Chris Martenson
EuroBonds: All eyes continue to be on Europe. What are the odds of the proposal to issue Eruobonds passing? If passed, do these have a snowball’s chance of helping the situation? 
Europe: Where to from here? 
Why Commodities are the New Safe Haven
Wednesday, September 7, 2011
Executive Summary
- Prices have already risen dramatically with the money supply.
- An increase in money velocity will ratchet up the trajectory in prices dramatically.
- Are we likely to see more or less moneyprinting from the Fed?
- Why commodities, beyond the precious metals, are becoming the next safe haven.
Part I – Commodities Seem Set to Rocket Higher
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Why Commodities are the New Safe Haven
Condition #3: Preference To Hold Money Persists
What does one do with Money of Zero Maturity (MZM)? Well, you can save it in a money market fund, keep it at your bank, or you can spend it. The rate at which it is being spent, relative to the economy, is measured in terms of its velocity.
The faster people are spending the same money chasing a relatively fixed amount of goods and services, the higher the rate of inflation goes. The mental image you should have here is someone in Germany in the 1920’s being paid with a wheelbarrow full of cash that they push as quickly as they can to the nearest store (literal veloicty of money, as it were).
Right now, the velocity of MZM is near its historic lows (only recently set in 2009), keeping inflationary pressures relatively low — for the time being.
Why Commodities are the New Safe Haven
PREVIEWWhy Commodities are the New Safe Haven
Wednesday, September 7, 2011
Executive Summary
- Prices have already risen dramatically with the money supply.
- An increase in money velocity will ratchet up the trajectory in prices dramatically.
- Are we likely to see more or less moneyprinting from the Fed?
- Why commodities, beyond the precious metals, are becoming the next safe haven.
Part I – Commodities Seem Set to Rocket Higher
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Why Commodities are the New Safe Haven
Condition #3: Preference To Hold Money Persists
What does one do with Money of Zero Maturity (MZM)? Well, you can save it in a money market fund, keep it at your bank, or you can spend it. The rate at which it is being spent, relative to the economy, is measured in terms of its velocity.
The faster people are spending the same money chasing a relatively fixed amount of goods and services, the higher the rate of inflation goes. The mental image you should have here is someone in Germany in the 1920’s being paid with a wheelbarrow full of cash that they push as quickly as they can to the nearest store (literal veloicty of money, as it were).
Right now, the velocity of MZM is near its historic lows (only recently set in 2009), keeping inflationary pressures relatively low — for the time being.
I’ve been asked to comment on the work of a few noted deflationists who are calling for a top in commodity prices here. Their argument is pretty clear cut: Because inflation is a function of available money plus credit (their definition), and because credit has fallen, deflation is what comes next. When looking about for things to deflate in price, commodities are an obvious candidate for attention because they have risen so much over the past decade.
One of the key tenets around here at PeakProsperity.com is that you need to trust yourself. The ‘advice’ we receive from Wall Street and its financially captive press about what we should do with our money is really not advice; it’s marketing.
Wall Street makes money by selling stocks and bonds to whomever: pensions, retirees, moms, pops, young workers, endowments…it doesn’t really matter. The name of the game is for you to buy and then hold onto those purchases.
So when the markets hit the skids, you see endless ‘articles’ offering this very (un)helpful ‘advice’:
With the recent headlines and stock market volatility, you may be wondering if we are seeing a repeat of the market activity of 2008. This is one of the hardest parts of being a long-term investor. It’s easy to stay the course when markets are rising. It’s harder to stay the course during declines and view them as potential investing opportunities. But that’s what being a long-term investor is all about.
Remember: Stay invested – A diversified portfolio of quality investments is a sensible strategy during volatile markets.
(Source – AG Edwards client letter)
Actions Speak Louder Than Words
PREVIEWOne of the key tenets around here at PeakProsperity.com is that you need to trust yourself. The ‘advice’ we receive from Wall Street and its financially captive press about what we should do with our money is really not advice; it’s marketing.
Wall Street makes money by selling stocks and bonds to whomever: pensions, retirees, moms, pops, young workers, endowments…it doesn’t really matter. The name of the game is for you to buy and then hold onto those purchases.
So when the markets hit the skids, you see endless ‘articles’ offering this very (un)helpful ‘advice’:
With the recent headlines and stock market volatility, you may be wondering if we are seeing a repeat of the market activity of 2008. This is one of the hardest parts of being a long-term investor. It’s easy to stay the course when markets are rising. It’s harder to stay the course during declines and view them as potential investing opportunities. But that’s what being a long-term investor is all about.
Remember: Stay invested – A diversified portfolio of quality investments is a sensible strategy during volatile markets.
(Source – AG Edwards client letter)
Joel Salatin, proprietor of Polyface Farms and highly-visible champion of sustainable farming, thinks modern humans have become so far removed from a natural connection to the food they eat that we no longer have a true understanding of what "normal" food is.
The rise of Big Ag and factory farming over the past century has conditioned us to treat food mechanically (as something to be recoded and retooled) vs. biologically. And we don't realize that for all our industrialization and optimization, we're actually getting less yield and less nutrition than natural-based processes can offer.
Whether we like it or not, the arrival of Peak Oil is going to force us to realize that our heavily-energy intensive practices can't continue at their current scale. And with world population still increasing exponentially, we'll need to find other, more sustainable ways of growing our food.
Joel Salatin: How to Prepare for A Future Increasingly Defined By Localized Food & Energy
Joel Salatin, proprietor of Polyface Farms and highly-visible champion of sustainable farming, thinks modern humans have become so far removed from a natural connection to the food they eat that we no longer have a true understanding of what "normal" food is.
The rise of Big Ag and factory farming over the past century has conditioned us to treat food mechanically (as something to be recoded and retooled) vs. biologically. And we don't realize that for all our industrialization and optimization, we're actually getting less yield and less nutrition than natural-based processes can offer.
Whether we like it or not, the arrival of Peak Oil is going to force us to realize that our heavily-energy intensive practices can't continue at their current scale. And with world population still increasing exponentially, we'll need to find other, more sustainable ways of growing our food.
Gold: with today’s sharp pullback after an amazing run upwards in the previous two weeks, how concerned should precious metal investors be? Are its fundamentals still strong? 
A growing number of individuals believe our economic and societal status quo is defined by unsustainable addiction to cheap oil and ever increasing debt. With that viewpoint, it's hard not to see a hard takedown of our national standard of living in the future. Even harder to answer is: what do you do about it?
Charles Hugh Smith, proprietor of the esteemed weblog OfTwoMinds.com, sees the path to future prosperity in removing capital from the Wall Street machine and investing it into local enterprise within the community in which you live.
"Enterprise is completely possible in an era of declining resource consumption. In other words, just because we have to use less, doesn’t mean that there is no opportunity for investing in enterprise. I think enterprise and investing in fact, are the solution. And if we withdraw our money from Wall Street and put it to use in our own communities, to the benefit of our own income streams, then I think that things happen."
Charles Hugh Smith: Why Local Enterprise Is The Solution
A growing number of individuals believe our economic and societal status quo is defined by unsustainable addiction to cheap oil and ever increasing debt. With that viewpoint, it's hard not to see a hard takedown of our national standard of living in the future. Even harder to answer is: what do you do about it?
Charles Hugh Smith, proprietor of the esteemed weblog OfTwoMinds.com, sees the path to future prosperity in removing capital from the Wall Street machine and investing it into local enterprise within the community in which you live.
"Enterprise is completely possible in an era of declining resource consumption. In other words, just because we have to use less, doesn’t mean that there is no opportunity for investing in enterprise. I think enterprise and investing in fact, are the solution. And if we withdraw our money from Wall Street and put it to use in our own communities, to the benefit of our own income streams, then I think that things happen."
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