{"id":141,"date":"2010-02-15T15:33:50","date_gmt":"2010-02-15T19:33:50","guid":{"rendered":"http:\/\/www.silver-investor.com\/blog\/?p=141"},"modified":"2018-06-10T10:58:22","modified_gmt":"2018-06-10T10:58:22","slug":"inflationdeflation-part-2","status":"publish","type":"post","link":"https:\/\/www.themorganreport.com\/blog\/inflationdeflation-part-2\/","title":{"rendered":"Inflation\/Deflation Part 2"},"content":{"rendered":"

Posted in reverse order– sorry, read the lower one first and then this one to put all thinking in proper perspective…
\nDavid Morgan Interviewed by Ellis Martin on The Opportunity Show<\/em><\/strong>
\nOctober 29, 2009, Part 2<\/strong>
\n\u00a0<\/strong>
\nEllis Martin<\/strong>: <\/strong>Now let\u2019s rejoin our conversation with <\/strong>the silver guru, David Morgan. So, essentially the Chinese are shunning the dollar in favor of their own yuan, as a methodology to boost the value of their own currency, to deal with the deflating dollar. And to continue to work toward controlling the market, not only are they doing that, but they also are buying all the resources around the world. They\u2019re the major driving factor here, are they not, in addition to our own government just printing money?
\n\u00a0<\/strong>
\nDavid Morgan<\/strong>: <\/strong>I\u2019d say China is definitely one of the main driving factors. Japan also has a great deal of debt. The dollar is in the carry trade mode right now, which means that the bank can make free money by borrowing dollars basically for zero and then renting them out at a specific interest rate. And if you can do that in a leverage environment, you can make quite a bit of money. So it\u2019s a gift to the banking system.
\nBut I want to go back to something I did a few years ago, Ellis, and that is a video on currency crisis. In fact, it\u2019s on YouTube at http:\/\/www.youtube.com\/watch?v=\u00adNN97tmw6qvY<\/a>. This is something that I wrote about in The Morgan Report <\/em>many years ago. It is from the movie Rollover,<\/em> a movie that depicted basically the end of the U.S. dollar and a huge increase in the price of gold\u2014thus a credit crisis, a currency crisis. And a credit crisis\/currency crisis is in essence what we\u2019re experiencing right now. Now the currency crisis part is arguable. Is it really happening? Is it going to take place as in the movie? I don\u2019t think so, but Rollover<\/em> makes some very, very important points, and at the conclusion of the movie, the Middle East (you might substitute the word China) has had it with the dollar and was going into the gold market very stealthily so as not to abruptly disturb the market. It wouldn\u2019t move the price of gold up very far or very fast, but every month they\u2019d go in and, instead of rolling over their bond position, they\u2019d roll over something like 98% of it. And the 2% that they weren\u2019t rolling over went back into cash and that cash went into the gold market and bought gold.
\nThat\u2019s how big positions are developed. You do it very slowly, over a lengthy span of time. You buy enough but not so much that it will actually move the market very much, and you build a position carefully and slowly. During this hypothetical situation in the Rollover <\/em>film, the word got out that the Arabs were no longer favorable to the dollar and were buying gold. Once that hit the mainstream financial press it ensued a panic. Once the panic hits, you can\u2019t turn it off. So then everybody was selling the dollar and everybody was moving into anything that they could that wasn\u2019t a dollar, or primarily the gold market. The end of the movie shows a banker coming out of a Wall Street bank and throwing cash at the screaming crowd. Then the scene cuts to a news reporter who\u2019s saying that what was witnessed outside the New York bank was happening all over the world, no currency was safe. The reporter names off all the currencies we\u2019ve had, saying we\u2019ve had a currency collapse.
\nNow I\u2019m not predicting that, per se. But in reality, the U.S. dollar, by the Federal Reserve\u2019s own admission, is worth about four pennies since the date the Fed was founded, so certainly it hasn\u2019t fulfilled its mandate, which is to keep a strong currency.
\nHow it\u2019s all going to wind up I really don\u2019t know, but I do think strongly that the U.S. dollar\u2019s days as reserve currency of the world are limited. I do know through monetary history that probably the best place you can be is in the precious metals. That\u2019s what history has shown us again and again and again. So that\u2019s what I\u2019m looking for. And I want to be careful here, because it\u2019s the doom-and-gloom label I really don\u2019t like. I think I\u2019m more of a realist than a doom-and-gloomer.
\nThere are many reasons for optimism, but when a system starts to unwind, you know it\u2019s got to complete the cycle and this is something that\u2019s happened before. It\u2019s not something that\u2019s unique in monetary history, but it\u2019s unique to America, because we\u2019ve never experienced it before. But if you review monetary history you\u2019ll see there have been cycles and panics like this before.
\nPeople are survivors. They\u2019re going to figure out how to best get through this, but the basis is that the overall living standard of the population of the United States, or North America actually, is probably going to be going down, generally speaking. It doesn\u2019t mean the end. It doesn\u2019t mean that it\u2019s all over. It does mean that things are going to change.
\n\u00a0<\/strong>
\nEllis<\/strong>: David, this is just some of the information that\u2019s available on your Web site. We\u2019ve just touched on the tip of the iceberg, so to speak, of what\u2019s available on silver-investor.com. All about the currency crisis, all about the fact that the supply of gold and silver does not meet the demand now nor will it in the conceivable future, and of course your DVD entitled, \u201cSilver Summit 2009.\u201d Let\u2019s talk about that.
\nDavid<\/strong>: <\/strong>Well certainly I\u2019d be glad to talk a bit about the DVD. This was my keynote speech at the Silver Summit, which was in September 2009. It\u2019s a speech that I developed based upon the real world and where we are financially in the United States, on a global basis. I compared that to the Weimar Republic. I didn\u2019t really know until I undertook this study how comparable they were, and what I found was rather startling.
\nIf you look at the money supply, the real wage rate, unemployment, and the stock market, and lined up all these things, if you could lay each graph on top of the other it would fit almost perfectly. So all these key components that I looked at lined up, with one slight but key difference at the end, and that is the M1 turnover rate. In other words, this is contrary to what I said a moment ago about how fast people want out of the dollar. The M1 turnover rate is below 1, which means that people do not want out of the dollar right now. The facts are what they are. Right now people are saving dollars. They\u2019re not spending dollars. They\u2019re scared to borrow. Or maybe they want to borrow but they\u2019re not creditworthy, so they can\u2019t borrow. . . . So there are a lot of factors right now that portend more deflationary pressures currently than inflationary pressure. And I go through this very carefully at the Silver Summit.
\nIn addition to that keynote \u201cbig-picture\u201d speech, I presented a summary of the key points in the silver market, and then a lunchtime speech about the psychology of the market, where we are on a psychological basis, and where I expect it to go in the future. Also on the DVD is the Webinar that we did with Hugo Salinas Price, advocating using silver currency in Mexico alongside the peso. Fascinating man, fascinating Webinar. And to round out the contents we included one more presentation, which has to do with the Weimar Republic and the destruction of the currency during the 1923 timeframe.
\nSo it\u2019s quite a summary of the Silver Summit that\u2019s available on our Web site. If you\u2019re a student of these markets, if you really want to be in the know, you might consider a purchase.\u00a0<\/strong>
\n\u00a0<\/strong>
\nEllis<\/strong>: Well I want to encourage everyone listening to this program right now to head over to your Web site, silver-investor.com, that\u2019s silver-investor.com. If you don\u2019t do it now, at least write down the name of that Web site because there\u2019s enough information to assist a sophisticated investor and also to bring you up to speed if you\u2019re a novice potential investor with regard to metals, resource stocks, whatever you like. Silver-investor.com. We\u2019ve been speaking with the silver guru, David Morgan of The Morgan Report<\/em>. Thank you, David, for joining us today on The Opportunity Show<\/em>.
\n\u00a0<\/strong>
\nDavid<\/strong>: Always a pleasure, thank you. <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Posted in reverse order– sorry, read the lower one first and then this one to put all thinking in proper perspective… David Morgan Interviewed by Ellis Martin on The Opportunity Show October 29, 2009, Part 2 \u00a0 Ellis Martin: Now let\u2019s rejoin our conversation with the silver guru, David Morgan. So, essentially the Chinese areMore<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121,89],"tags":[],"yoast_head":"\nInflation\/Deflation Part 2<\/title>\n<meta name=\"description\" content=\"Inflation\/Deflation Part 2\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.themorganreport.com\/blog\/inflationdeflation-part-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inflation\/Deflation Part 2\" \/>\n<meta property=\"og:description\" content=\"Inflation\/Deflation Part 2\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.themorganreport.com\/blog\/inflationdeflation-part-2\/\" \/>\n<meta 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