Volcker Impact to PMs

Longshot

Paul Volcker has been named as the head of Obama's special economic advisory board. The last time he was in this situation he raised interest rates to nosebleed hieghts which effectively killed the bull market in gold and silver, but raised the value of the US dollar, which was in crisis at the time.

I wonder if this can happen again given the current debt level the govt and everyone in this country is carrying.

Here is the link: Volcker Announcement

What do you think will be the effect of this?

Placid

Raising interest rates is considered the normal move to combat hyper inflation and lowering them is normal to fight deflation.
Right now the economy dosent have the inflation problem so I see no reason he will raise interest rates until hyper inflation starts to happen.
I think he will do with interest rates whatever the economy dictates.

CertifiedGoldCoins

Volker? Good thing he's only on a committee. There are more retreads in the Obama lineup than in a dumpster at a tire store. All with old ideas that didn't work the first time around. Polyester leisure suits will be back, no doubt.

HonoluluDude

Volcker = 2 Presidential terms too late.

DoubleEagle59

Raising interest rates now or anytime in the near future is a Death MOve for the US Economy (think Stock market and Housing).

Keeping interest Rates low or Lower is also a Death Move (think US dollar).

I guess you know what I think about the chances of a quick US Recovery.

Bear

t some point, the Fed and the Treasury will have to sop

up the trillions of dollers now flooding the market or we

will face Weimar Republic type of hyper inflation.

Deadhorse

<< <i>t some point, the Fed and the Treasury will have to sop

up the trillions of dollers now flooding the market or we

will face Weimar Republic type of hyper inflation. >>




But they won't and we are going to face Weimar.

That's when they pull out that ace card and change our money while devalueing it by 90%.

Just trade in your $$ at a 10 to 1 ratio for the new (Amero possibility?) dollars.

This is going to get real ugly over the next couple of years.

Just hold real money, gold and silver and wait this mess out and pray it only lasts 2-3 years.

Don't need no 9 year depression and the liklihood of serious wars breaking out.

HonoluluDude

<< <i>

<< <i>t some point, the Fed and the Treasury will have to sop up the trillions of dollers now flooding the market or we will face Weimar Republic type of hyper inflation. >>

But they won't and we are going to face Weimar. >>

Yep, once the turbo inflation floodgate is opened, it'll be very difficult to shut down. The dollar is toast.

Deadhorse

<< <i>Yep, once the turbo inflation floodgate is opened, it'll be very difficult to shut down. The dollar is toast. >>




Toast wil be more valuable than the dollar.

We'll look back fondly to the time when a dollar would actually buy a piece of toast.

HonoluluDude

<< <i>

<< <i>Yep, once the turbo inflation floodgate is opened, it'll be very difficult to shut down. The dollar is toast. >>

Toast wil be more valuable than the dollar. We'll look back fondly to the time when a dollar would actually buy a piece of toast. >>

roadrunner

The tactics that worked for Volcker in the 1970's and early 1980's are not really trasferable to the mess we have today. For one thing we actually had a solid industrial base back then, solid banks, and a solid overall econcomy. While rates can cure the disease, it will also surely kill the patient this time around. Volcker is now 25 years too late but the Obama window dressing looks good.

roadrunner

cohodk

<< <i>t some point, the Fed and the Treasury will have to sop

up the trillions of dollers now flooding the market or we

will face Weimar Republic type of hyper inflation. >>



What if there really arnt trillions of dollars flodding the market? I know the FED has been printing presses running full tilt, but the banks have lost all our money and the presses are just trying to fill the void created by the losses. So I ask, If it is lost and you dont know it, but then replaced before you find out, was it really lost in the first place?

History has shown that this country has never had deflation followed by hyperinflation, but rather it is inflation that preceeds deflation. And we all know we have had copious amounts of inflation for the past 80 years.

And dont forget....we are currently in the most massive of all bubbles of all time in the debt market.

Bear

Bubble, bubble toil and trouble.

We may well resolve the economic

crises, but make no mistake, there

will be war. Large regional wars in

which we will be fully involved. Once

again, Mankind is marching toward

madness. One act of insanity and the

world will be torn asunder. Perhaps

we are closer to the biblical prophesy

of Armegedon, then we realize.

Deadhorse

<< <i>Bubble, bubble toil and trouble.

We may well resolve the economic

crises, but make no mistake, there

will be war. Large regional wars in

which we will be fully involved. Once

again, Mankind is marching toward

madness. One act of insanity and the

world will be torn asunder. Perhaps

we are closer to the biblical prophesy

of Armegedon, then we realize. >>




Harmagedon is actually a rather small hill in Israel. I've been there more than once.

It has already been the scene of many battles in history. I believe King David beheaded a few prisoners there long ago.

That's where Armageddon comes from. That place certanily won't be a final battleground.

However, I can see that when it was written, that would seem to be the logical place.

I think we are closer to a civil war in this country than 99% realize and many other wars across the planet.

It could get out of hand ranther quickly and those in DC are in further over their heads than they can comprehend.

Look what the terrorists are already doing just recently and it's going to grow exponentially.

The US Embassy was also bombed tonight in Kabul.

The Penn Station bombings were stopped just in the last 24 hours. Funding for domestic control and information gathering which has stopped over 1100 attacks on US soil is about to be slashed if not cut out altogether.

Soon these attacks will occur on US soil. 99% of the Muslim world believes we have elected one of theirs as our President. This will only make them bolder.

It doesn't bode well for our country or it's economy. While we have the right people to handle these things, they are being releived of duty and there are no replacements.

The mere fact that the Secretary of Defense is being kept on tells me that the Pres select has become aware of facts he had no idea even existed.

sumnom

<< <i>Raising interest rates is considered the normal move to combat hyper inflation and lowering them is normal to fight deflation.
Right now the economy dosent have the inflation problem so I see no reason he will raise interest rates until hyper inflation starts to happen.
I think he will do with interest rates whatever the economy dictates. >>



Wait a minute, are you saying that just because he did something in one situation it doesn't mean that he'll do the same thing over and over in all situations? You, sir, are a dangerous radical.

sumnom

Soon these attacks will occur on US soil. 99% of the Muslim world believes we have elected one of theirs as our President. This will only make them bolder.

If even your 99% claim is true, why would that "fact" embolden terrorists?

Deadhorse

<< <i>Soon these attacks will occur on US soil. 99% of the Muslim world believes we have elected one of theirs as our President. This will only make them bolder.

If even your 99% claim is true, why would that "fact" embolden terrorists? >>




The absence of a fear of retribution. The fact that domestic intel budgets are being slashed and many cut away altogether is a sign that they aren't going to be tracked and taken into custody as they have been since 9/11.

BTW, it is true. Get out more or at least read foreign newspapers more.

roadrunner

We never had hyperinflation per se in the 1970's yet interest rates were solidly in the double digits. Remember that the CPI index consists 60% of items that are resistant to change (imputed homeowner rents, durable goods, white goods, etc.). And in a recessionary environment these will be stagnant to falling. In order to change the 40% part of the index that is more susceptible to inflationary effects, you need to more than double the existing inflation rate to get a 100% change in the CPI. In other words we'll need an actual inflation rate above 20-25% just to get the CPI to register at >10%. The CPI...it's a beautiful thing.

roadrunner

Loki

While I agree that for value-holding purposes, PM's are the way to go at this time, I just don't see the hyperinflation theory holding up. The Fed is pumping bailout money to an economy that has massive toxic debt. All the extra dollars are doing now is helping to deleverage this debt and really just transferring the toxic debt to the taxpayer (but there is just too much debt to pay off). Banks are not pumping the money into the money supply in the form of loans at this time, and the multiplier effect (i.e. inflation) that loans give the economy is not being realized.

I don't see hyperinflation in the future, but I clearly see the US not being able to pay off the debt it is creating for the country via the TARP and other bailouts. We are around 10 trillion dollars in debt as it is, which equates to something like $35 K for every breathing soul in the US. The outstanding debt in our economy is something like $1000 trillion and a high percentage of that debt is toxic. So for every $10 trillion in bailout money, another $35K will have to be serviced by each of us. There is no way imo that we can ever pay this off. The best thing the US can do is keep the house of cards stacked high with more and more bailouts. After all, if a debt is incrementally paid each month, even if the debtee (meaning the US) is technically bankrupt, it can go a long way to keep everyone happy. Credit card companies have this down to a science... the small minimum payment they ask you to pay will service them forever, and the CC companies will be happy, even though the debt can last beyond your lifetime.

I believe it is either continuing down this road of bailouts and never being able to pay off the US debt but servicing it forever, or a new dollar-killing currency being introduced such as the Amero, that will be the answer to this mess. I just don't see hyperinflation fitting in to either of these scenarios.

sumnom

<< <i>

<< <i>Soon these attacks will occur on US soil. 99% of the Muslim world believes we have elected one of theirs as our President. This will only make them bolder.

If even your 99% claim is true, why would that "fact" embolden terrorists? >>




The absence of a fear of retribution. The fact that domestic intel budgets are being slashed and many cut away altogether is a sign that they aren't going to be tracked and taken into custody as they have been since 9/11.

BTW, it is true. Get out more or at least read foreign newspapers more. >>



I am afraid you do not know the degree to which I get out or what materials I read but I would be willing to read some research or consider some evidence suggesting, 1) 99% of the Muslim world thinks Obama is a Muslim, 2) such a belief would embolden terrorism, and 3) terrorists care about retribution. Can you point me to some?

Deadhorse

<< <i>

<< <i>

<< <i>Soon these attacks will occur on US soil. 99% of the Muslim world believes we have elected one of theirs as our President. This will only make them bolder.

If even your 99% claim is true, why would that "fact" embolden terrorists? >>




The absence of a fear of retribution. The fact that domestic intel budgets are being slashed and many cut away altogether is a sign that they aren't going to be tracked and taken into custody as they have been since 9/11.

BTW, it is true. Get out more or at least read foreign newspapers more. >>



I am afraid you do not know the degree to which I get out or what materials I read but I would be willing to read some research or consider some evidence suggesting, 1) 99% of the Muslim world thinks Obama is a Muslim, 2) such a belief would embolden terrorism, and 3) terrorists care about retribution. Can you point me to some? >>




You'll have to do your own research.

I'm not at liberty to enlighten you from my sources.

There is plenty of it out there, you should have no problem verifying.

You may want to check recent headlines for a starter. Penn Station ring a bell?

sumnom

I'm not at liberty to enlighten you from my sources.

I see.