"Socialism works until you run out of other people's money" - Margaret Thatcher

"Congress approved an increase in the debt limit from $12.1 trillion on Thursday, winning two more months of funding for a record U.S. deficit as Obama tries to stimulate economic growth after the country's worst recession in 70 years.

Critics say Democrat Obama is making the deficit worse, but the White House blames the recession and unfunded cuts in taxes and prescription drug aid, which were all inherited from his Republican predecessor George W. Bush..."

Read more:

http://www.reuters.com/a...e/idUSTRE5BR3GK20091228


Is it all Just a Ponzi Scheme?

http://jsmineset.com/wp-...Just-a-Ponzi-Scheme_.pdf

"And what a revolution! Compare a tenfold growth of gross domestic product in the space of 26 years with a fourfold increase in the space of 70. The former has been China’s achievement between 1978 and 2004; the latter was Britain’s between 1830 and 1900. Or consider the fact that US GDP was more than eight times that of China’s at the beginning of this decade. Now it is barely four times larger – and if the projections from Jim O’Neill, Goldman Sachs’ chief economist, prove to be correct, China will overtake America as soon as 2027: in less than two decades...."

Read more:

http://www.ft.com/cms/s/...e-a888-00144feab49a.html

@karanjakinuthia. Happy 2010.

That was a great post (44) on the ponzi scheme. There was one part in the article page 3 "We are now in a situation, however, where the Fed is printing dollars to buy Treasuries as a means of faking the Treasury's ability to attract outside capital...it amazes us that the US can successfully issue a record number Treasuries in this environment without the slightest hiccup in the market".

Does that sounds familiar particularly within the Kenyan set-up? Off course the cbk is not buying treasuries but it is printing shillings.

It is all a ponzi-scheme with an imperative for govt debts to be rolled-over forever. The problem that Kenneth Boulding alludes to is that the world's resources are finite so the debtholders will demand more from the real world to back those debts. This is not sustainable. When the govt word on backing it's debts is no longer reliable, then the market responds accordingly, by buying gold.

India's thirst for gold comes as no surprise given its performance as a store of wealth from the 1970s as demonstrated in the Rupee price chart (bottom in the link page below):

http://www.research.gold.org/prices/monthly/


"NEW DELHI, Jan 4 (Reuters) - India imported 300-350 tonnes of gold in 2009, higher that the previous estimate of a little over 200 tonnes, the head of the Bombay Bullion Association said on Monday.

Suresh Hundia said the trade body had also revised its estimate of imports in 2008 to 439 tonnes from 420 tonnes.

"Figures of export houses had to be revised ... Data for eight months had to be revised," he said.

Hundia said the estimate changed significantly because data from several large trading houses, which were allowed to import gold in early 2009, was not available earlier.

On Jan. 1, Hundia said India imported "a little over 200 tonnes" in 2009..."

http://www.reuters.com/a...otStocksNews&rpc=401

@Scubidu. I had covered the issue of a One World Currency in an earlier post. I have no idea on the timeline for all I privy to are voices of discontent such as those of Nicolas Sarkozy, the Chinese and the Russians.

Central bankers are first human, second bureaucrats therefore will act when it is absolutely necessary. Usually, too late. Take for instance the dumping of gold by central banks from 2001 to 2008 whilst the price was edging upwards. Watch as scramble to outbid each other in the coming years. The reserve status of the Dollar has its foundation in the subconscious mind of the central banker and will only change when a Dollar crisis unfolds.

The Euro is on the ascendancy as an alternative to the Dollar although it is beset by problems in Greece, Spain, Ireland and Eastern Europe. For it to improve its rating, it would have to axe these nations from the union.

I have no idea as concerns the African Central Bank. I would only hope that it will not have a uniform interest rate as is the case for the European Central Bank.

The gold control mechanism is designated for the One World Currency that exists outside the precincts of individual nations. It would ensure that international liquidity would have an anchor that all players have trust in. An increase in money supply would have to be backed by increase in gold reserves, global liquidity and/or global GDP.

[quote=karanjakinuthia]The ripple effect of U.S. financial policy on the entire world is explained in the article as the Triffin Dilemma. Increasingly, voices of discontent are being heard drumming support for a One World Currency or Super Sovereign Reserve Currency backed by a Global Central Bank.

Martin Armstrong's historical studies shows us that gold was the One World Currency during the Byzantine Empire as the "solidus", slang name "Byzant" between 500 and 1250 AD.

Centuries later, the 1944 Bretton Woods plan was to fix the Dollar to $35 of gold and set it as the reserve currency of the world. The former gave way with the establishment of a two tier-tier gold standard in 1968 and the eventual collapse of the gold standard in 1971. The latter is presently under threat of dissolution.

"A new global currency should replace the US dollar as the international reserve currency, as the long-term deterioration of America's economy and the greenback is fuelling a "currency-regime crisis", says Martin Wolf, associate editor and chief economics commentator of the Financial Times..."

Read more:

http://www.business24-7....a981282abc0ee85802.aspx[/quote]


Sentiments from France's president:

"PARIS, Jan 7 (Reuters) - Disorder among world currencies has become unacceptable and France intends to make it a major subject of its presidency of the G8 and G20 in 2011, President Nicolas Sarkozy said on Thursday...."

Read more:

http://www.reuters.com/a...100107?type=marketsNews

@KK,
You strike me as a being a very well informed gentleman.
Where do you get the time to read all this stuff?(You surely must be a batchelor)
I am also curious to know what you do for a living?

@ Chaka and Phaoro.

Thank you for your kind sentiments. Standing on the shoulders of investing greats such as Warren Buffet, Jim Sinclair, Martin Armstrong, Monty Guild, Jim Rogers, Marc Faber etc, one is able to have a bird's eye view of the forest as a opposed to individual trees when on the ground level. As with all other skill sets, time and effort are directly proportional to mastery.

I am an entrepreneur and will be the luckiest man south of the Equator to marry a woman of substance.

If you have additional questions, do not hesitate to ask.

Every cloud has a silver lining. It took a drought spell to cut down the tea supply glut in the market. Farmers now have a gleam in their eye.

"2009 is a year that many investors would prefer to forget after the Nairobi Stock Exchange plunged to a three- year low. But the year was not so gloomy for the agricultural segment which produced the top three best-performing stocks in terms of capital gains despite its counter being the least active at the bourse.

The sector has traditionally been a shunned by investors due to the volatility inherent in its stocks which rely on weather, an increasingly unpredictable phenomenon following decades of environmental degradation by human activities...."

Read more:

http://www.businessdaily...36/-/6a4801/-/index.html

Excellent previous post (149) btw. I had no idea the Central Banks had been dumping gold prior to 2008 and indeed many of the gold experts predict a rally. I’ll admit I don’t much about gold but I’d like to know what cbk does in with its gold reserves. Do you know? What’s it function in the Kenyan context?

One shouldn’t support a one world currency until the fiat currency is changed, but, I also used to remember many of the historians citing the ways in which gold could be manipulated. I had read the story about the French cashing in their gold for dollars in the 70s (post 150) and it sounds like it could happen again (considering what you said about the increase in money supply and gold reserves as well as the current banking system).

The gold debate has also been a big one amongst the group of economists/financial experts who belong to the Austrian school and some see it as one of the most viable options in reforming the monetary system. One of the experts I’m currently following is John Kutyn and he’s also advocate for a gold-based currency:

http://www.gold-eagle.co...als_08/kutyn082509.html

I had read a book called “Confessions of an Economic Hitman” by John Perkins and he gave an interesting perspective of the ‘petroscam’ that accelerated the dollar role as the reserve currency and may give us. Also stumbled onto a blogger who had an interesting view:

http://macromarketmusing.../10/more-on-dollar.html

karanjakinuthia. I appreciate the effort you put into your posts and pray that you’re encouraged by the rest of us to continue sharing your knowledge.

Strategies of China's reform and opening to the world by the "great designer" Deng Xiaoping and Ye Jianying in 1976 are steadily bearing fruit with the "Middle Kingdom" overtaking Germany as the world's largest exporter.

"China has had a few big moments along the way — becoming the world’s biggest holder of US government debt, building up the world’s biggest pool of foreign reserves and boasting the world’s biggest bank by some measures.

And now, the country’s banks are climbing..."

Read more:

http://ftalphaville.ft.c...anks-take-on-the-world/