I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits principal and interest to earlier "bond" investors with funds from more recent "bond" investors.
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits and interest to earlier "bond" investors with funds from more recent "bond" investors.
If that isn't a Ponzi, I'd like to know what is.
Q: Are You Printing Money? Bernanke: Not Literally
@Goldminers said:
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits and interest to earlier "bond" investors with funds from more recent "bond" investors.
.
That is the exact definition of a "ponzi" scheme. Paying earlier investors with funds from newer investors.
@WCC said:
Haven't read this forum in a long time. Read the first few posts but that's all I need to read.
I agree that gold (and silver) look to be "breaking out", but the reason doesn't make any difference.
The only actual reason anyone “invests” in anything is to realize a return. They expect to realize a monetary profit, or else they wouldn’t buy it. Whatever reasoning they believe or claim implicitly or explicitly to justify their decision is irrelevant.
Supposed “investors” (actually speculators) act on beliefs which actually determines prices, whether it is true or not or whether the outcome is “better” or “worse” than expected. When enough “investors” act on their beliefs, prices change regardless of “fundamentals”. That’s why “fundamentals” have no consistent predictability on anything. As future events confirm or contradict expectations, “investors” act on this feedback loop too but the event or outcome isn’t the actual reason for the price (change) either.
In the long run fundamentals do play a factor in pricing. The issue is getting an accurate accounting of the fundamentals when there are entities that deliberately lie about or skew the fundamentals. When you have a situation where paper gold or silver bears no direct relationship to the actual amount of real gold and silver the value of those assets can be greatly manipulated by those holding and/or creating the paper.
Yes, and in the long run we'll all be dead too. The "fundamentals" make no practical difference to the outcome because the outcome is still almost if not entirely based upon changes in psychological perception. That's why gold still sells for less in CPI-adjusted prices vs. 1980 and silver sells for about 40% less in NOMINAL dollars, also since 1980. That's two generations.
Gold is not historically cheap. Everyone I've read who claims it (whether due to manipulation or otherwise) ignores the relative price versus other physical goods and services. If the price of gold has been manipulated, it sure has been a spectacular failure since convertibility ended entirely in 1971 It's also supposedly pure coincidence that it succeeded with a far less important monetary metal, silver
The primary purpose of "money" (what gold is supposed to be) isn't to trade it for other forms of "money" (silver, "crypto", or fiat currency) but ultimately the goods and services people need and want. By this entirely sensible standard, it's not close to cheap.
I don't use this type of argument because "fundamentals" don't have anything to do with the price of anything, other than in limited instances serving as a minimal price floor. (E.g., a coin won't sell for less than FV as long as society resembles anything close to its current form.)
The so-called "fundamentals" are believed to true by "assuming facts not in evidence", claiming causality that doesn't actually exist.
My explanation for gold's relative price is the lack of confidence in the global monetary and financial system. It's a system designed to fail, and the price reflects it indirectly, but this alone has no practical value when "investing". My explanation for the post-1980 gold-silver ratio isn't manipulation, but collective perception of its reduced role as a monetary metal. It's not viewed as equivalent "money".
It's also a fallacy to assume that those buying the "paper" versions actually or mostly want physical. There is no evidence of that. Most buyers of "paper" substitutes are speculating on the future fiat currency price change.
They may wish they had it later and be sorry they don't, but that's something else entirely. They don't want it now because they don't share the psychology of physical metal buyers.
By the way, I will reiterate that I agree with the sentiments of the thread title, at this time. So, not arguing that.
@Goldminers said:
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits principal and interest to earlier "bond" investors with funds from more recent "bond" investors.
It's a straight refinancing method used by homeowners, corporations, and governments. As long as the economy and government finances can pay the debt, it's not a problem.
The Debt/GDP ratio in Japan is about 250%. European countries hit the wall when the number gets to about 130% -- and that's for 3rd-rate economies.
@WCC said:
Haven't read this forum in a long time. Read the first few posts but that's all I need to read.
I agree that gold (and silver) look to be "breaking out", but the reason doesn't make any difference.
The only actual reason anyone “invests” in anything is to realize a return. They expect to realize a monetary profit, or else they wouldn’t buy it. Whatever reasoning they believe or claim implicitly or explicitly to justify their decision is irrelevant.
Supposed “investors” (actually speculators) act on beliefs which actually determines prices, whether it is true or not or whether the outcome is “better” or “worse” than expected. When enough “investors” act on their beliefs, prices change regardless of “fundamentals”. That’s why “fundamentals” have no consistent predictability on anything. As future events confirm or contradict expectations, “investors” act on this feedback loop too but the event or outcome isn’t the actual reason for the price (change) either.
In the long run fundamentals do play a factor in pricing. The issue is getting an accurate accounting of the fundamentals when there are entities that deliberately lie about or skew the fundamentals. When you have a situation where paper gold or silver bears no direct relationship to the actual amount of real gold and silver the value of those assets can be greatly manipulated by those holding and/or creating the paper.
Yes, and in the long run we'll all be dead too. The "fundamentals" make no practical difference to the outcome because the outcome is still almost if not entirely based upon changes in psychological perception. That's why gold still sells for less in CPI-adjusted prices vs. 1980 and silver sells for about 40% less in NOMINAL dollars, also since 1980. That's two generations.
Gold is not historically cheap. Everyone I've read who claims it (whether due to manipulation or otherwise) ignores the relative price versus other physical goods and services. If the price of gold has been manipulated, it sure has been a spectacular failure since convertibility ended entirely in 1971 It's also supposedly pure coincidence that it succeeded with a far less important monetary metal, silver
The primary purpose of "money" (what gold is supposed to be) isn't to trade it for other forms of "money" (silver, "crypto", or fiat currency) but ultimately the goods and services people need and want. By this entirely sensible standard, it's not close to cheap.
I don't use this type of argument because "fundamentals" don't have anything to do with the price of anything, other than in limited instances serving as a minimal price floor. (E.g., a coin won't sell for less than FV as long as society resembles anything close to its current form.)
The so-called "fundamentals" are believed to true by "assuming facts not in evidence", claiming causality that doesn't actually exist.
My explanation for gold's relative price is the lack of confidence in the global monetary and financial system. It's a system designed to fail, and the price reflects it indirectly, but this alone has no practical value when "investing". My explanation for the post-1980 gold-silver ratio isn't manipulation, but collective perception of its reduced role as a monetary metal. It's not viewed as equivalent "money".
It's also a fallacy to assume that those buying the "paper" versions actually or mostly want physical. There is no evidence of that. Most buyers of "paper" substitutes are speculating on the future fiat currency price change.
They may wish they had it later and be sorry they don't, but that's something else entirely. They don't want it now because they don't share the psychology of physical metal buyers.
By the way, I will reiterate that I agree with the sentiments of the thread title, at this time. So, not arguing that.
Everything is based on psychological perception. Do you really want to go down that rabbit hole? For thousands of years there has been the psychological perception that gold has value whether the accounting of that value has been in corn, wheat, sugar, salt, land, etc. The psychological perception that paper is a substitute for gold is a fairly recent and greatly perverted perception over the last 50 years of manipulation.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@pmh1nic said:
Everything is based on psychological perception. Do you really want to go down that rabbit hole? For thousands of years there has been the psychological perception that gold has value whether the accounting of that value has been in corn, wheat, sugar, salt, land, etc. The psychological perception that paper is a substitute for gold is a fairly recent and greatly perverted perception over the last 50 years of manipulation.
Here's the deal: up to the last 50-60 or so years, people's ENTIRE LIFE SAVINGS and the economies could get wiped out. It was a legitimate fear becaust for many people on Earth, it happened ever few decades.
In other words....lose 100% of eveything you own. Not 50% or 75% and then wait to get it back in 5-10 years. You worked for decades....30 or 40 or 50 years....and then you lose 100% of your life savings.
That happened all the time in Europe. Wars would reduce currencies and financial markets to ZERO. It happened to France 3 times within 75 years: 1870....1914....1940.
Gold was the only thing that didn't go to zero. Gold held it's value. Gold might even appreciate. Gold could be hidden in your backyard if you didn't want to keep it in a bank. Gold could be brought to another country in your pocketbook or the lining of your coat. So the rich and peasants alike held gold. The French hoarding culture, which I've discussed on other threads, reached billions of dollars in gold by the 1920's.
Today, people can have safety and preserve capital with financial markets. Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value. They appreciate in times of stress. They are the New Gold Standard and have been since 1980.
In 1980, both the gold and currency markets traded about $1 billion daily. Today, because of the increased liquidity and safety of U.S. and other country fixed-income markets.....gold trades about $60 billion daily but the currency markets are at $7 trillion. It's not remotely close as you need the currencies to access the risky and risk-free financial instruments.
Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value.
I wouldn't bet on it.
In 1980, both the gold and currency markets traded about $1 billion daily. Today, because of the increased liquidity and safety of U.S. and other country fixed-income markets.....gold trades about $60 billion daily but the currency markets are at $7 trillion.
Read what you just wrote. Using your numbers, on a relative scale the implication is that all of the gold is worth 60 times what it was worth in 1980, but that paper & fiat assets are "worth" 7,000 times what they were worth in 1980 - a factor of 116.6. That's more than inflation - it's an exercise in self-deception to believe that fiat money creation equals wealth creation.
The banking system is a fraud.
Wars would reduce currencies and financial markets to ZERO.
You should read your own analysis. The currency and bond markets are anything but safe or risk-free, especially when uncontrolled debt expansion is being used to finance the massive spending programs that are now taking place.
The Fed is responsible for what is about to happen, and so is Congress and the President. It's not going to be pretty.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said: Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value.
I wouldn't bet on it.
Everybody else, including folks with billions on the line, say otherwise. Maybe you should reconsider.
Read what you just wrote. Using your numbers, on a relative scale the implication is that all of the gold is worth 60 times what it was worth in 1980, but that paper & fiat assets are "worth" 7,000 times what they were worth in 1980 - a factor of 116.6. That's more than inflation - it's an exercise in self-deception to believe that fiat money creation equals wealth creation.
No, that's NOT what that number reflects. It shows that whereas once you needed gold to protect assets, today there is so much demand for TRUE FINANCIAL SAFETY that currency markets have taken off (so has U.S. Treasury bill/bond volumes, which reflect our reserve currency status and deep, liquid markets).
Total Household Financial Net Worth was about $8 trillion in 1980 and was just over $120 trillion last year....an increase of about 15-fold.
The banking system is a fraud.
You obviously don't understand banking or banks. A blanket statement like that is useless.
The Fed is responsible for what is about to happen, and so is Congress and the President. It's not going to be pretty.
Do you put your money where your postings are at ? If you do, let us know how you do financally.
@WCC said:
Haven't read this forum in a long time. Read the first few posts but that's all I need to read.
I agree that gold (and silver) look to be "breaking out", but the reason doesn't make any difference.
The only actual reason anyone “invests” in anything is to realize a return. They expect to realize a monetary profit, or else they wouldn’t buy it. Whatever reasoning they believe or claim implicitly or explicitly to justify their decision is irrelevant.
Supposed “investors” (actually speculators) act on beliefs which actually determines prices, whether it is true or not or whether the outcome is “better” or “worse” than expected. When enough “investors” act on their beliefs, prices change regardless of “fundamentals”. That’s why “fundamentals” have no consistent predictability on anything. As future events confirm or contradict expectations, “investors” act on this feedback loop too but the event or outcome isn’t the actual reason for the price (change) either.
In the long run fundamentals do play a factor in pricing. The issue is getting an accurate accounting of the fundamentals when there are entities that deliberately lie about or skew the fundamentals. When you have a situation where paper gold or silver bears no direct relationship to the actual amount of real gold and silver the value of those assets can be greatly manipulated by those holding and/or creating the paper.
Yes, and in the long run we'll all be dead too. The "fundamentals" make no practical difference to the outcome because the outcome is still almost if not entirely based upon changes in psychological perception. That's why gold still sells for less in CPI-adjusted prices vs. 1980 and silver sells for about 40% less in NOMINAL dollars, also since 1980. That's two generations.
Gold is not historically cheap. Everyone I've read who claims it (whether due to manipulation or otherwise) ignores the relative price versus other physical goods and services. If the price of gold has been manipulated, it sure has been a spectacular failure since convertibility ended entirely in 1971 It's also supposedly pure coincidence that it succeeded with a far less important monetary metal, silver
The primary purpose of "money" (what gold is supposed to be) isn't to trade it for other forms of "money" (silver, "crypto", or fiat currency) but ultimately the goods and services people need and want. By this entirely sensible standard, it's not close to cheap.
I don't use this type of argument because "fundamentals" don't have anything to do with the price of anything, other than in limited instances serving as a minimal price floor. (E.g., a coin won't sell for less than FV as long as society resembles anything close to its current form.)
The so-called "fundamentals" are believed to true by "assuming facts not in evidence", claiming causality that doesn't actually exist.
My explanation for gold's relative price is the lack of confidence in the global monetary and financial system. It's a system designed to fail, and the price reflects it indirectly, but this alone has no practical value when "investing". My explanation for the post-1980 gold-silver ratio isn't manipulation, but collective perception of its reduced role as a monetary metal. It's not viewed as equivalent "money".
It's also a fallacy to assume that those buying the "paper" versions actually or mostly want physical. There is no evidence of that. Most buyers of "paper" substitutes are speculating on the future fiat currency price change.
They may wish they had it later and be sorry they don't, but that's something else entirely. They don't want it now because they don't share the psychology of physical metal buyers.
By the way, I will reiterate that I agree with the sentiments of the thread title, at this time. So, not arguing that.
Everything is based on psychological perception. Do you really want to go down that rabbit hole? For thousands of years there has been the psychological perception that gold has value whether the accounting of that value has been in corn, wheat, sugar, salt, land, etc. The psychological perception that paper is a substitute for gold is a fairly recent and greatly perverted perception over the last 50 years of manipulation.
If the price of gold was manipulated as you infer, there is no way gold would have risen by a multiple of roughly 40 since 1971 especially while silver has been left in the dust since 1980.
If this manipulation existed as you infer and the price was really undervalued as the believers in manipulation claim, there wouldn't be a single physical ounce to be bought now or during this entire time.
That's how tradeable markets work. No one is stopping anyone from buying physical.
Look at relative prices. Gold isn't cheap. That along with the price performance since 1971 is the best evidence against this type of claim.
@jmski52 said:
When you & coho tell us which institutions you work for, then we can discuss my financial standing.
I am self-employed, managing $$$ for a few F&F. I've worked for 2 Private Banks and a bunch of smaller firms in my career.
I'm accountable to my investors every day from 9:30 AM to 4 PM. I get graded every day. If I post something here and act on it there....it better work out. Or at least not blow up.
@Goldminers said:
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits principal and interest to earlier "bond" investors with funds from more recent "bond" investors.
It's a straight refinancing method used by homeowners, corporations, and governments. As long as the economy and government finances can pay the debt, it's not a problem.
The Debt/GDP ratio in Japan is about 250%. European countries hit the wall when the number gets to about 130% -- and that's for 3rd-rate economies.
The U.S. is at about 100%. We're fine.
There is no arbitrary line which when crossed, triggers a crisis.
The long-term "fundamentals" of the US and western societies generally absolutely "suck". Fundamentals (in other words, what represents the well--being of any society) are a lot more than the performance of financial markets or some data point like GDP "growth" which is substantially fake.
@WCC said:
The long-term "fundamentals" of the US and western societies generally absolutely "suck". Fundamentals (in other words, what represents the well--being of any society) are a lot more than the performance of financial markets or some data point like GDP "growth" which is substantially fake.
Warren Buffet said it best: betting against the United States is not a smart thing. Lots of problems that we think are insurmountable turn out to be fixed: Y2K....budget deficits....energy crisis....inflation....etc.
I read that AI might boost real GDP by 1% a year. I'm not sold on it, but if it happens, that is HUGE. It means that Debt/GDP ratios collapse....tax revenues soar....demographic problems that take 40-50 years to fix get solved in under 12 years.
Remember, it took Socialist Greece 30 years to hit the fan. Will take much longer for larger, better-diversified economies.
@pmh1nic said:
Everything is based on psychological perception. Do you really want to go down that rabbit hole? For thousands of years there has been the psychological perception that gold has value whether the accounting of that value has been in corn, wheat, sugar, salt, land, etc. The psychological perception that paper is a substitute for gold is a fairly recent and greatly perverted perception over the last 50 years of manipulation.
Here's the deal: up to the last 50-60 or so years, people's ENTIRE LIFE SAVINGS and the economies could get wiped out. It was a legitimate fear becaust for many people on Earth, it happened ever few decades.
In other words....lose 100% of eveything you own. Not 50% or 75% and then wait to get it back in 5-10 years. You worked for decades....30 or 40 or 50 years....and then you lose 100% of your life savings.
That happened all the time in Europe. Wars would reduce currencies and financial markets to ZERO. It happened to France 3 times within 75 years: 1870....1914....1940.
Gold was the only thing that didn't go to zero. Gold held it's value. Gold might even appreciate. Gold could be hidden in your backyard if you didn't want to keep it in a bank. Gold could be brought to another country in your pocketbook or the lining of your coat. So the rich and peasants alike held gold. The French hoarding culture, which I've discussed on other threads, reached billions of dollars in gold by the 1920's.
Today, people can have safety and preserve capital with financial markets. Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value. They appreciate in times of stress. They are the New Gold Standard and have been since 1980.
In 1980, both the gold and currency markets traded about $1 billion daily. Today, because of the increased liquidity and safety of U.S. and other country fixed-income markets.....gold trades about $60 billion daily but the currency markets are at $7 trillion. It's not remotely close as you need the currencies to access the risky and risk-free financial instruments.
Bonds, Notes and Bills are the go to investments until they are not. Again, this perception that paper and digital assets are secure is VERY recent in terms of money. While I work within the system I'm somewhat prepared for this system to break down. I'm a simple minded individual and my simple mind tells me we can't go on creating dollars and debt out of thin air forever without suffering any consequences AND that those consequences become more severe the longer this facade is allowed to continue.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@pmh1nic said:
Bonds, Notes and Bills are the go to investments until they are not. Again, this perception that paper and digital assets are secure is VERY recent in terms of money. While I work within the system I'm somewhat prepared for this system to break down. I'm a simple minded individual and my simple mind tells me we can't go on creating dollars and debt out of thin air forever without suffering any consequences AND that those consequences become more severe the longer this facade is allowed to continue.
Waiting for the end of currency like in STAR TREK or some futuristic society is not something worth considering, IMO.
Why live in a house when you should be in a mountain, better to withstand an asteroid hit, right ?
We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
@pmh1nic said:
Bonds, Notes and Bills are the go to investments until they are not. Again, this perception that paper and digital assets are secure is VERY recent in terms of money. While I work within the system I'm somewhat prepared for this system to break down. I'm a simple minded individual and my simple mind tells me we can't go on creating dollars and debt out of thin air forever without suffering any consequences AND that those consequences become more severe the longer this facade is allowed to continue.
Waiting for the end of currency like in STAR TREK or some futuristic society is not something worth considering, IMO.
Why live in a house when you should be in a mountain, better to withstand an asteroid hit, right ?
We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@GoldFinger1969 said: We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
@GoldFinger1969 said: We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
.
OK, thin electrons then.
.
LOL Keep praying for the destruction of 'Merica. This place IS GREAT!! You're fantasy just ain't happen so I ask you yet again, go get a life. THKS!
@GoldFinger1969 said: We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
.
OK, thin electrons then.
.
LOL Keep praying for the destruction of 'Merica. This place IS GREAT!! You're fantasy just ain't happen so I ask you yet again, go get a life. THKS!
I'm not praying for the destruction of America BUT we have spent $34 trillion of borrowed money and what do we have to show for it? Crumbling infrastructure (roads, bridges, tunnels, electric grid, airports, etc.), a massive number of people either homeless or living in poverty, an unhealthy population with a standard of education that is slipping. We're no longer the lead producer of steel, automobiles, semiconductors, white goods (refrigerators, washing machines, stoves, etc.). We have dug ourselves into a hole and for the most part all I hear from our "leadership" is keep digging and dig faster. I don't care that the DOW is approaching 40K. That's all smoke and mirrors.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@GoldFinger1969 said: We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
.
OK, thin electrons then.
.
LOL Keep praying for the destruction of 'Merica. This place IS GREAT!! You're fantasy just ain't happen so I ask you yet again, go get a life. THKS!
.
I'm not the praying type. Whatever happens is going to do so whether I pray for it, or against it, or not at all.
Putting your worthless obfuscation and distraction attempt aside, here is data directly from the Federal Reserve itself.
The way M1 and M2 Money Supply was calculated changed in May 2020.
So to be consistent, the comparison will be made from January 2008 through March 2020.
This first chart shows the total amount of currency (Federal Reserve Notes) in circulation (see the dark blue line):
The chart only goes back to just before 2008. In 2008, the total amount of Federal Reserve Notes in circulation was 0.83 trillion dollars. As of March 2020, the amount was 1.90 trillion $. This was an increase of 1.07 trillion $.
This next chart shows M2 Money Supply, which includes cash in circulation plus most liquid bank deposits.
In 2008, M2 was 7.5 trillion. In April 2020 it had grown to 16.0 trillion $. This is an increase of 8.50 trillion $ for M2.
M1, the narrowest measure of liquid money in circulation, was 1.3 trillion in 2008 and 4.3 trillion in March 2020 (an increase of 3 trillion for M1).
So if the total amount of available money in circulation increased by 8.5 trillion, and the amount of actual paper currency in circulation increased by 1.07 trillion, where did the other 7.43 trillion come from ?
@pmh1nic said:
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
But the dollar is super-strong against most currencies. The Yen has plunged, Euro has issues, and the Yuan has problems, too.
Only Japan looks like they have clear sailing for the next 5-10 years. Plus emerging markets like India.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
Yes, ultimately currencies are measured against another. You can be the worst team in the NFL but you'll beat any High School team. The U.S. might have issues that MIGHT matter in the 2050's but they won't hurt our economy or the dollar in the 2020's or 2030's. China is headed for a Minsky Moment with their collapsing labor supply for the next 30-40 years.
Gold will go up based on supply and demand factors. I would not be surprised to see a rising gold price along with a stable to higher dollar. Rising incomes in many countries that were subsistence level from 1970-2020 will instead have them doubling their gold buying every 8-12 years.
@GoldFinger1969 said:
I watched the monetary aggregates every Thursday at 4:30 PM in the 1980's.
Your charts mean nothing today. You're 40 years late.
.
Answer this question if you can (without the irrelevant comments) :
From January 2008 to March 2020, M1 rose about 3 trillion and M2 rose about 8.5 trillion.
Currency in circulation rose about 1 trillion during that same time span.
Where did the extra 2 trillion (M1) and 7.5 trillion (M2) come from and how was it created ?
Every single non-backed currency that has ever existed has eventually declined to its intrinsic value, which is zero. Since it is estimated that 99% of the world's citizens do not own any gold, many must still believe their fiat currencies are money, instead of debt, and that "This time is different".
It will only take a small percentage of the world's population to realize their purchasing power is dropping, and purchase gold as store of value, to drive the price up significantly from here.
For example, according to the World Gold Council, rampant inflation, a weakening currency and geopolitical tensions are boosting demand for gold in Turkey. In terms of bars and coins, Turkish demand for gold was 44 tonnes in the first quarter of 2024, up 50 percent on the preceding three months. Gold jewelry demand rose for an eighth straight quarter to 11 tonnes, and their central bank bought a further 30 tonnes of gold in the first three months of this year, expanding its reserves to 570 tonnes.
The major drop in the value of the Turkish lira vs the dollar which triggered a lot of this gold buying activity was when their central bank lowered interest rates too fast. It seems the US is about to embark on this path.
Warren Buffet said it best: betting against the United States is not a smart thing. Lots of problems that we think are insurmountable turn out to be fixed: Y2K....budget deficits....energy crisis....inflation....etc.
Yes, you've told me this before. Buffet ignores the impact of culture, as do you. I'm also not claiming what you think I'm claiming, yet. In our prior exchanges, I've claimed that the majority of Americans are destined to become poorer or a lot poorer because economic "growth" since 2008 is entirely artificial and most "wealth" is fake too. That's my claim now too, because there is never something for nothing. Current US living standards are entirely dependent upon the loosest credit conditions and lowest credit standards in history.
I read that AI might boost real GDP by 1% a year. I'm not sold on it, but if it happens, that is HUGE. It means that Debt/GDP ratios collapse....tax revenues soar....demographic problems that take 40-50 years to fix get solved in under 12 years.
I'll agree when there is actual evidence it amounts to something. Some "AI" will amount to something but much or most of it won't. Depends upon what it actually does. "AI" isn't actual intelligence and it's not alive either. It's a computer program using huge data sources and a lot of processing power. It's not a deus ex machina.
Increasing GDP in and of itself doesn't make any society better or more prosperous. Most or practically all GDP "growth" since 2008 is the result of increased federal deficit spending. Look at the data yourself. I didn't make it up. I've told you this repeatedly and you ignore it. Whatever isn't the result of increased deficit spending is substantially if not entirely attributable to deranged monetary policy. You've repeatedly ignored that too.
If the economy is so fantastic, why are what were previously considered emergency measures necessary for over 15 years? (No, I'm not actually asking.)
As for demographics, I can't provide an appropriate reply on this forum but it's a big problem in the US too. The US doesn't have the Japanese demographic problem. It has another one which is actually worse. It exists elsewhere too, especially in Europe.
Remember, it took Socialist Greece 30 years to hit the fan. Will take much longer for larger, better-diversified economies.
Yes, you've told me that too, just like you did in your last reply with Japan. Neither experience has any predictability on the future in the US.
Japan should have allowed their bubble economy to burst in 1990 and "sucked it up". Greece never should have adopted the Euro. The Euro will either require a political union to survive or the EU as it exists now is "toast".
You're implying a future "black swan" which isn't one. But if you want one, first on my list is completely "off the rails" US foreign policy.
I'm not praying for the destruction of America BUT we have spent $34 trillion of borrowed money and what do we have to show for it? Crumbling infrastructure (roads, bridges, tunnels, electric grid, airports, etc.), a massive number of people either homeless or living in poverty, an unhealthy population with a standard of education that is slipping. We're no longer the lead producer of steel, automobiles, semiconductors, white goods (refrigerators, washing machines, stoves, etc.). We have dug ourselves into a hole and for the most part all I hear from our "leadership" is keep digging and dig faster. I don't care that the DOW is approaching 40K. That's all smoke and mirrors.
I agree with you.
No, the country or the world isn't coming to an end. But you are correct that the almost $30 trillion 21st century increase in the national debt is a symptom (not a cause) of extended social and economic decay. It's either "kicking the can" as far into the future as possible or a delusional belief in something for nothing.
For those who follow international events, it also sure seems US leadership is trying to get the country into major military conflict on multiple fronts simultaneously. If there is one supposed "black swan" out there, that's number one on my list. That's a recipe for disaster.
@WCC said (among other things!): "economic "growth" since 2008 is entirely artificial and most "wealth" is fake too"
One can reasonably question whether some assets, including some equities and some real estate, are overvalued.
But, the economic growth in the US in the 21st century (and since 2008 in particular) is very real and is driven by a highly innovative and productive economy. Among the areas of growth and innovation coming from the US economy include:
Bioengineering with fantastic applications to medical science and agriculture
Self-driving vehicles; electric vehicles
Microchip design as illustrated by (but not limited to) NVIDIA
Micro-surgery
Privatized rocketry
Telecommunications; vast improvements in cell phones and satellite linkages
Materials science and related apps such as 3D printing
Software engineering, including open sourced software that provides huge potential value to millions
Great advances in the internet, including free resources such as Wikipedia
The list goes on and on. This is generating growth and vast new wealth. (much of which is shared through pension plans, 401ks, etc.)
@GoldFinger1969 said:
I watched the monetary aggregates every Thursday at 4:30 PM in the 1980's.
Your charts mean nothing today. You're 40 years late.
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Answer this question if you can (without the irrelevant comments) :
From January 2008 to March 2020, M1 rose about 3 trillion and M2 rose about 8.5 trillion.
Currency in circulation rose about 1 trillion during that same time span.
Where did the extra 2 trillion (M1) and 7.5 trillion (M2) come from and how was it created ?
.
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Another aspect to this question, and perhaps the most important aspect, is who benefits the most from the creation of these trillions ? Who gets that money first and is able to deploy it before it floods out there and dilutes the value of everyone's currency and deposits ? Banks.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@pmh1nic said:
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
But the dollar is super-strong against most currencies. The Yen has plunged, Euro has issues, and the Yuan has problems, too.
Only Japan looks like they have clear sailing for the next 5-10 years. Plus emerging markets like India.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
Yes, ultimately currencies are measured against another. You can be the worst team in the NFL but you'll beat any High School team. The U.S. might have issues that MIGHT matter in the 2050's but they won't hurt our economy or the dollar in the 2020's or 2030's. China is headed for a Minsky Moment with their collapsing labor supply for the next 30-40 years.
Gold will go up based on supply and demand factors. I would not be surprised to see a rising gold price along with a stable to higher dollar. Rising incomes in many countries that were subsistence level from 1970-2020 will instead have them doubling their gold buying every 8-12 years.
The issues the U.S. has are hurting the economy and individuals TODAY. The significant increase in pricing this year has hurt people TODAY. Credit card debt up, car repossessions up, mortgage default rates relatively low but climbing, unemployment rate starting to climb, business default rates climbing, consumer savings at 3.70% down from last year's 5.3% and all of this happening in an election year.
While the dollar may be strong against other fiat money it's losing value against real money, gold and silver. Other nations are making serious attempts to divest themselves from the dollar. But the greatest sign of serious problems ahead is no one in DC seems to want to take the situation seriously enough to even discuss addressing the issues driving us toward the cliff. Dig and dig faster.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@Higashiyama said: @WCC said (among other things!): "economic "growth" since 2008 is entirely artificial and most "wealth" is fake too"
One can reasonably question whether some assets, including some equities and some real estate, are overvalued.
But, the economic growth in the US in the 21st century (and since 2008 in particular) is very real and is driven by a highly innovative and productive economy. Among the areas of growth and innovation coming from the US economy include:
Bioengineering with fantastic applications to medical science and agriculture
Self-driving vehicles; electric vehicles
Microchip design as illustrated by (but not limited to) NVIDIA
Micro-surgery
Privatized rocketry
Telecommunications; vast improvements in cell phones and satellite linkages
Materials science and related apps such as 3D printing
Software engineering, including open sourced software that provides huge potential value to millions
Great advances in the internet, including free resources such as Wikipedia
The list goes on and on. This is generating growth and vast new wealth. (much of which is shared through pension plans, 401ks, etc.)
But how many of these innovations are creating a significant number of jobs in the U.S. Nvidia does manufacture any of their own chips. Most of the production is in Asia. Those innovations occur here but the work is done elsewhere. So are Americans profiting from those innovations?
I've worked in the field of electronic component manufacturing and distribution for forty years. Nvidia is one of my customers. The design work is done here but the vast majority of the manufacturing is done off short. I could name a dozen other big names in electronics where the situation is the same. Forty years ago the mix of U.S. versus off short manufacturing of components was about 50/50. Today it's 95/5 with the 95 being done elsewhere.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@pmh1nic said:
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
But the dollar is super-strong against most currencies. The Yen has plunged, Euro has issues, and the Yuan has problems, too.
Only Japan looks like they have clear sailing for the next 5-10 years. Plus emerging markets like India.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
Yes, ultimately currencies are measured against another. You can be the worst team in the NFL but you'll beat any High School team. The U.S. might have issues that MIGHT matter in the 2050's but they won't hurt our economy or the dollar in the 2020's or 2030's. China is headed for a Minsky Moment with their collapsing labor supply for the next 30-40 years.
Gold will go up based on supply and demand factors. I would not be surprised to see a rising gold price along with a stable to higher dollar. Rising incomes in many countries that were subsistence level from 1970-2020 will instead have them doubling their gold buying every 8-12 years.
The issues the U.S. has are hurting the economy and individuals TODAY. The significant increase in pricing this year has hurt people TODAY. Credit card debt up, car repossessions up, mortgage default rates relatively low but climbing, unemployment rate starting to climb, business default rates climbing, consumer savings at 3.70% down from last year's 5.3% and all of this happening in an election year.
Not sure what country you are living in because the US I live in is absolutely BOOMIN. Credit card debt? 0, Auto loans? 0, Mortgage loan? ~$40K at a 2.75%. Could pay off with a click of the mouse but why when my bank is paying me 2x that in interest. Job? Yep, with a salary increase of 70% in the last 4 years. Savings accounts, brokerage accounts, the Au stack, 401k's, IRA's? All BOOMIN! The only difference between me and them is I don't need a fancy new smartphone every 12 months, no need for a fancy new car, starbucks, I know how to pack my lunch etc. It's not difficult. THKS!
@pmh1nic said:
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
But the dollar is super-strong against most currencies. The Yen has plunged, Euro has issues, and the Yuan has problems, too.
Only Japan looks like they have clear sailing for the next 5-10 years. Plus emerging markets like India.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
Yes, ultimately currencies are measured against another. You can be the worst team in the NFL but you'll beat any High School team. The U.S. might have issues that MIGHT matter in the 2050's but they won't hurt our economy or the dollar in the 2020's or 2030's. China is headed for a Minsky Moment with their collapsing labor supply for the next 30-40 years.
Gold will go up based on supply and demand factors. I would not be surprised to see a rising gold price along with a stable to higher dollar. Rising incomes in many countries that were subsistence level from 1970-2020 will instead have them doubling their gold buying every 8-12 years.
The issues the U.S. has are hurting the economy and individuals TODAY. The significant increase in pricing this year has hurt people TODAY. Credit card debt up, car repossessions up, mortgage default rates relatively low but climbing, unemployment rate starting to climb, business default rates climbing, consumer savings at 3.70% down from last year's 5.3% and all of this happening in an election year.
Not sure what country you are living in because the US I live in is absolutely BOOMIN. Credit card debt? 0, Auto loans? 0, Mortgage loan? ~$40K at a 2.75%. Could pay off with a click of the mouse but why when my bank is paying me 2x that in interest. Job? Yep, with a salary increase of 70% in the last 4 years. Savings accounts, brokerage accounts, the Au stack, 401k's, IRA's? All BOOMIN! The only difference between me and them is I don't need a fancy new smartphone every 12 months, no need for a fancy new car, starbucks, I know how to pack my lunch etc. It's not difficult. THKS!
YOU are not the U.S. economy. The U.S. economy is counting on people buying on credit a new smartphone every 12 months, signing up for a $750/month car loan, going to Starbucks every day, etc., etc., etc.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
YOU are not the U.S. economy. The U.S. economy is counting on people buying on credit a new smartphone every 12 months, signing up for a $750/month car loan, going to Starbucks every day, etc., etc., etc.
CBDCs (digital dollars) will bring him (all of us) into the fold
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@dcarr said:
Answer this question if you can (without the irrelevant comments) :
From January 2008 to March 2020, M1 rose about 3 trillion and M2 rose about 8.5 trillion.
Currency in circulation rose about 1 trillion during that same time span.
Where did the extra 2 trillion (M1) and 7.5 trillion (M2) come from and how was it created ?
The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ
YOU are not the U.S. economy. The U.S. economy is counting on people buying on credit a new smartphone every 12 months, signing up for a $750/month car loan, going to Starbucks every day, etc., etc., etc.
CBDCs (digital dollars) will bring him (all of us) into the fold
Unfortunately I think you're correct. It comes down to control and power. There may be situations where some can live off the grid but for most it will be bowing to the beast or else.
The longer I live the more convincing proofs I see of this truth, that God governs in the affairs of men. And if a sparrow cannot fall to the ground without His notice is it possible for an empire to rise without His aid? Benjamin Franklin
@dcarr said:
Answer this question if you can (without the irrelevant comments) :
From January 2008 to March 2020, M1 rose about 3 trillion and M2 rose about 8.5 trillion.
Currency in circulation rose about 1 trillion during that same time span.
Where did the extra 2 trillion (M1) and 7.5 trillion (M2) come from and how was it created ?
The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ
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So the extra 2 trillion (M1) and 7.5 trillion (M2) is created "out of thin air" (via electrons).
The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ
"Fractional reserve banking allows banks to essentially create money in the economy."
What is not created by debt is created by printing (MMT - the Magic Money Tree).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Comments
A Ponzi Scheme is artificially high asset prices that collapse. Show me the asset class that is going to collapse. Tell me when.
Telling me the dollar will fall/collapse against a democratic China's currency in 2050 doesn't count.
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits principal and interest to earlier "bond" investors with funds from more recent "bond" investors.
My US Mint Commemorative Medal Set
I think that a Fed version of a Ponzi scheme is a form of fraud that lures "bond" investors by paying profits and interest to earlier "bond" investors with funds from more recent "bond" investors.
If that isn't a Ponzi, I'd like to know what is.
I knew it would happen.
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That is the exact definition of a "ponzi" scheme. Paying earlier investors with funds from newer investors.
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Yes, and in the long run we'll all be dead too. The "fundamentals" make no practical difference to the outcome because the outcome is still almost if not entirely based upon changes in psychological perception. That's why gold still sells for less in CPI-adjusted prices vs. 1980 and silver sells for about 40% less in NOMINAL dollars, also since 1980. That's two generations.
Gold is not historically cheap. Everyone I've read who claims it (whether due to manipulation or otherwise) ignores the relative price versus other physical goods and services. If the price of gold has been manipulated, it sure has been a spectacular failure since convertibility ended entirely in 1971 It's also supposedly pure coincidence that it succeeded with a far less important monetary metal, silver
The primary purpose of "money" (what gold is supposed to be) isn't to trade it for other forms of "money" (silver, "crypto", or fiat currency) but ultimately the goods and services people need and want. By this entirely sensible standard, it's not close to cheap.
I don't use this type of argument because "fundamentals" don't have anything to do with the price of anything, other than in limited instances serving as a minimal price floor. (E.g., a coin won't sell for less than FV as long as society resembles anything close to its current form.)
The so-called "fundamentals" are believed to true by "assuming facts not in evidence", claiming causality that doesn't actually exist.
My explanation for gold's relative price is the lack of confidence in the global monetary and financial system. It's a system designed to fail, and the price reflects it indirectly, but this alone has no practical value when "investing". My explanation for the post-1980 gold-silver ratio isn't manipulation, but collective perception of its reduced role as a monetary metal. It's not viewed as equivalent "money".
It's also a fallacy to assume that those buying the "paper" versions actually or mostly want physical. There is no evidence of that. Most buyers of "paper" substitutes are speculating on the future fiat currency price change.
They may wish they had it later and be sorry they don't, but that's something else entirely. They don't want it now because they don't share the psychology of physical metal buyers.
By the way, I will reiterate that I agree with the sentiments of the thread title, at this time. So, not arguing that.
It's a straight refinancing method used by homeowners, corporations, and governments. As long as the economy and government finances can pay the debt, it's not a problem.
The Debt/GDP ratio in Japan is about 250%. European countries hit the wall when the number gets to about 130% -- and that's for 3rd-rate economies.
The U.S. is at about 100%. We're fine.
Everything is based on psychological perception. Do you really want to go down that rabbit hole? For thousands of years there has been the psychological perception that gold has value whether the accounting of that value has been in corn, wheat, sugar, salt, land, etc. The psychological perception that paper is a substitute for gold is a fairly recent and greatly perverted perception over the last 50 years of manipulation.
Here's the deal: up to the last 50-60 or so years, people's ENTIRE LIFE SAVINGS and the economies could get wiped out. It was a legitimate fear becaust for many people on Earth, it happened ever few decades.
In other words....lose 100% of eveything you own. Not 50% or 75% and then wait to get it back in 5-10 years. You worked for decades....30 or 40 or 50 years....and then you lose 100% of your life savings.
That happened all the time in Europe. Wars would reduce currencies and financial markets to ZERO. It happened to France 3 times within 75 years: 1870....1914....1940.
Gold was the only thing that didn't go to zero. Gold held it's value. Gold might even appreciate. Gold could be hidden in your backyard if you didn't want to keep it in a bank. Gold could be brought to another country in your pocketbook or the lining of your coat. So the rich and peasants alike held gold. The French hoarding culture, which I've discussed on other threads, reached billions of dollars in gold by the 1920's.
Today, people can have safety and preserve capital with financial markets. Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value. They appreciate in times of stress. They are the New Gold Standard and have been since 1980.
In 1980, both the gold and currency markets traded about $1 billion daily. Today, because of the increased liquidity and safety of U.S. and other country fixed-income markets.....gold trades about $60 billion daily but the currency markets are at $7 trillion. It's not remotely close as you need the currencies to access the risky and risk-free financial instruments.
Treasury Bonds, Notes, and Bills are the go-to investment when one is fearful. They hold their value.
I wouldn't bet on it.
In 1980, both the gold and currency markets traded about $1 billion daily. Today, because of the increased liquidity and safety of U.S. and other country fixed-income markets.....gold trades about $60 billion daily but the currency markets are at $7 trillion.
Read what you just wrote. Using your numbers, on a relative scale the implication is that all of the gold is worth 60 times what it was worth in 1980, but that paper & fiat assets are "worth" 7,000 times what they were worth in 1980 - a factor of 116.6. That's more than inflation - it's an exercise in self-deception to believe that fiat money creation equals wealth creation.
The banking system is a fraud.
Wars would reduce currencies and financial markets to ZERO.
You should read your own analysis. The currency and bond markets are anything but safe or risk-free, especially when uncontrolled debt expansion is being used to finance the massive spending programs that are now taking place.
The Fed is responsible for what is about to happen, and so is Congress and the President. It's not going to be pretty.
I knew it would happen.
Some folk have 15 to 20% annualized returns since end of April. That ain't too shabby.
Knowledge is the enemy of fear
Everybody else, including folks with billions on the line, say otherwise. Maybe you should reconsider.
No, that's NOT what that number reflects. It shows that whereas once you needed gold to protect assets, today there is so much demand for TRUE FINANCIAL SAFETY that currency markets have taken off (so has U.S. Treasury bill/bond volumes, which reflect our reserve currency status and deep, liquid markets).
Total Household Financial Net Worth was about $8 trillion in 1980 and was just over $120 trillion last year....an increase of about 15-fold.
You obviously don't understand banking or banks. A blanket statement like that is useless.
Do you put your money where your postings are at ? If you do, let us know how you do financally.
When you & coho tell us which institutions you work for, then we can discuss my financial standing.
I knew it would happen.
If the price of gold was manipulated as you infer, there is no way gold would have risen by a multiple of roughly 40 since 1971 especially while silver has been left in the dust since 1980.
If this manipulation existed as you infer and the price was really undervalued as the believers in manipulation claim, there wouldn't be a single physical ounce to be bought now or during this entire time.
That's how tradeable markets work. No one is stopping anyone from buying physical.
Look at relative prices. Gold isn't cheap. That along with the price performance since 1971 is the best evidence against this type of claim.
I am self-employed, managing $$$ for a few F&F. I've worked for 2 Private Banks and a bunch of smaller firms in my career.
I'm accountable to my investors every day from 9:30 AM to 4 PM. I get graded every day. If I post something here and act on it there....it better work out. Or at least not blow up.
Money, like people, can leave at any time.
There is no arbitrary line which when crossed, triggers a crisis.
The long-term "fundamentals" of the US and western societies generally absolutely "suck". Fundamentals (in other words, what represents the well--being of any society) are a lot more than the performance of financial markets or some data point like GDP "growth" which is substantially fake.
Warren Buffet said it best: betting against the United States is not a smart thing. Lots of problems that we think are insurmountable turn out to be fixed: Y2K....budget deficits....energy crisis....inflation....etc.
I read that AI might boost real GDP by 1% a year. I'm not sold on it, but if it happens, that is HUGE. It means that Debt/GDP ratios collapse....tax revenues soar....demographic problems that take 40-50 years to fix get solved in under 12 years.
Remember, it took Socialist Greece 30 years to hit the fan. Will take much longer for larger, better-diversified economies.
Bonds, Notes and Bills are the go to investments until they are not. Again, this perception that paper and digital assets are secure is VERY recent in terms of money. While I work within the system I'm somewhat prepared for this system to break down. I'm a simple minded individual and my simple mind tells me we can't go on creating dollars and debt out of thin air forever without suffering any consequences AND that those consequences become more severe the longer this facade is allowed to continue.
Will take much longer for larger, better-diversified economies.
Certainly, won't be in ours or the next 5 generations lifetimes. RGDS!
Waiting for the end of currency like in STAR TREK or some futuristic society is not something worth considering, IMO.
Why live in a house when you should be in a mountain, better to withstand an asteroid hit, right ?
We're NOT just "creating dollars" out of thin air. We have an independent Federal Reserve which watches dozens of indicators and inflation is back to about 3%, which isn't 2% but it's not The 1970's, either.
I think the odds of a significant currency devaluation are much higher than the Earth getting hit by an asteroid. The flip side of the rise in the cost of food and energy, the increase in the cost of gold and silver, over the last six months, is the devaluation of the dollar.
The Federal Reserve watching indicators doesn't negate the higher cost of goods and services that has occurred over the last six months. They caused the inflation that occurred and may have slowed down the rate of increase but prices are still higher than they were which equates to a net loss in the value of the dollar. The national debt is at an all time high, growing in dollars at a record pace while interest rates have double over the last year. You don't see a problem with that? Or does it give you comfort that we're the best of the worst as far as bad economic policy?
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OK, thin electrons then.
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LOL Keep praying for the destruction of 'Merica. This place IS GREAT!! You're fantasy just ain't happen so I ask you yet again, go get a life. THKS!
We're NOT just "creating dollars" out of thin air.
Ok then, where are the $1 trillion dollars every 100 days coming from?
We have an independent Federal Reserve which watches dozens of indicators
Every one of the leading economic indicators for future economic activity are pointed DOWN. So exactly how is the Federal Reserve helping anyone?
End the Fed.
I knew it would happen.
I'm not praying for the destruction of America BUT we have spent $34 trillion of borrowed money and what do we have to show for it? Crumbling infrastructure (roads, bridges, tunnels, electric grid, airports, etc.), a massive number of people either homeless or living in poverty, an unhealthy population with a standard of education that is slipping. We're no longer the lead producer of steel, automobiles, semiconductors, white goods (refrigerators, washing machines, stoves, etc.). We have dug ourselves into a hole and for the most part all I hear from our "leadership" is keep digging and dig faster. I don't care that the DOW is approaching 40K. That's all smoke and mirrors.
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I'm not the praying type. Whatever happens is going to do so whether I pray for it, or against it, or not at all.
Putting your worthless obfuscation and distraction attempt aside, here is data directly from the Federal Reserve itself.
The way M1 and M2 Money Supply was calculated changed in May 2020.
So to be consistent, the comparison will be made from January 2008 through March 2020.
This first chart shows the total amount of currency (Federal Reserve Notes) in circulation (see the dark blue line):
The chart only goes back to just before 2008. In 2008, the total amount of Federal Reserve Notes in circulation was 0.83 trillion dollars. As of March 2020, the amount was 1.90 trillion $. This was an increase of 1.07 trillion $.
This next chart shows M2 Money Supply, which includes cash in circulation plus most liquid bank deposits.
In 2008, M2 was 7.5 trillion. In April 2020 it had grown to 16.0 trillion $. This is an increase of 8.50 trillion $ for M2.
M1, the narrowest measure of liquid money in circulation, was 1.3 trillion in 2008 and 4.3 trillion in March 2020 (an increase of 3 trillion for M1).
So if the total amount of available money in circulation increased by 8.5 trillion, and the amount of actual paper currency in circulation increased by 1.07 trillion, where did the other 7.43 trillion come from ?
Electrons.
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If gold is worth 2000 today and 3000 tomorrow, then where did the additional 1000 come from?
Knowledge is the enemy of fear
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If you think you know, don't be shy, spit it out.
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But the dollar is super-strong against most currencies. The Yen has plunged, Euro has issues, and the Yuan has problems, too.
Only Japan looks like they have clear sailing for the next 5-10 years. Plus emerging markets like India.
Yes, ultimately currencies are measured against another. You can be the worst team in the NFL but you'll beat any High School team. The U.S. might have issues that MIGHT matter in the 2050's but they won't hurt our economy or the dollar in the 2020's or 2030's. China is headed for a Minsky Moment with their collapsing labor supply for the next 30-40 years.
Gold will go up based on supply and demand factors. I would not be surprised to see a rising gold price along with a stable to higher dollar. Rising incomes in many countries that were subsistence level from 1970-2020 will instead have them doubling their gold buying every 8-12 years.
I watched the monetary aggregates every Thursday at 4:30 PM in the 1980's.
Your charts mean nothing today. You're 40 years late.
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Answer this question if you can (without the irrelevant comments) :
From January 2008 to March 2020, M1 rose about 3 trillion and M2 rose about 8.5 trillion.
Currency in circulation rose about 1 trillion during that same time span.
Where did the extra 2 trillion (M1) and 7.5 trillion (M2) come from and how was it created ?
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If gold is $3000 today and $2000 tomorrow, then where did the $1000 go?
Knowledge is the enemy of fear
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So do you think you know, or not ?
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Every single non-backed currency that has ever existed has eventually declined to its intrinsic value, which is zero. Since it is estimated that 99% of the world's citizens do not own any gold, many must still believe their fiat currencies are money, instead of debt, and that "This time is different".
It will only take a small percentage of the world's population to realize their purchasing power is dropping, and purchase gold as store of value, to drive the price up significantly from here.
For example, according to the World Gold Council, rampant inflation, a weakening currency and geopolitical tensions are boosting demand for gold in Turkey. In terms of bars and coins, Turkish demand for gold was 44 tonnes in the first quarter of 2024, up 50 percent on the preceding three months. Gold jewelry demand rose for an eighth straight quarter to 11 tonnes, and their central bank bought a further 30 tonnes of gold in the first three months of this year, expanding its reserves to 570 tonnes.
The major drop in the value of the Turkish lira vs the dollar which triggered a lot of this gold buying activity was when their central bank lowered interest rates too fast. It seems the US is about to embark on this path.
My US Mint Commemorative Medal Set
Yes, you've told me this before. Buffet ignores the impact of culture, as do you. I'm also not claiming what you think I'm claiming, yet. In our prior exchanges, I've claimed that the majority of Americans are destined to become poorer or a lot poorer because economic "growth" since 2008 is entirely artificial and most "wealth" is fake too. That's my claim now too, because there is never something for nothing. Current US living standards are entirely dependent upon the loosest credit conditions and lowest credit standards in history.
I'll agree when there is actual evidence it amounts to something. Some "AI" will amount to something but much or most of it won't. Depends upon what it actually does. "AI" isn't actual intelligence and it's not alive either. It's a computer program using huge data sources and a lot of processing power. It's not a deus ex machina.
Increasing GDP in and of itself doesn't make any society better or more prosperous. Most or practically all GDP "growth" since 2008 is the result of increased federal deficit spending. Look at the data yourself. I didn't make it up. I've told you this repeatedly and you ignore it. Whatever isn't the result of increased deficit spending is substantially if not entirely attributable to deranged monetary policy. You've repeatedly ignored that too.
If the economy is so fantastic, why are what were previously considered emergency measures necessary for over 15 years? (No, I'm not actually asking.)
As for demographics, I can't provide an appropriate reply on this forum but it's a big problem in the US too. The US doesn't have the Japanese demographic problem. It has another one which is actually worse. It exists elsewhere too, especially in Europe.
Yes, you've told me that too, just like you did in your last reply with Japan. Neither experience has any predictability on the future in the US.
Japan should have allowed their bubble economy to burst in 1990 and "sucked it up". Greece never should have adopted the Euro. The Euro will either require a political union to survive or the EU as it exists now is "toast".
You're implying a future "black swan" which isn't one. But if you want one, first on my list is completely "off the rails" US foreign policy.
I agree with you.
No, the country or the world isn't coming to an end. But you are correct that the almost $30 trillion 21st century increase in the national debt is a symptom (not a cause) of extended social and economic decay. It's either "kicking the can" as far into the future as possible or a delusional belief in something for nothing.
For those who follow international events, it also sure seems US leadership is trying to get the country into major military conflict on multiple fronts simultaneously. If there is one supposed "black swan" out there, that's number one on my list. That's a recipe for disaster.
@WCC said (among other things!): "economic "growth" since 2008 is entirely artificial and most "wealth" is fake too"
One can reasonably question whether some assets, including some equities and some real estate, are overvalued.
But, the economic growth in the US in the 21st century (and since 2008 in particular) is very real and is driven by a highly innovative and productive economy. Among the areas of growth and innovation coming from the US economy include:
The list goes on and on. This is generating growth and vast new wealth. (much of which is shared through pension plans, 401ks, etc.)
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Another aspect to this question, and perhaps the most important aspect, is who benefits the most from the creation of these trillions ? Who gets that money first and is able to deploy it before it floods out there and dilutes the value of everyone's currency and deposits ? Banks.
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does "robbing Peter to pay Bernie" ring a bell?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
No but robbing Peter to pay Putin and the wannabe rocket man certainly does. God bless The Commonwealth! RGDS!!
The issues the U.S. has are hurting the economy and individuals TODAY. The significant increase in pricing this year has hurt people TODAY. Credit card debt up, car repossessions up, mortgage default rates relatively low but climbing, unemployment rate starting to climb, business default rates climbing, consumer savings at 3.70% down from last year's 5.3% and all of this happening in an election year.
While the dollar may be strong against other fiat money it's losing value against real money, gold and silver. Other nations are making serious attempts to divest themselves from the dollar. But the greatest sign of serious problems ahead is no one in DC seems to want to take the situation seriously enough to even discuss addressing the issues driving us toward the cliff. Dig and dig faster.
But how many of these innovations are creating a significant number of jobs in the U.S. Nvidia does manufacture any of their own chips. Most of the production is in Asia. Those innovations occur here but the work is done elsewhere. So are Americans profiting from those innovations?
I've worked in the field of electronic component manufacturing and distribution for forty years. Nvidia is one of my customers. The design work is done here but the vast majority of the manufacturing is done off short. I could name a dozen other big names in electronics where the situation is the same. Forty years ago the mix of U.S. versus off short manufacturing of components was about 50/50. Today it's 95/5 with the 95 being done elsewhere.
Not sure what country you are living in because the US I live in is absolutely BOOMIN. Credit card debt? 0, Auto loans? 0, Mortgage loan? ~$40K at a 2.75%. Could pay off with a click of the mouse but why when my bank is paying me 2x that in interest. Job? Yep, with a salary increase of 70% in the last 4 years. Savings accounts, brokerage accounts, the Au stack, 401k's, IRA's? All BOOMIN! The only difference between me and them is I don't need a fancy new smartphone every 12 months, no need for a fancy new car, starbucks, I know how to pack my lunch etc. It's not difficult. THKS!
YOU are not the U.S. economy. The U.S. economy is counting on people buying on credit a new smartphone every 12 months, signing up for a $750/month car loan, going to Starbucks every day, etc., etc., etc.
CBDCs (digital dollars) will bring him (all of us) into the fold
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The currency in circulation is what is called "high-powered money" and is the fuel for credit creation. That increase in HPM led to the boost in the monetary aggregates, notably M1, M2, and M3. HPM boosts lead to increased M1...more of a boost to M2....and usually more M3.
The big boost was necessary to counter the drop in velocity.
Milton Friedman, Quantity Theory of Money: MV = PQ
Unfortunately I think you're correct. It comes down to control and power. There may be situations where some can live off the grid but for most it will be bowing to the beast or else.
I don't see it slowing down, but I don't expect 5k in my time..
I just put it together from scratch. California Coins
Vintage site: JayCoinShop.com (Both same stuff just different flavors?) #numismaticmetals
Make some stupid offers now. https://collectorscorner.com/dealer/default.aspx?dealerId=1045&pt=1
Maybe 3k over the next 5-6 years.
I just put it together from scratch. California Coins
Vintage site: JayCoinShop.com (Both same stuff just different flavors?) #numismaticmetals
Make some stupid offers now. https://collectorscorner.com/dealer/default.aspx?dealerId=1045&pt=1
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So the extra 2 trillion (M1) and 7.5 trillion (M2) is created "out of thin air" (via electrons).
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The fuel for credit creation is debt. Also known as [Fractional Banking](https://www.nerdwallet.com/article/banking/fractional-reserve-banking#:~:text=Fractional reserve banking is a system in which banks (and,to a lesser extent, investments.)
"Fractional reserve banking allows banks to essentially create money in the economy."
What is not created by debt is created by printing (MMT - the Magic Money Tree).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey