from the "Rich Dad" days...

See video Here

explorer wrote:The top 4 american banks have a total asset value of just over 5 trillion dollars but their derivate black pool plays are closer to $532 trillion dollars and some analysts believe it could be more than double this figure. That is leverage at the ratio 1.50 minumum and could be ast high as 1.100. As in some ETF funds for paper gold and silver ie 1 ounce of gold leveraged in the fund 100 times on paper.

It is a house of cards preparing to fall ( it just a matter of when)

That's right, they're calling it the "Quadrillion Dollar Deathstar"

Here is something to make you think. How about the fact that since the banks don't have any real money and they are soooo much in debt, how do you think that they might rectify this small problem?
There is a plan and it is aimed at YOU!
The banks know that we have money in term deposits and savings (not much but) etc etc. If we all went to draw that money out, the banks couldn't pay up.
So what to do?
Banking Crash! Steal the money and reopen the next day! Don't believe me? Well the plan is already in place. Formulated by sovereignty in England and it is going to happen soon. Want proof?
All banks have recieved the consultation document already. Their initial response had to be in by 30th June 2011. Following this the the Banks had to have a detailed implementation plan by 30th Sept 2011. Guess what... The Banks have to be fully prepositioned no later than 2012.
The consultation document is on line (prepositioning for open bank resolution) rbnz.govt.nz/finstab/banking/4335146.pdf but if you can get a copy of June - September Uncensored Magazine (Issue 24) it gives you a lot more info and lots of links to back this up. They don't give a rats ass about you or me. We are no better than rodents that can be sucked dry to their gains.
You can now see why they took guns off us.

This is right on topic to Panther's last post.

I'm not sure why everyone is surprised about whats going on. The proverbial hit the fan here in Australia when Peter Costello (the worlds greatest treasurer or so he thinks) off loaded a hell of a lot of our gold stocks. His reasoning was, the world economy no longer relied on gold as the support for a countries finances. Australia wasn't the only country to dump, and the price hit rock bottom.
The best example of what can happen to the ordinary people, watch a movie called the "Grapes of Wrath". Then you will understand what your country thinks of us, the small people who are expendable.

Panther

Have they got a rough date when all this will occur. I am still getting my head around how they will do it. If the banks crash how will the money disappear and will the loans owing disappear on the records as well??? Can you explain this scenario in a few brief scentences. As the deposits by people are leveraged out at about 100 to 1 anyway. It would not be in the banks interest to crash the system.....

explorer.
The heading of the Article is... Australia/New Zealand Pre-Planned Banking Crash Coming Soon?

I will quote from Uncensored Magazine.
" I suggest you all print off the New Zealand Reserve Bank 'Consultation Document' and read it carefully. You will then pretty well understand the specific time frame in which these momentous events are likely to take place.. what these wicked devils are doing, and what you PERSONALLY can do to protect yourself and your family financially, at least in the short term. Regards 'Author'
The article gives a very good description of how and who is behind it and why, but is too much for me to elaborate on here. I just wanted to bring folks attention to what is going on and would feel remiss if I did not do so.

Further direct quote but I am not the fastest typist.
" As you will see, this amazing document outlines their actual secret plans and time frame in which these scurrilous international banking pirates are plotting to arrogantly "haircut (in other words, "confiscate" most peoples life savings) overnight during a PRE-PLANNED giant banking crash and reopen the banks the following day after having fleeced depositors of most if not all of their lifes savings and cash by "haircutting" their term deposits and savings accounts." end quote. All I can say is DO NOT TRUST ANY BANK. I wasn't even aware that NAB and Westpac were bailed out recently until I read Bytemans link yesterday. Sadly, one of these banks is my bank... erk!
Buy yourselves a safe. They are not expensive.

I'm a great believer in conspiracy theories and anyone who puts their trust in their democratically elected governments needs to think deep. In Australia we have 2 major parties who will govern and if for one minute you think they care about you, then think again. We have that "Great Man" Paul Keating to thank for bank deregulation in Oz, now we pay the banks for the privilege of having our money stored in their vaults. Does anyone remember interest on ya savings. Now the banks are raking in the dough at our expense.
Bit of trivia, my pay goes into the bank Tuesday afternoon but I can't get it until Thursday morning. The bank has nearly 48 hrs to use my money on the overnight markets. Don't for one minute think the Oz government will prop up the banks if it hits the fan.

If anything major happens in the financial markets i believe it will happen between now and sometime within now and the next five weeks. Other wise we will get through 2011. But 2012 will be a whole new ball game again if we get through the next 5 weeks.

THIS JUST IN from this morning's Australian Newspaper:

UK Announced it will now start printing tens of billions of pounds of new money in an attempt to ward off a recession:




Bank of England chief Mervyn King issues stark warning of looming crisis

by: Sam Fleming and Kathryn Hopkins
From: The Times
October 07, 2011 10:17AM



THE WORLD may be confronting its worst-ever financial crisis, the Governor of the Bank of England has warned.

The warning by Sir Mervyn King came as. Britain's central bank announced that it would print tens of billions of pounds in a desperate bid to prevent recession.

Sir Mervyn said the magnitude of the current crisis could well surpass that of the Depression of the 1930s and that the bank had to respond by injecting more money into the economy.

The Monetary Policy Committee, which sets interest rates, voted to create another Stg75 billion ($A120 billion) of electronic money, which will be used to purchase bonds issued by the Treasury in the hope that this will stimulate spending and keep borrowing costs low.

The gambit, which happened sooner than many City economists expected, came after UK growth fell to just 0.1 per cent in the second quarter of the year, leaving the economy perilously close to a fresh downturn.

The Bank said that it would leave its official rate at its historic low of 0.5 per cent for the 32nd month in a row. Traders are now betting that the rate will not rise until 2013.

Sir Mervyn dismissed fears that printing more money would trigger dangerous levels of inflation, saying that Britain's problem was too little money in the economy, not too much.

“This is the most serious financial crisis we have seen at least since the 1930s, if not ever, and we are having to deal with very unusual circumstances but react calmly to this and do the right thing,” Sir Mervyn said. “The right thing at present is to create some more money to inject into the economy.”

Less than an hour after the decision, the European Central Bank defied calls in financial markets for it to cut its interest rate from 1.5 per cent, despite the intensifying debt crisis in the eurozone.

Instead, Jean-Claude Trichet, the bank's president, said that he would pour emergency credit into the zone's stricken banking system.

The Bank of England warned that Britain's economy was being threatened by intensifying strains in Europe.

The Bank of England's initiative was welcomed by Chancellor of the Exchequer George Osborne, who this week hinted that he would like to see the bank recommence its money printing program, known as quantitative easing.

Labour said that the Chancellor had described quantitative easing as “the last resort of desperate governments” when he was in opposition.

Ed Balls, the shadow chancellor, said that the bank's efforts would do little to create jobs and growth and that Mr Osborne should instead ease back on his fiscal austerity plans.

Stephen King, chief economist at HSBC, said that the bank's action was not a magic wand, adding: “It might be better to do something rather than nothing, but I would not hold my breath and think this is going to transform the prospects of the UK economy in any significant way.”

The Times

http://www.theaustralian.com.au/news/world/bank-of-england-chief-mervyn-king-issues-stark-warning-of-looming-crisis/story-e6frg6so-1226160958874

explorer...

why the next five weeks? Interested...

Notice the govt has just lowered the bank garrantee from
1mill to 250,000.Glad I don't have a mill in the bank.

Found gold might be the best way to go?

Alan
Be careful the way i read it was the GFC 3 year limit finishes at the end of this month for the cover. Then the cover is a maximum amount of 250k per each bank. ( so put 250k in each of the big 4 to cover you for the 1 million previously up to in one bank)

But there is a catch in the fine print the new covering of bank deposits to 250k does not start till the beginning of February 2012. ( THAT MEANS THERE IS A WINDOW OF MINIMUM OF 3 MONTHS THE FEDERAL GOVERNMENT DOES NOT COVER THE DEPOSITS IN BANKS).

WHY THERE IS NO GOVERNMENT COVERING FOR THE 3 MONTHS I DO NOT KNOW.

An bullet asked why the next 4 or 5 weeks are dangerous that is what a couple of EX banker mates and a couple of brokers have told me. ( Plus have a look at some of the brokering firms the brokers are leaving for other job....is this the start of something ie the RATS DESERTING THE SINKING SHIP)

Very interesting period coming up.
Lots of convergences on many different of levels.

I think the brokers etc are leaving cause no one wants
to gamb, er ,invest with them anymore so no fees.

According to JSinclair the second biggest group to
loose their jobs in the US in September were in the financial sector.Over 31000.
Govt. was first.

The Bank of America is now refusing to let people close their bank accounts.!! WTF?

http://www.abovetopsecret.com/forum/thread760851/pg1

explorer wrote:Alan
Be careful the way i read it was the GFC 3 year limit finishes at the end of this month for the cover. Then the cover is a maximum amount of 250k per each bank. ( so put 250k in each of the big 4 to cover you for the 1 million previously up to in one bank)

But there is a catch in the fine print the new covering of bank deposits to 250k does not start till the beginning of February 2012. ( THAT MEANS THERE IS A WINDOW OF MINIMUM OF 3 MONTHS THE FEDERAL GOVERNMENT DOES NOT COVER THE DEPOSITS IN BANKS).

WHY THERE IS NO GOVERNMENT COVERING FOR THE 3 MONTHS I DO NOT KNOW.

An bullet asked why the next 4 or 5 weeks are dangerous that is what a couple of EX banker mates and a couple of brokers have told me. ( Plus have a look at some of the brokering firms the brokers are leaving for other job....is this the start of something ie the RATS DESERTING THE SINKING SHIP)

I don't know that you are right explorer!

12 September 2011
FAQ - Financial Claims Scheme for Authorised Deposit-taking Institutions
Key features of the Financial Claims Scheme
The Financial Claims Scheme (FCS) protects depositors through the provision of a guarantee on deposits (up to the cap) held in authorised deposit-taking institutions (ADIs) incorporated in Australia and allows quick access to their deposits if an ADI becomes insolvent.
A permanent guarantee of $250,000 for deposits will be in place effective from 1 Feb 2012.
The $250,000 cap applies per person, per ADI.
All deposits will continue to be guaranteed to $1 million until the new scheme comes into effect on 1 February 2012.
Existing term deposits which existed on 10 September 2011 will be covered up to $1 million until 31 December 2012 or until the deposit matures — whichever occurs sooner.
The Treasurer announced the details of the revised scheme on 11 September 2011. Please see the Treasurer’s media release for further details.

Inhere

Thanks one article i read did not have that underlined sentence for some reason ( maybe to put a bit of fear out there) another article i read had it much the same as yours.

Once again thanks that clears that up.

If anyone get a chance watch Jim Courter on Lateline ABC on now.