I don't think luxury cars is a good comparision. I'm not familiar with Mercedes the way I am Suburbans. A semi-loaded 1996 4x4 LS Suburban would've been around 35k, a 2014 4x4 LS Sub is now around $52k. The big difference with about a ton of steel replaced with plastic and a smaller engine for slightly better gas mileage.
OTOH .... food isn't something people can put off buying for a few years like an automobile.
Out of curiosity I pulled up my personal finances from 10 yrs ago. My wife works for a lge company as an executive in the same position since 2001. I own the same real estate investments as I did in 2002, mixture of Residential, Industrial and land.
2002 Food Bill of $12600 Family of 4. 15 yr Teenage boy that ate everything in the House, litterally. 10 yr Daughter that ate the same as she does now. Parents probably eat less now that we've been in a constant diet phase of trying to keep old age fat off. Both parents too busy working to fix meals every night. We did a huge percentage of eating out / take out meals. Real Estate Tax on Personal Home - $3612
2012 Food Bill of $20800 (683 mth increase) Same Family of 4. 25 yr Son that eats a lot less. We now cook at home 6 sometimes 7 nights a week. Real Estate Tax on same Home - $9222 (That's an increase of $500 mth) Wife Salary down 22% from 2002. Company has cut staff and all bonuses back in 2009. Reduced pay for Mgmt across the board by 20% My Investment income, mostly Industrial real estate. 2002 full occupancy. Since 2009 I've had roughly a 30% vacancy. My R.E. income down approx 50% because of Taxes. I haven't been able to raise rents since 2009. Real Estate Tax on my vacant land has increased almost 300%. I've had a piece of commercial land parcel on the market for 3 yrs with not one offer.
There is a huge segment of the population that have been under wage freeze for a number of yrs now.
I want the Gov to stay shut down. I want the US to default on T bills. I want the Stock Market to Crash to 8000 Dow. I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol.
<< <i>I don't think luxury cars is a good comparision. I'm not familiar with Mercedes the way I am Suburbans. A semi-loaded 1996 4x4 LS Suburban would've been around 35k, a 2014 4x4 LS Sub is now around $52k. The big difference with about a ton of steel replaced with plastic and a smaller engine for slightly better gas mileage.
OTOH .... food isn't something people can put off buying for a few years like an automobile.
Out of curiosity I pulled up my personal finances from 10 yrs ago. My wife works for a lge company as an executive in the same position since 2001. I own the same real estate investments as I did in 2002, mixture of Residential, Industrial and land.
2002 Food Bill of $12600 Family of 4. 15 yr Teenage boy that ate everything in the House, litterally. 10 yr Daughter that ate the same as she does now. Parents probably eat less now that we've been in a constant diet phase of trying to keep old age fat off. Both parents too busy working to fix meals every night. We did a huge percentage of eating out / take out meals. Real Estate Tax on Personal Home - $3612
2012 Food Bill of $20800 (683 mth increase) Same Family of 4. 25 yr Son that eats a lot less. We now cook at home 6 sometimes 7 nights a week. Real Estate Tax on same Home - $9222 (That's an increase of $500 mth) Wife Salary down 22% from 2002. Company has cut staff and all bonuses back in 2009. Reduced pay for Mgmt across the board by 20% My Investment income, mostly Industrial real estate. 2002 full occupancy. Since 2009 I've had roughly a 30% vacancy. My R.E. income down approx 50% because of Taxes. I haven't been able to raise rents since 2009. Real Estate Tax on my vacant land has increased almost 300%. I've had a piece of commercial land parcel on the market for 3 yrs with not one offer.
There is a huge segment of the population that have been under wage freeze for a number of yrs now.
I want the Gov to stay shut down. I want the US to default on T bills. I want the Stock Market to Crash to 8000 Dow. I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol. >>
This is a much better snap shot of "real Life" as opposed to the luxury car market..[ I've bought 3 including 2 Mercedes over the past 10 years].. if you want to talk about value in an auto then the Mercedes value post earlier may have some legs.. however to go beyond to imply things are cheaper now is just hogwash. Many things today are of much graters costs period. BTW.. Yes the lux autos where great buys but still cost more then the others and always will.
If food and gas were included, COLA's would be higher, and that would cost the government money. By not including them they can continue to deny reality. As I've said here before, if you could eat a big screen tv or drive a computer , things would be hunky dorey.
If milk were allowed to float to its real cost without subsidies it would be $8 per gallon. But then demand would dry up and we'd have a short term overabundance of beef on the market. Link
Gas (oil) is a lousy indicator for inflation due to the heavy influence of speculation.
I want the Gov to stay shut down. I want the US to default on T bills. I want the Stock Market to Crash to 8000 Dow. I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol.
Your rant sounds very disturbing. I hope you are OK. Just remember that to live in the greatest country in the world (for now) you have to do your part. Otherwise, if taxes make you angry, you can move to somewhere where there are no taxes, like Somalia.
<< <i>Gas (oil) is a lousy indicator for inflation due to the heavy influence of speculation. >>
An average price would negate the speculation. So you shouldn't use today's price, but if you used the average weekly price for all of 1999, 2000, and 2001 and compared to the same for 2010, 2011, 2012 that would be fair. And the numbers would be similar. $1-2 compared to $2.5-$3.5 off the top of my head.
Thanks for sharing your budget information; it definitely facilitates a discussion to have concrete figures.
One key point: your numbers illustrate how significant regional variations may be. The tax figures, in particular, are hard to interpret without more context. Taxes on my U.S. residence in Seattle, WA have increased about 2 % per year during the time period you've described -- and this is in a state that has no income tax.
I do not believe that food inflation has been much more than 2 % per year in Seattle during this period, though I don't have personal figures to support this assertion. As a general comment, the quality of produce available in the Northwest is very good and has improved (both in quality and available variety) over the past ten years, so inflation figures need to be interpreted with caution.
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic.
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic. >>
Pineapples are all fine and good , but what about cranberry products? I can practically spit on ocean state cranberry company from my house but my cousin in colorado pays less for cranberry juice than I do
It isn't high labor costs , the pickers are all illegals , and it isn't transportation costs I can walk 50 feet from my property line and pick my own cranberries .
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic. >>
I know. I've flown many an airplane with the cargo hold smelling like pineapple be it from South or Central America. I've flown "Atlantic Fresh Salmon" by the crates from Santiago, Chile destined to the eastern seaboard. Yup, Atlantic salmon (farmed) from the Pacific side of SA. Go figure. Well someone has and it makes cents.
I empathize with comrade bronco though.
One reason for our higher costs among others that I've learned is the nonexistence of "illegal" labor...no porous border issues.
How long it takes is in the hands of the US economic policy makers and money printers. The US is its own worst enemy when it comes to protecting its world reserve currency status:
1. It's money printing and reckless fiscal control are telling the rest of the world the dollar is toast. 2. It's sanctions are encouraging international trade that does not involve US dollars, proving to the world that the dollar is not a necessity. 3. It's "policy" of artificially low gold prices is facilitating a speedy transfer of gold from the west to the east. This attempt to strengthen the dollar only expedites China's growing gold reserves and the day those reserves are used to back its currency. 4. As the most powerful central bank the FED is forcing others to follow its path of self destruction. These other central banks would love nothing more than to be free of this fate.
While daily economic events add to the destruction of the dollar, the nail in the coffin will be a Yuan backed by gold. Look for the Chinese to seize the right moment to do so. Not only will this result in US hyper-inflation as all of those dollars come home to roost, it will drive metal prices through the stratosphere. Also look for this to play out very rapidly once the Chinese are willing to accept the losses on the US debt they hold. This is why I continue to stack, even in the face of falling prices and against the advice of those who continue to look at the world through rose colored glasses.
"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 Chinese want to be a leading power in a very prosperous world. They certainly believe that they can and ultimately will be the world's leading power. Chinese leadership, especially the elite in the banking sector, are very well educated (often at Western institutions), and they are willing to adopt a long term perspective. They will pursue their goal of ever increasing prosperity and influence, but they are definitely not going to do anything that upsets the global economy on which their future prosperity so dearly depends.
In spite of the remarkable strides the Chinese have made, they do not yet have the intellectual or social capital to replace the US as keeper of the reserve currency. Certainly they want to continue to diversify their risks, and this means working to gradually diminish US dominance. But, the expertise in international finance at the People's Bank of China does not compare to that at the Fed, the European Central Bank, or the Bank of England. You cannot just create a currency and have people flock to it; the institutions required take years to develop.
<< <i>A few points about the gold-backed yuan theory.
The Chinese want to be a leading power in a very prosperous world. They certainly believe that they can and ultimately will be the world's leading power. Chinese leadership, especially the elite in the banking sector, are very well educated (often at Western institutions), and they are willing to adopt a long term perspective. They will pursue their goal of ever increasing prosperity and influence, but they are definitely not going to do anything that upsets the global economy on which their future prosperity so dearly depends.
In spite of the remarkable strides the Chinese have made, they do not yet have the intellectual or social capital to replace the US as keeper of the reserve currency. Certainly they want to continue to diversify their risks, and this means working to gradually diminish US dominance. But, the expertise in international finance at the People's Bank of China does not compare to that at the Fed, the European Central Bank, or the Bank of England. You cannot just create a currency and have people flock to it; the institutions required take years to develop. >>
And as my link points out they are slowly but surely being developed. To become the world's leading economic power will require reserve currency status. Gold backing will be required to upset the dollar's position. Shortsighted FED Keynsian academic "expertise" is its downfall. The soon to be largest economy in the world will not allow US economic policy to continue upsetting the global economy on which its future prosperity so dearly depends. Consider recent PBOC public lashing of US economic policy and China's recent downgrading of US debt to be a statement confirming this and to be the shot across the bow. To prevent China's economic advance will require a complete reversal on numerous FED fronts. It cannot be accomplished. The FED is too involved with covering runaway soverign spending/borrowing and bad real estate debt and providing money to fuel US equity markets. All at the cost of a stronger currency.
"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
I totally agree that Fed policy is severely misguided. But I think the Chinese shot across the bow is a very good thing. Although it has many facets, fundamentally I think it is meant to be constructive -- that is, the Chinese recognize that it is in their best interests to have more functional government in the US.
<< <i>I totally agree that Fed policy is severely misguided. But I think the Chinese shot across the bow is a very good thing. Although it has many facets, fundamentally I think it is meant to be constructive -- that is, the Chinese recognize that it is in their best interests to have more functional government in the US. >>
China's shot across the bow was meant to be a wake up call for the rest of the world and nothing more than posturing for it's planned new economic leadership role. It was taking the lead in admonishing the US. China knows it cannot change the US economic downward spiral. It is only attempting to wake up its remaining trade partners and convince them there is a need for a change in the US led worldwide economic outlook. Look for further public lashings from the PBOC, it's part of the PR campaign. A less functional US economy provides the fuel that China needs to lead the paradigm shift to another world status currency. China cannot do this without first changing worldwide perception of a firmly established US economic policy that has doomed emerging markets.
Foreigners sold more US$-based securities in June than after the Lehman Brothers bankruptcy. This is why taper talk was a smoke screen. Look for the FED to increase QE to absorb what is being dumped:
"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
We're of course not 180 degree apart in our thinking, but ... to get a sense of how far apart we are, what is your gut feeling of how soon this yuan gold-backed regime could be implemented? Do you see a concrete move happening within the next year? Could China fully implement a global standard that replaces the dollar by, say, 2018? Is it something that could happen quite suddenly, or something that would phased in over more than a decade?
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions!
<< <i>We're of course not 180 degree apart in our thinking, but ... to get a sense of how far apart we are, what is your gut feeling of how soon this yuan gold-backed regime could be implemented? Do you see a concrete move happening within the next year? Could China fully implement a global standard that replaces the dollar by, say, 2018? Is it something that could happen quite suddenly, or something that would phased in over more than a decade?
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions! >>
Could be within five years, more likely within three - China will set the timetable and I don't expect it will be a moment you will be able to pinpoint. I see concrete moves have already been made in this direction by China. Not only are they preparing themselves, they have begun to prepare their trading partners. I do not see it happening suddenly I see it as a work that is already in progress. One day the world will wake up and realize the US dollar has lost its reserve status role. Keep in mind that it is US demand for Chinese products that creates the need for China to hold US dollars. Velocity of money shows US spending, including that with China, to have contracted drastically. At some point, China no longer needs US consumers who are no longer buying. I believe China has switched their focus to european consumption.
US inflation rates could be in the neighborhood of 15-20% once foreigners shun holding any new US debt. And as we know, growing inflation easily fuels even higher inflation - history has demonstrated this on numerous occasions.
"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
<< <i>We're of course not 180 degree apart in our thinking, but ... to get a sense of how far apart we are, what is your gut feeling of how soon this yuan gold-backed regime could be implemented? Do you see a concrete move happening within the next year? Could China fully implement a global standard that replaces the dollar by, say, 2018? Is it something that could happen quite suddenly, or something that would phased in over more than a decade?
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions! >>
Could be within five years, more likely within three - China will set the timetable and I don't expect it will be a moment you will be able to pinpoint. I see concrete moves have already been made in this direction by China. Not only are they preparing themselves, they have begun to prepare their trading partners. I do not see it happening suddenly I see it as a work that is already in progress. One day the world will wake up and realize the US dollar has lost its reserve status role. Keep in mind that it is US demand for Chinese products that creates the need for China to hold US dollars. Velocity of money shows US spending, including that with China, to have contracted drastically. At some point, China no longer needs US consumers who are no longer buying. I believe China has switched their focus to european consumption.
US inflation rates could be in the neighborhood of 15-20% once foreigners shun holding any new US debt. And as we know, growing inflation easily fuels even higher inflation - history has demonstrated this on numerous occasions. >>
THIS!
I agree were in the middle of a slow transition. China has prepared themselves for years. My first awareness of this was in 2006 when they dramatically increased their purchase of gold. When the Chicomms see themselves supporting a self-containing-consumer-society the final switch will be pulled. Then we'll probably see the US take a dramatic leap into massive inflation.
I agree with the "middle of a slow transition" statement. And I agree that within a 3 - 5 year time frame, it looks like the Chinese may have a fully convertible currency and open financial markets. The result though, would not be domination of global finance by the yuan, but only the elevation of the yuan to one of the world's major currencies (now, the dollar, euro, and the yen, with some importance for the pound and the Swiss franc). The dollar of course will diminish in importance.
This in many ways would be good for the U.S. Being the keeper of the reserve currency has led to bad habits that we may be better off if we are forced to break. Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later.
<< <i>The result though, would not be domination of global finance by the yuan, but only the elevation of the yuan to one of the world's major currencies (now, the dollar, euro, and the yen, with some importance for the pound and the Swiss franc). The dollar of course will diminish in importance. >>
It's not a matter of the yaun overtaking the dollar. It is a matter of the dollar failing those that depend on it to hold value, due to internal mismanagement. When it does fail, a major currency will take its reserve status. China is positioning itself to be that currency. Euro and yen are following the fate of the dollar; Britain and the Swiss are not a large enough economic force to establish a reserve currency. Yuan is actually a shoe-in and need only sit back while the dollar is destroyed.
The only alternative will be a currency basket from someone like the IMF.
"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
"From our research, we have determined that the average price of a Big Mac is $4.38 (the range was $3.49 to $5.10), a decline $0.18 or a loss of 3.9% from what The Economist obtained in July. Annualized, this is inflation of 1.2% over the last 15 months.
As stated in previous posts, I believe that the Big Mac provides a better indication of price movements than the government compiled CPI. Many of us can neither follow nor actually experience what the CPI means or how it moves. Conversely, the Big Mac is consumed constantly, and we shell out hard-earned dollars to purchase the sandwich. Thus, it is a real-time metric of our economy.
Just recently, Placed Insights surveyed the eating habits of Americans to determine that individuals eat 17 Big Macs a second. This means Big Macs are eaten at a rate of 1,200 a minute, 61,200 an hour, 1,468,800 each day and 536,112,000 a year. At $4.38, the current average price of a Big Mac generated $2.3 billion in revenue for McDonald's from Big Macs sold in the U.S. alone.
My point is that people experience the change in the price of the Big Mac daily. It is tangible. Consequently, it is a good way to view inflation."
"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
China's dominance, if it occurs, has some very serious hurdles one of which is political, but the major one is demographics. The UN estimates China's population to peak in about 15-20 years. Then it declines by about 30-35% over the next 60-70 years. It is extremely difficult for an economy to grow when domestic demand declines. China is probably close to reaching full economic potential. Where will it find workers to occupy its factories? A tight labor force usually means increasing wages. Increasing wages are highly inflationary. China will lose its competitive edge, if it hasnt already, within 10-20 years. Hyper-inflation is more likely to be felt in China before the USA. Maybe thats why they are supposedly hoarding gold?
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
There's still a huge migration from rural to urban. In 2012 for the first time ever there were more urbanites than rural citizens. China use to have a "house registration" program that kept people in their cities for generations to qualify for their benefits. A Mao thing. After 1990 it was rarely enforced. They now have 160 cities over one million in population and about a dozen in the 10 million. They build an entire city infrastructure before allowing a single person and/or company move in. Crazy. I've noticed in Shanghai over this past year the tallest building in China (2nd in the world) being built. It reminds me of the skyscraper wars in NY in the twenties and thirties.
Hard to say when it will all slow down to our growth rate. I suspect a couple of more decades or so gauging by their demographics.
China's economy will have to contract as the economies of it's product buyers continues to contract. China's future will have to be in growiing internal middle class consumption. This requires growing a middle class.
Demographics in the private sector becomes highly overated when there is less money in the population's hands. Demographics' role in economics is one of labor supply/entitlement cost (putting money in human hands) and consumer demand/tax revenue supply (removing money from human hands). Current US velocity of money tells us money is not changing hands in the private sector making demographics important only in tax revenue and state "entitlement" matters. The importance of demographics in the public sector is controlled by those who set the policy affected by demographics (entitlement eligibility requirements, contributions, tax rates, etc.). Just another shift of free market economic influence from the private sector into the hands of economic controllers who may or may not know what is best for the economy or what is best for the people who are the economy.
"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
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
I'm really curious about the German demographics article, but can't get the link to work! >>
Try just pasting this into your browser. I need to read the report a few more times to really get my head around these stats and projections, but it is discussions like this that encourage critical thinking.
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
There's still a huge migration from rural to urban. In 2012 for the first time ever there were more urbanites than rural citizens. China use to have a "house registration" program that kept people in their cities for generations to qualify for their benefits. A Mao thing. After 1990 it was rarely enforced. They now have 160 cities over one million in population and about a dozen in the 10 million. They build an entire city infrastructure before allowing a single person and/or company move in. Crazy. I've noticed in Shanghai over this past year the tallest building in China (2nd in the world) being built. It reminds me of the skyscraper wars in NY in the twenties and thirties.
Hard to say when it will all slow down to our growth rate. I suspect a couple of more decades or so gauging by their demographics. >>
I think demand for these cities will be dramatically reduced in about 10-20 years. In the Old West we have ghost towns, China will have ghost cities.
What will happen to China when the world shifts its cheap labor outsourcing to India or Africa?
<< <i>It's not a matter of the yaun overtaking the dollar. It is a matter of the dollar failing those that depend on it to hold value, due to internal mismanagement. When it does fail, a major currency will take its reserve status. China is positioning itself to be that currency. Euro and yen are following the fate of the dollar; Britain and the Swiss are not a large enough economic force to establish a reserve currency. Yuan is actually a shoe-in and need only sit back while the dollar is destroyed.
The only alternative will be a currency basket from someone like the IMF. >>
Why is a reserve currency even necessary any more? As we have seen, major countries have been establishing direct trade agreements where trade is conducted in their own currencies. For those countries outside of the top 10 currencies, they can pick and choose which currency to use. I don't see why there has to be a single reserve currency any longer. I agree though, that perhaps an SDR is the ideal solution. I don't think the world is ready to rely on a single country's currency any longer.
<< <i>Why is a reserve currency even necessary any more? As we have seen, major countries have been establishing direct trade agreements where trade is conducted in their own currencies. For those countries outside of the top 10 currencies, they can pick and choose which currency to use. I don't see why there has to be a single reserve currency any longer. I agree though, that perhaps an SDR is the ideal solution. I don't think the world is ready to rely on a single country's currency any longer. >>
When a nation succeeds in establishing (convincing other nations) its currency as a reserve currency it creates a foreign need (demand) for that currency. That need includes buying the host country's debt in the form of bonds. At a time when the dollar was strong (backed by gold) the US was smart in arranging this through various trade and military protection agreements. Its downfall is going to be failure to protect the dollar's strength (removing gold backing/poor dollar management) and a lack of preparation for it's eventual shun by others. The US became too dependent on the dollar's reserve currency status and failed to create policy that continued the at home industrial/production edge. QE (irresponsible new money creation) by the FED to start covering debt that other nations will no longer buy is the proof in the pudding.
The advantage to having a reserve currency is that foreign traders need only stockpile that one particular strong currency to facilitate all of its foreign trade and not have to have multiple stacks of differing currency, many of which are very poor investments. Imagine having to keep a stack of Zimbabawean notes just to conduct trade with Zimbabawe. When a nation holds foreign reserves it is making an investment in those reserves. The advantage to the host country of the reserve currency is it will never face a balance of payments crisis, because it purchases imports in its own currency.
As the world's economy sees greater interaction, it has a greater need for a common trading denominator. The current problem other nations have with stacking dollars is that they see US policy destroying the value of those once very strong dollars. A reserve currency has to remain strong and be backed by currency protective policy. History has shown no single currency is able to do this indefinitely. History has also shown that gold backing restricts reckless currency policy. For this reason the world's economy is much more willing to accept a reserve currency that is backed by the restraints that gold provides. This is what puts China in the "next reserve currency" driver's seat.
I don't believe any major nation is prepared to relinquish control of it's currency (and associated policy) to an international group (IMF, World Bank) any more than it is willing to turn its political control/policy over to someone like the United Nations. Additionally, the eurozone has proven the pitfalls of a single currency among polically and economically differing nations. The euro's days are numbered.
I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China.
"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
Agreed. The "number" of days it will last are in the tens of thousands, if not hundreds of thousands or millions of days, but everything's days are numbered.
IMO no one reading this will live to see the dollar, euro, yen, swiss franc, or any of the other top currencies "die" completely. Change, sure, die, no.
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US. Try actively publishing information that makes the administration looks bad and the IRS will come after you. Try not-buying health insurance in 2014 and you will pay a penalty. Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through. Try getting a permit to build a house in Malibu. Try buying a 32oz Coke in NYC. Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US. Try actively publishing information that makes the administration looks bad and the IRS will come after you. Try not-buying health insurance in 2014 and you will pay a penalty. Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through. Try getting a permit to build a house in Malibu. Try buying a 32oz Coke in NYC. Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
You call that remarkable personal freedom? >>
You want to do those things?
I find that the modern USA does indeed have remarkable personal freedoms, within the limit of a society.
I am not prevented from doing anything that I want to do, within the reasonableness test of: I don't want anyone to be able to do to me or at me, those things I'm prevented from doing to them.
I find that the modern USA does indeed have remarkable personal freedoms, within the limit of a society.
I am not prevented from doing anything that I want to do, within the reasonableness test of: I don't want anyone to be able to do to me or at me, those things I'm prevented from doing to them. >>
None of the things I mentioned infringe upon anyone else in any meaningful way. Freedom to do something is not a question of whether or not I want to or ever will want to do something, it's about having the option if I ever choose to.
I will never open a cash-based health clinic, but it sure would be great if someone who wanted to had that option.
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US. Try actively publishing information that makes the administration looks bad and the IRS will come after you. Try not-buying health insurance in 2014 and you will pay a penalty. Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through. Try getting a permit to build a house in Malibu. Try buying a 32oz Coke in NYC. Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
You call that remarkable personal freedom? >>
In what country can you do all those things listed above?
I get your point though--in some countries people can freely murder other people, oftentimes being held in high stature for doing so.
"The reality is that Washington has now committed itself to a policy of permanent debt increase and QE infinity that can only possibly end in one way: a currency crisis."
"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 reality is that Washington has now committed itself to a policy of permanent debt increase and QE infinity that can only possibly end in one way: a currency crisis." >>
Or a blockbuster Science Fiction movie called: " Buoy in the Plastic Bubble"
SA is a major player in accepting only dollars for oil. Since they are now cuddling up with Russia I guess they no longer feel they need our "protection."
"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
SA is a major player in accepting only dollars for oil. Since they are now cuddling up with Russia I guess they no longer feel they need our "protection." >>
SA good luck and good riddance.
derryb thanks for the reserve currency info, I learned from it.
Successful coin BST transactions with Gerard and segoja.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China. >>
The main problem I have with this thesis is that the Chinese cannot be trusted. China appears to be a nation of cheats and liars, as evidenced by their substandard, fake, and poisonous products. Do you really think the world is going to trust China as the honest fount of money? Their ethics are worse than Wall Street and the City of London.
<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China. >>
The main problem I have with this thesis is that the Chinese cannot be trusted. China appears to be a nation of cheats and liars, as evidenced by their substandard, fake, and poisonous products. Do you really think the world is going to trust China as the honest fount of money? Their ethics are worse than Wall Street and the City of London. >>
My bad, I forgot the rest of the world trusts Washington and Wall St. Heck, you and I don't even trust them.
China lets it's market set interest rates, not it's central bank.
"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
I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China.
A fiat currency will replace a fiat currency? No chance. And China even attempting to back the Yuan with Gold, would be raided, and emptied by nations redeeming the Yuan for Gold before you can say boo. There is no clear path forward, yet, once the dollar implodes. At the moment, only Gold/Silver exchanges could act to balance nations accounts with one another.
<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China.
A fiat currency will replace a fiat currency? No chance. And China even attempting to back the Yuan with Gold, would be raided, and emptied by nations redeeming the Yuan for Gold before you can say boo. There is no clear path forward, yet, once the dollar implodes. At the moment, only Gold/Silver exchanges could act to balance nations accounts with one another. >>
The Chinese artificially depress the value of their currency to their advantage. It is accepted and encouraged by consumers. A genuine reserve fiat currency is a thing of the past.
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Comments
I don't think luxury cars is a good comparision. I'm not familiar with Mercedes the way I am Suburbans. A semi-loaded 1996 4x4 LS Suburban would've been around 35k, a 2014 4x4 LS Sub is now around $52k. The big difference with about a ton of steel replaced with plastic and a smaller engine for slightly better gas mileage.
OTOH .... food isn't something people can put off buying for a few years like an automobile.
Out of curiosity I pulled up my personal finances from 10 yrs ago. My wife works for a lge company as an executive in the same position since 2001. I own the same real estate investments as I did in 2002, mixture of Residential, Industrial and land.
2002 Food Bill of $12600
Family of 4. 15 yr Teenage boy that ate everything in the House, litterally. 10 yr Daughter that ate the same as she does now. Parents probably eat less now that we've been in a constant diet phase of trying to keep old age fat off. Both parents too busy working to fix meals every night. We did a huge percentage of eating out / take out meals.
Real Estate Tax on Personal Home - $3612
2012 Food Bill of $20800 (683 mth increase)
Same Family of 4. 25 yr Son that eats a lot less. We now cook at home 6 sometimes 7 nights a week.
Real Estate Tax on same Home - $9222 (That's an increase of $500 mth)
Wife Salary down 22% from 2002. Company has cut staff and all bonuses back in 2009. Reduced pay for Mgmt across the board by 20%
My Investment income, mostly Industrial real estate. 2002 full occupancy. Since 2009 I've had roughly a 30% vacancy. My R.E. income down approx 50% because of Taxes. I haven't been able to raise rents since 2009. Real Estate Tax on my vacant land has increased almost 300%. I've had a piece of commercial land parcel on the market for 3 yrs with not one offer.
There is a huge segment of the population that have been under wage freeze for a number of yrs now.
I want the Gov to stay shut down. I want the US to default on T bills. I want the Stock Market to Crash to 8000 Dow.
I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol.
<< <i>I don't think luxury cars is a good comparision. I'm not familiar with Mercedes the way I am Suburbans. A semi-loaded 1996 4x4 LS Suburban would've been around 35k, a 2014 4x4 LS Sub is now around $52k. The big difference with about a ton of steel replaced with plastic and a smaller engine for slightly better gas mileage.
OTOH .... food isn't something people can put off buying for a few years like an automobile.
Out of curiosity I pulled up my personal finances from 10 yrs ago. My wife works for a lge company as an executive in the same position since 2001. I own the same real estate investments as I did in 2002, mixture of Residential, Industrial and land.
2002 Food Bill of $12600
Family of 4. 15 yr Teenage boy that ate everything in the House, litterally. 10 yr Daughter that ate the same as she does now. Parents probably eat less now that we've been in a constant diet phase of trying to keep old age fat off. Both parents too busy working to fix meals every night. We did a huge percentage of eating out / take out meals.
Real Estate Tax on Personal Home - $3612
2012 Food Bill of $20800 (683 mth increase)
Same Family of 4. 25 yr Son that eats a lot less. We now cook at home 6 sometimes 7 nights a week.
Real Estate Tax on same Home - $9222 (That's an increase of $500 mth)
Wife Salary down 22% from 2002. Company has cut staff and all bonuses back in 2009. Reduced pay for Mgmt across the board by 20%
My Investment income, mostly Industrial real estate. 2002 full occupancy. Since 2009 I've had roughly a 30% vacancy. My R.E. income down approx 50% because of Taxes. I haven't been able to raise rents since 2009. Real Estate Tax on my vacant land has increased almost 300%. I've had a piece of commercial land parcel on the market for 3 yrs with not one offer.
There is a huge segment of the population that have been under wage freeze for a number of yrs now.
I want the Gov to stay shut down. I want the US to default on T bills. I want the Stock Market to Crash to 8000 Dow.
I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol. >>
This is a much better snap shot of "real Life" as opposed to the luxury car market..[ I've bought 3 including 2 Mercedes over the past 10 years].. if you want to talk about value in an auto then the Mercedes value post earlier may have some legs.. however to go beyond to imply things are cheaper now is just hogwash. Many things today are of much graters costs period. BTW.. Yes the lux autos where great buys but still cost more then the others and always will.
Gas (oil) is a lousy indicator for inflation due to the heavy influence of speculation.
I want the 1% to suffer the way I have. I want the Banksters to be in Jail. I want the politicians that kept the Banksters out of Jail to be in Jail. I want not hyperinflation, but Jimmy Carter level inflation so that we can devalue all their Tbills.
Explanation for my rotten mood. I'm doing my 1040 that is due today after the 6mth extension. I am sick of paying everyone else's bills. Let their be a Revolustion, lol.
Your rant sounds very disturbing. I hope you are OK. Just remember that to live in the greatest country in the world (for now) you have to do your part. Otherwise, if taxes make you angry, you can move to somewhere where there are no taxes, like Somalia.
<< <i>Gas (oil) is a lousy indicator for inflation due to the heavy influence of speculation. >>
An average price would negate the speculation. So you shouldn't use today's price, but if you used the average weekly price for all of 1999, 2000, and 2001 and compared to the same for 2010, 2011, 2012 that would be fair. And the numbers would be similar. $1-2 compared to $2.5-$3.5 off the top of my head.
Thanks for sharing your budget information; it definitely facilitates a discussion to have concrete figures.
One key point: your numbers illustrate how significant regional variations may be. The tax figures, in particular, are hard to interpret without more context. Taxes on my U.S. residence in Seattle, WA have increased about 2 % per year during the time period you've described -- and this is in a state that has no income tax.
I do not believe that food inflation has been much more than 2 % per year in Seattle during this period, though I don't have personal figures to support this assertion. As a general comment, the quality of produce available in the Northwest is very good and has improved (both in quality and available variety) over the past ten years, so inflation figures need to be interpreted with caution.
When you take the speculation out of oil, gas prices fall to about $1.50.
<< <i>
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic.
Knowledge is the enemy of fear
<< <i>
<< <i>
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic. >>
Pineapples are all fine and good , but what about cranberry products? I can practically spit on ocean state cranberry company from my house but my cousin in colorado pays less for cranberry juice than I do
It isn't high labor costs , the pickers are all illegals , and it isn't transportation costs I can walk 50 feet from my property line and pick my own cranberries .
<< <i>
<< <i>
<< <i>Why should pineapples be "next to free", in your view? Do they plant, tend, harvest, and ship themselves to the store? >>
When I lived in Colorado I could get one for $2. On Oahu, $3.44. Transportation costs to Colorado vice 20 miles on an Island seems self evident. So yeah I would think they'd be next to free or at least under $2. >>
Thats because most pineapples sold in the continental USA come from Costa Rica, The Philippines or Dominican Republic. >>
I know. I've flown many an airplane with the cargo hold smelling like pineapple be it from South or Central America. I've flown "Atlantic Fresh Salmon" by the crates from Santiago, Chile destined to the eastern seaboard. Yup, Atlantic salmon (farmed) from the Pacific side of SA. Go figure. Well someone has and it makes cents.
I empathize with comrade bronco though.
One reason for our higher costs among others that I've learned is the nonexistence of "illegal" labor...no porous border issues.
How long it takes is in the hands of the US economic policy makers and money printers. The US is its own worst enemy when it comes to protecting its world reserve currency status:
1. It's money printing and reckless fiscal control are telling the rest of the world the dollar is toast.
2. It's sanctions are encouraging international trade that does not involve US dollars, proving to the world that the dollar is not a necessity.
3. It's "policy" of artificially low gold prices is facilitating a speedy transfer of gold from the west to the east. This attempt to strengthen the dollar only expedites China's growing gold reserves and the day those reserves are used to back its currency.
4. As the most powerful central bank the FED is forcing others to follow its path of self destruction. These other central banks would love nothing more than to be free of this fate.
While daily economic events add to the destruction of the dollar, the nail in the coffin will be a Yuan backed by gold. Look for the Chinese to seize the right moment to do so. Not only will this result in US hyper-inflation as all of those dollars come home to roost, it will drive metal prices through the stratosphere. Also look for this to play out very rapidly once the Chinese are willing to accept the losses on the US debt they hold. This is why I continue to stack, even in the face of falling prices and against the advice of those who continue to look at the world through rose colored glasses.
"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 Chinese want to be a leading power in a very prosperous world. They certainly believe that they can and ultimately will be the world's leading power. Chinese leadership, especially the elite in the banking sector, are very well educated (often at Western institutions), and they are willing to adopt a long term perspective. They will pursue their goal of ever increasing prosperity and influence, but they are definitely not going to do anything that upsets the global economy on which their future prosperity so dearly depends.
In spite of the remarkable strides the Chinese have made, they do not yet have the intellectual or social capital to replace the US as keeper of the reserve currency. Certainly they want to continue to diversify their risks, and this means working to gradually diminish US dominance. But, the expertise in international finance at the People's Bank of China does not compare to that at the Fed, the European Central Bank, or the Bank of England. You cannot just create a currency and have people flock to it; the institutions required take years to develop.
<< <i>A few points about the gold-backed yuan theory.
The Chinese want to be a leading power in a very prosperous world. They certainly believe that they can and ultimately will be the world's leading power. Chinese leadership, especially the elite in the banking sector, are very well educated (often at Western institutions), and they are willing to adopt a long term perspective. They will pursue their goal of ever increasing prosperity and influence, but they are definitely not going to do anything that upsets the global economy on which their future prosperity so dearly depends.
In spite of the remarkable strides the Chinese have made, they do not yet have the intellectual or social capital to replace the US as keeper of the reserve currency. Certainly they want to continue to diversify their risks, and this means working to gradually diminish US dominance. But, the expertise in international finance at the People's Bank of China does not compare to that at the Fed, the European Central Bank, or the Bank of England. You cannot just create a currency and have people flock to it; the institutions required take years to develop. >>
And as my link points out they are slowly but surely being developed. To become the world's leading economic power will require reserve currency status. Gold backing will be required to upset the dollar's position. Shortsighted FED Keynsian academic "expertise" is its downfall. The soon to be largest economy in the world will not allow US economic policy to continue upsetting the global economy on which its future prosperity so dearly depends. Consider recent PBOC public lashing of US economic policy and China's recent downgrading of US debt to be a statement confirming this and to be the shot across the bow. To prevent China's economic advance will require a complete reversal on numerous FED fronts. It cannot be accomplished. The FED is too involved with covering runaway soverign spending/borrowing and bad real estate debt and providing money to fuel US equity markets. All at the cost of a stronger currency.
"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
<< <i>I totally agree that Fed policy is severely misguided. But I think the Chinese shot across the bow is a very good thing. Although it has many facets, fundamentally I think it is meant to be constructive -- that is, the Chinese recognize that it is in their best interests to have more functional government in the US. >>
China's shot across the bow was meant to be a wake up call for the rest of the world and nothing more than posturing for it's planned new economic leadership role. It was taking the lead in admonishing the US. China knows it cannot change the US economic downward spiral. It is only attempting to wake up its remaining trade partners and convince them there is a need for a change in the US led worldwide economic outlook. Look for further public lashings from the PBOC, it's part of the PR campaign. A less functional US economy provides the fuel that China needs to lead the paradigm shift to another world status currency. China cannot do this without first changing worldwide perception of a firmly established US economic policy that has doomed emerging markets.
And this just out from Reuters
And in other unimportant news China's Largest Conglomerate Buys World's Largest Gold Vault - in New York City (the west no longer has a need for it)
Foreigners sold more US$-based securities in June than after the Lehman Brothers bankruptcy. This is why taper talk was a smoke screen. Look for the FED to increase QE to absorb what is being dumped:
"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
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions!
<< <i>We're of course not 180 degree apart in our thinking, but ... to get a sense of how far apart we are, what is your gut feeling of how soon this yuan gold-backed regime could be implemented? Do you see a concrete move happening within the next year? Could China fully implement a global standard that replaces the dollar by, say, 2018? Is it something that could happen quite suddenly, or something that would phased in over more than a decade?
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions!
Could be within five years, more likely within three - China will set the timetable and I don't expect it will be a moment you will be able to pinpoint. I see concrete moves have already been made in this direction by China. Not only are they preparing themselves, they have begun to prepare their trading partners. I do not see it happening suddenly I see it as a work that is already in progress. One day the world will wake up and realize the US dollar has lost its reserve status role. Keep in mind that it is US demand for Chinese products that creates the need for China to hold US dollars. Velocity of money shows US spending, including that with China, to have contracted drastically. At some point, China no longer needs US consumers who are no longer buying. I believe China has switched their focus to european consumption.
US inflation rates could be in the neighborhood of 15-20% once foreigners shun holding any new US debt. And as we know, growing inflation easily fuels even higher inflation - history has demonstrated this on numerous occasions.
"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
<< <i>
<< <i>We're of course not 180 degree apart in our thinking, but ... to get a sense of how far apart we are, what is your gut feeling of how soon this yuan gold-backed regime could be implemented? Do you see a concrete move happening within the next year? Could China fully implement a global standard that replaces the dollar by, say, 2018? Is it something that could happen quite suddenly, or something that would phased in over more than a decade?
A second question: when you say "Not only will this result in US hyper inflation ..." , give me a sense of how "hyper". Annual rates of 10 - 15? 50 - 100 %? More?
Finally, to assure reciprocity: I'm happy to clarify my view by answering any questions!
Could be within five years, more likely within three - China will set the timetable and I don't expect it will be a moment you will be able to pinpoint. I see concrete moves have already been made in this direction by China. Not only are they preparing themselves, they have begun to prepare their trading partners. I do not see it happening suddenly I see it as a work that is already in progress. One day the world will wake up and realize the US dollar has lost its reserve status role. Keep in mind that it is US demand for Chinese products that creates the need for China to hold US dollars. Velocity of money shows US spending, including that with China, to have contracted drastically. At some point, China no longer needs US consumers who are no longer buying. I believe China has switched their focus to european consumption.
US inflation rates could be in the neighborhood of 15-20% once foreigners shun holding any new US debt. And as we know, growing inflation easily fuels even higher inflation - history has demonstrated this on numerous occasions. >>
THIS!
I agree were in the middle of a slow transition. China has prepared themselves for years. My first awareness of this was in 2006 when they dramatically increased their purchase of gold. When the Chicomms see themselves supporting a self-containing-consumer-society the final switch will be pulled. Then we'll probably see the US take a dramatic leap into massive inflation.
Some interesting old and current predictions.
The Beginning of the End
Monetary Forecast for 2015 (from 2009)
Jesse's Cafe taken in 2010
An Onion spoof on how the Renminbi will be the reserve currency.
This in many ways would be good for the U.S. Being the keeper of the reserve currency has led to bad habits that we may be better off if we are forced to break. Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later.
<< <i>The result though, would not be domination of global finance by the yuan, but only the elevation of the yuan to one of the world's major currencies (now, the dollar, euro, and the yen, with some importance for the pound and the Swiss franc). The dollar of course will diminish in importance. >>
It's not a matter of the yaun overtaking the dollar. It is a matter of the dollar failing those that depend on it to hold value, due to internal mismanagement. When it does fail, a major currency will take its reserve status. China is positioning itself to be that currency. Euro and yen are following the fate of the dollar; Britain and the Swiss are not a large enough economic force to establish a reserve currency. Yuan is actually a shoe-in and need only sit back while the dollar is destroyed.
The only alternative will be a currency basket from someone like the IMF.
"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
I think this is much more likely than yuan dominance.
<< <i>The only alternative will be a currency basket from someone like the IMF
I think this is much more likely than yuan dominance. >>
IMF's SDR's have been in the works for some time...
Schiff had some interesting and blunt words on the recent "debt ceiling" spectacle and Yellen.
"From our research, we have determined that the average price of a Big Mac is $4.38 (the range was $3.49 to $5.10), a decline $0.18 or a loss of 3.9% from what The Economist obtained in July. Annualized, this is inflation of 1.2% over the last 15 months.
As stated in previous posts, I believe that the Big Mac provides a better indication of price movements than the government compiled CPI. Many of us can neither follow nor actually experience what the CPI means or how it moves. Conversely, the Big Mac is consumed constantly, and we shell out hard-earned dollars to purchase the sandwich. Thus, it is a real-time metric of our economy.
Just recently, Placed Insights surveyed the eating habits of Americans to determine that individuals eat 17 Big Macs a second. This means Big Macs are eaten at a rate of 1,200 a minute, 61,200 an hour, 1,468,800 each day and 536,112,000 a year. At $4.38, the current average price of a Big Mac generated $2.3 billion in revenue for McDonald's from Big Macs sold in the U.S. alone.
My point is that people experience the change in the price of the Big Mac daily. It is tangible. Consequently, it is a good way to view inflation."
"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
Knowledge is the enemy of fear
Knowledge is the enemy of fear
Or, at least the years of remarkably rapid growth may be coming to an end.
I'm really curious about the German demographics article, but can't get the link to work!
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
There's still a huge migration from rural to urban. In 2012 for the first time ever there were more urbanites than rural citizens. China use to have a "house registration" program that kept people in their cities for generations to qualify for their benefits. A Mao thing. After 1990 it was rarely enforced. They now have 160 cities over one million in population and about a dozen in the 10 million. They build an entire city infrastructure before allowing a single person and/or company move in. Crazy. I've noticed in Shanghai over this past year the tallest building in China (2nd in the world) being built. It reminds me of the skyscraper wars in NY in the twenties and thirties.
Hard to say when it will all slow down to our growth rate. I suspect a couple of more decades or so gauging by their demographics.
Demographics in the private sector becomes highly overated when there is less money in the population's hands. Demographics' role in economics is one of labor supply/entitlement cost (putting money in human hands) and consumer demand/tax revenue supply (removing money from human hands). Current US velocity of money tells us money is not changing hands in the private sector making demographics important only in tax revenue and state "entitlement" matters. The importance of demographics in the public sector is controlled by those who set the policy affected by demographics (entitlement eligibility requirements, contributions, tax rates, etc.). Just another shift of free market economic influence from the private sector into the hands of economic controllers who may or may not know what is best for the economy or what is best for the people who are the economy.
"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
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
I'm really curious about the German demographics article, but can't get the link to work! >>
Try just pasting this into your browser. I need to read the report a few more times to really get my head around these stats and projections, but it is discussions like this that encourage critical thinking.
https://www.destatis.de/EN/Publications/Specialized/Population/GermanyPopulation2060.pdf?__blob=publicationFile
Knowledge is the enemy of fear
<< <i>
<< <i>China is probably close to reaching full economic potential
Or, at least the years of remarkably rapid growth may be coming to an end.
There's still a huge migration from rural to urban. In 2012 for the first time ever there were more urbanites than rural citizens. China use to have a "house registration" program that kept people in their cities for generations to qualify for their benefits. A Mao thing. After 1990 it was rarely enforced. They now have 160 cities over one million in population and about a dozen in the 10 million. They build an entire city infrastructure before allowing a single person and/or company move in. Crazy. I've noticed in Shanghai over this past year the tallest building in China (2nd in the world) being built. It reminds me of the skyscraper wars in NY in the twenties and thirties.
Hard to say when it will all slow down to our growth rate. I suspect a couple of more decades or so gauging by their demographics. >>
I think demand for these cities will be dramatically reduced in about 10-20 years. In the Old West we have ghost towns, China will have ghost cities.
What will happen to China when the world shifts its cheap labor outsourcing to India or Africa?
Knowledge is the enemy of fear
<< <i>It's not a matter of the yaun overtaking the dollar. It is a matter of the dollar failing those that depend on it to hold value, due to internal mismanagement. When it does fail, a major currency will take its reserve status. China is positioning itself to be that currency. Euro and yen are following the fate of the dollar; Britain and the Swiss are not a large enough economic force to establish a reserve currency. Yuan is actually a shoe-in and need only sit back while the dollar is destroyed.
The only alternative will be a currency basket from someone like the IMF. >>
Why is a reserve currency even necessary any more? As we have seen, major countries have been establishing direct trade agreements where trade is conducted in their own currencies. For those countries outside of the top 10 currencies, they can pick and choose which currency to use. I don't see why there has to be a single reserve currency any longer. I agree though, that perhaps an SDR is the ideal solution. I don't think the world is ready to rely on a single country's currency any longer.
<< <i>Why is a reserve currency even necessary any more? As we have seen, major countries have been establishing direct trade agreements where trade is conducted in their own currencies. For those countries outside of the top 10 currencies, they can pick and choose which currency to use. I don't see why there has to be a single reserve currency any longer. I agree though, that perhaps an SDR is the ideal solution. I don't think the world is ready to rely on a single country's currency any longer. >>
When a nation succeeds in establishing (convincing other nations) its currency as a reserve currency it creates a foreign need (demand) for that currency. That need includes buying the host country's debt in the form of bonds. At a time when the dollar was strong (backed by gold) the US was smart in arranging this through various trade and military protection agreements. Its downfall is going to be failure to protect the dollar's strength (removing gold backing/poor dollar management) and a lack of preparation for it's eventual shun by others. The US became too dependent on the dollar's reserve currency status and failed to create policy that continued the at home industrial/production edge. QE (irresponsible new money creation) by the FED to start covering debt that other nations will no longer buy is the proof in the pudding.
The advantage to having a reserve currency is that foreign traders need only stockpile that one particular strong currency to facilitate all of its foreign trade and not have to have multiple stacks of differing currency, many of which are very poor investments. Imagine having to keep a stack of Zimbabawean notes just to conduct trade with Zimbabawe. When a nation holds foreign reserves it is making an investment in those reserves. The advantage to the host country of the reserve currency is it will never face a balance of payments crisis, because it purchases imports in its own currency.
As the world's economy sees greater interaction, it has a greater need for a common trading denominator. The current problem other nations have with stacking dollars is that they see US policy destroying the value of those once very strong dollars. A reserve currency has to remain strong and be backed by currency protective policy. History has shown no single currency is able to do this indefinitely. History has also shown that gold backing restricts reckless currency policy. For this reason the world's economy is much more willing to accept a reserve currency that is backed by the restraints that gold provides. This is what puts China in the "next reserve currency" driver's seat.
I don't believe any major nation is prepared to relinquish control of it's currency (and associated policy) to an international group (IMF, World Bank) any more than it is willing to turn its political control/policy over to someone like the United Nations. Additionally, the eurozone has proven the pitfalls of a single currency among polically and economically differing nations. The euro's days are numbered.
I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China.
"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
Agreed. The "number" of days it will last are in the tens of thousands, if not hundreds of thousands or millions of days, but everything's days are numbered.
IMO no one reading this will live to see the dollar, euro, yen, swiss franc, or any of the other top currencies "die" completely. Change, sure, die, no.
Liberty: Parent of Science & Industry
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US.
Try actively publishing information that makes the administration looks bad and the IRS will come after you.
Try not-buying health insurance in 2014 and you will pay a penalty.
Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through.
Try getting a permit to build a house in Malibu.
Try buying a 32oz Coke in NYC.
Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
You call that remarkable personal freedom?
<< <i>
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US.
Try actively publishing information that makes the administration looks bad and the IRS will come after you.
Try not-buying health insurance in 2014 and you will pay a penalty.
Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through.
Try getting a permit to build a house in Malibu.
Try buying a 32oz Coke in NYC.
Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
You call that remarkable personal freedom? >>
You want to do those things?
I find that the modern USA does indeed have remarkable personal freedoms, within the limit of a society.
I am not prevented from doing anything that I want to do, within the reasonableness test of: I don't want anyone to be able to do to me or at me, those things I'm prevented from doing to them.
Liberty: Parent of Science & Industry
<< <i>You want to do those things?
I find that the modern USA does indeed have remarkable personal freedoms, within the limit of a society.
I am not prevented from doing anything that I want to do, within the reasonableness test of: I don't want anyone to be able to do to me or at me, those things I'm prevented from doing to them. >>
None of the things I mentioned infringe upon anyone else in any meaningful way.
Freedom to do something is not a question of whether or not I want to or ever will want to do something, it's about having the option if I ever choose to.
I will never open a cash-based health clinic, but it sure would be great if someone who wanted to had that option.
<< <i>
<< <i>Compared to other large economies, we have very favorable demographics, remarkable personal freedoms, leading edge intellectual capital and a very free exchange of ideas. It may be better that we are forced to get our financial house in order sooner rather than later. >>
I don't know about personal freedoms. I can think of several places where I can pretty much do whatever I want, but not here in the US.
Try actively publishing information that makes the administration looks bad and the IRS will come after you.
Try not-buying health insurance in 2014 and you will pay a penalty.
Try driving from Phoenix to San Diego and you go through several suspicion-less check points where they track everyone who goes through.
Try getting a permit to build a house in Malibu.
Try buying a 32oz Coke in NYC.
Try opening a low-cost health clinic where patrons pay cash and insurance is not accepted.
You call that remarkable personal freedom? >>
In what country can you do all those things listed above?
I get your point though--in some countries people can freely murder other people, oftentimes being held in high stature for doing so.
Knowledge is the enemy of fear
<< <i>Of course by the time inflation hits 200% a year it is mega inflation. >>
hyper vs mega
Amat Colligendo Focum
Top 10 • FOR SALE
"The reality is that Washington has now committed itself to a policy of permanent debt increase and QE infinity that can only possibly end in one way: a currency crisis."
"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
<< <i>since we have now redefined the problem as the debt ceiling, rather than the debt itself, all efforts to solve the real problem may be cast aside
"The reality is that Washington has now committed itself to a policy of permanent debt increase and QE infinity that can only possibly end in one way: a currency crisis." >>
Or a blockbuster Science Fiction movie called: " Buoy in the Plastic Bubble"
Saudi Arabia severs diplomatic ties with US
SA is a major player in accepting only dollars for oil. Since they are now cuddling up with Russia I guess they no longer feel they need our "protection."
"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
<< <i>Dollar will suffer greatly from this:
Saudi Arabia severs diplomatic ties with US
SA is a major player in accepting only dollars for oil. Since they are now cuddling up with Russia I guess they no longer feel they need our "protection." >>
SA good luck and good riddance.
derryb thanks for the reserve currency info, I learned from it.
Successful card BST transactions with cbcnow, brogurt, gstarling, Bravesfan 007, and rajah 424.
The IRS can't go after taxpayers who don't pay up. That's right -- the Affordable Care Act didn't include any provisions for the tax agency to enforce collection of the penalties. (scroll down to "Penalty, shmenalty?")
<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China. >>
The main problem I have with this thesis is that the Chinese cannot be trusted. China appears to be a nation of cheats and liars, as evidenced by their substandard, fake, and poisonous products. Do you really think the world is going to trust China as the honest fount of money? Their ethics are worse than Wall Street and the City of London.
<< <i>
<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China. >>
The main problem I have with this thesis is that the Chinese cannot be trusted. China appears to be a nation of cheats and liars, as evidenced by their substandard, fake, and poisonous products. Do you really think the world is going to trust China as the honest fount of money? Their ethics are worse than Wall Street and the City of London. >>
My bad, I forgot the rest of the world trusts Washington and Wall St.
China lets it's market set interest rates, not it's central bank.
"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
A fiat currency will replace a fiat currency? No chance. And China even attempting to back the Yuan with Gold, would be raided, and emptied by nations redeeming the Yuan for Gold before you can say boo.
There is no clear path forward, yet, once the dollar implodes. At the moment, only Gold/Silver exchanges could act to balance nations accounts with one another.
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<< <i>I remain convince the Yuan is the next reserve currency and only because of poor dollar managment coupled with strong preparation by China.
A fiat currency will replace a fiat currency? No chance. And China even attempting to back the Yuan with Gold, would be raided, and emptied by nations redeeming the Yuan for Gold before you can say boo.
There is no clear path forward, yet, once the dollar implodes. At the moment, only Gold/Silver exchanges could act to balance nations accounts with one another. >>
The Chinese artificially depress the value of their currency to their advantage. It is accepted and encouraged by consumers. A genuine reserve fiat currency is a thing of the past.
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Yup. It is a curse to the USA that the dollar is the reserve currency.
However, China will not have a reserve currency for at least 2-3 generations.
Knowledge is the enemy of fear