The view from John Maynard Keynes

[Tennessee Blue Mike]

“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they can not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of hatred by the bourgeoisie, whom the inflation has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does so in a manner which not one man in a million is able to diagnose.”

~ John Maynard Keynes, The Economic Consequences of the Peace, London: Macmillan, 1919.

Hoping to get some perspective from our lids on commodities and currency.

 

[Reidy's Bottle Of Grecian]

does he say anything about beating that by obtaining gold teeth ?

 

[Tennessee Blue Mike]

does he say anything about beating that by obtaining gold teeth ?

That is a very good question. I'll ask some of my rapper Bros. Gold teeth here are like gold jewelry to the Indian. Big business.

 

[Reidy's Bottle Of Grecian]

That is a very good question. I'll ask some of my rapper Bros. Gold teeth here are like gold jewelry to the Indian. Big business.

Eastern Europe mate, I went to communist Bulgaria and Ceaucescu's Romania, you never saw so many gold teeth in your life, only way they could save up without the government getting their hands on it.

 

[mezzrow]

grillz, lid.

You know where I'm at, Mike. As some wiser men have said around these parts,

"You can stand on me..."

Vero.

 

[Tennessee Blue Mike]

Save those Nickels.

Did you know the US government is still subsidizing the nickel. Easy money ahead read on.

[FONT=Arial, Helvetica, sans-serif]Buy Two, Get One Free[/FONT]​

[FONT=Arial, Helvetica, sans-serif]Copper is currently about $4.60/lb. Nickel is currently about $13.00/lb[/FONT]
[FONT=Arial, Helvetica, sans-serif]120 five-cent pieces is $6.00. Those 120 coins contain a pound of copper and 1/3 pound of nickel. That's about $8.93.[/FONT]
[FONT=Arial, Helvetica, sans-serif]If you deposit $6 in any bank in the nation, then withdraw your money as nickels, you get almost $9 worth of metal. That's an immediate 50% return. That's like paying for two thing and getting three.[/FONT]
[FONT=Arial, Helvetica, sans-serif]You can't legally cash in on it now (anti-smelting laws for pennies and nickels were introduced in late 2006). But the bullion market for cupronickel coins will develop, just as it did for silver U.S. coins. This will happen once the government starts minting five-cent pieces made out of cheaper metals.[/FONT]
[FONT=Arial, Helvetica, sans-serif]To those who doubt this will happen, I refer you to the bags of silver coins trading as bullion for over 20 times their face value. You can easily order such a bag right now by going to any of a number of online bullion dealers. These bags of coins sell right alongside silver bars and rounds.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Right now, the government is subsidizing your copper and nickel purchases...and cutting out the middleman. As much as we complain about government, we ought to stop and offer them a little thanks for this.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The debasement of the U.S. nickel is looking very likely. Right now you have another opportunity to do what the silver coin hoarders did back in the early 1960's.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Hoarding nickels right now gives you an immediate benefit. You get between $0.07 and $0.08 of copper and nickel for a mere $0.05. Thanks to Uncle Sam. But your good uncle won't subsidize this forever. He can't afford it.[/FONT]
[FONT=Arial, Helvetica, sans-serif]What's even more is that there is a hedge against deflation risk that you just don't get with bullion. You see this discounted metal is minted. It will always have a nominal value of what's stamped on it by its issuer.[/FONT]
[FONT=Arial, Helvetica, sans-serif]So if the dollar strengthens and copper, silver, and gold all get cheaper in dollar terms, you can still spend your nickels just like any other money. Your purchasing power stays the same, maybe even increases.[/FONT]
[FONT=Arial, Helvetica, sans-serif]But if the dollar declines, then the value of the cupronickel in the currency will rise against the face value. Eventually - at two or three times face value - these five-cent pieces will trade as bullion just as 90% silver quarters and dimes did and still do.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Again, there is currently no transaction cost to saving in nickels and no risk from plummeting metal prices. There is literally nothing (in case of deflation) to lose and everything (in case of inflation) to gain.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Your only real problem is storage; a few thousand dollars of nickels takes up a lot of space...and it's heavy. But people had the same problem with silver when it was cheap. I doubt they're complaining now.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Having "too much" cupronickel won't seem like much of a problem if inflation continues to drive the cupronickel in five-cent pieces far in excess of face value.[/FONT]
[FONT=Arial, Helvetica, sans-serif]At worse the dollar strengthens and you've just saved money whose purchasing power has increased. That is not a bad worse case scenario at all.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The cupronickel is the last bit of honest U.S. currency there is. Right now it's dying slow, like the others did. But things could speed up quick.[/FONT]
[FONT=Arial, Helvetica, sans-serif]The cupronickel could surprise us all. Gold and silver are having their day. Maybe eventually cupronickel will, too. What cannot be dismissed is the current discount on the stuff (thanks, Uncle Sam) and the extremely limited downside.[/FONT]

 

[mezzrow]

Hmmm... That's some thinking outside the box, Mike. FRN's for nickels.

Too bad I don't have a basement. I'd worry about the metal falling through the floor.

Heavy, dude.

 

[Tennessee Blue Mike]

Hmmm... That's some thinking outside the box, Mike. FRN's for nickels.

Too bad I don't have a basement. I'd worry about the metal falling through the floor.

Heavy, dude.

True. But a lot better than accumulating pre 1982 copper pennies now worth around 3 cents. It would take a lot of room. There is still some opportunities in circulation even some pre 1964 silver exists. Aah Silver nothing like it.

 

[McBain]

Anyone into Pogs?

 

[McBain]

 

[McBain]

What a line up.

Golden Era, like

 

[Tennessee Blue Mike]

What a line up.

Golden Era, like

Nice collection McBain. All with their eighties hair dos.

 

[TX Bill]

Any well constructed investment portfolio needs to have some exposure to alternative investments such as metals, futures, hedge funds, etc.... Depending upon risk tolerance and objective, anywhere from 5% to 25%. ETF's are making it easier for people to own alternatives which is nice because it creates a liquid market.

 

[McBain]

Nice collection McBain. All with their eighties hair dos.

In the olden days, why do young people look old?

A question that's often kept me up at night.

 

[linglong]

it was the '80's everyone just looked old becuase old was the new young or something back then