The Bloomberg article states that total CDS's were reduced from $60 to $30 TRILL over the last 3 yrs. It does not say that the reduction came mostly on canceling out contracts. Of that $30 TRILL reduction I'd bet more than half ended up being losses that needed to be paid out through AIG and other conduits. I'd swag that between $10-$20 TRILL real value of CDS were a net loss to the financial system. Toss in another several TRILL for MBS losses. Total derivative losses so far are estimated at from $15-$30 TRILL.
Bloomberg says $65 TRILLION of total derivative contracts have been torn up. Let's recall that before the BIS remodeled/remarked the value of all derivatives to maturity in 2008, their total notional value was $1.14 QUADRILLION. That means they have effectively canceled out 5.7% of the original otc derivatives required to be reported to the BIS. There's no way to know how much bigger the $1.14 QUAD was when all otc derivatives are included since many private contracts need not be reported. That $1.14 QUAD number was immediately remodeled to $693 TRILL in 2008 because the number was apparently too humongous and frightening to try and explain. No doubt that $65 TRILL in cancelled contracts represents the low hanging, and easier to deal with fruit. With millions of contracts to deal, many having multiple counter-parties, it's still a mind-boggling task.
Greater than 90% of the otc derivatives still remain after 3 yrs. No doubt a lot of those contracts now canceled were among banks that took over other insolvent banks and corporations. That was one of the primary reasons for swallowing up BSCos, Merrill, GSE's, and others. The hard part is cancelling them out between different entities. Bottom line is that FASB 157 is still allowing banks to value these contracts any way they like.
The recently published June 2010 OOC/BIS reports have also stated that 84% of remaining otc derivatives in US banks are interest rate contracts. These have essentially been untouched since the start of the financial crisis. 25 large US banks that report to the OOC/BIS still have $295 TRILLION outstanding in total otc derivative contracts. These totals have increased another $9 TRILLION in the past 6 months. While not the impressive 40-60% per year growth seen during the boom-boom years of the past decade, nonetheless, growth of that size seems unwarranted. The Bloomberg article does put a nice spin on it to say that things are under control, but it might take 27 more years to deal with the remaining 90%. But there is no mention that > $1 QUAD of these contracts still exist. The amount of CDS ammo that caused the initial shock that nearly killed the financial system in October 2008 is still out there. So are the interest rate contracts that dwarf the remaining combination of CDS, MBS, and Forex contracts.
<< The recently published June 2010 OOC/BIS reports have also stated that 84% of remaining otc derivatives in US banks are interest rate contracts. These have essentially been untouched since the start of the financial crisis. >>
Don't some of these contracts have an expiration date, or are they continually rolled over?
Don't some of these contracts have an expiration date, or are they continually rolled over?
Sinclair has said in the past that they are STILL writing these things and that there are more of them now than when the financial system almost went down in 2008. And, the "financial reform" didn't even slow this down. I'm thinking that they get rolled over, but the ones that the Treasury is buying from Fannie and Freddie (via the Fed) may never see the light of day, even after they expire. It's a mess, and getting bigger by the moment.
Q: Are You Printing Money? Bernanke: Not Literally
Saw this tonight. Pretty sobering really. What do you guys think of Roger Wiegand in general and this article in particular?
I've always thought that he is pretty accurate, and his commentary has become more and more worrisome over the past few years, and much more critical of the government & bankers. Like I said, he's been pretty accurate.
Q: Are You Printing Money? Bernanke: Not Literally
"after traders cancelled overlapping deals" sure sounds like "cancelling out contracts", to me.
Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched.
$9 Trillion of real estate value has been destroyed in the USA alone in the last 4 years. The FED has an awful lot of printing to do to make up those losses, but in the end, is there more money floating around? Did the demand for money increase?
Will there there more financial panics in the future? Of course. Somehow human kind has always survived, whether they owned gold or not. Im not against gold, heck I have friends sitting on tons and tons of silver and several hundred pounds of gold. Over the next 20 years gold could go wildly higher, just as it could become a "barbarous relic" as in the 1990's.
One can decide to live in fear or create his prosperity. Or do both like the newsletter writers do.
<< <i>Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched. >>
I'm not sure exactly how this works, but I don't think you are correct. If I owe you $1T and you owe me $1T, then that does cancel out. But if my grandma owes your uncle $1M and I your uncle owes me $1M, then that doesn't exactly cancel out. It could be restructured such that my grandma owes me $1M and your uncle is debt-free, but someone is still out $1M.
Will there there more financial panics in the future? Of course. Somehow human kind has always survived,
Can you compare anything in the past that was equal to the financial mess we are in today? I hope we can survive but there will be a lot of pain I fear coming in the next few years.
Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched.
Part of the problem is that both sides of the contract value it differently. If 2 separate entities are involved, it's unlikely they just cancel. Someone has to win, someone has to lose. If I'm the "winner" of the contract cancelation, but the counter-party cannot pay, then I don't win. And that expected "win" is already booked based on my modeled value of the contract. The fact that each side of the party values these contracts to their own liking sort of suggests that even the winners will be losers when the contracts are netted out. If I were expecting to receive $100 MILL for my winning contract, that's what it's on the books for. If I only get $50 MILL because I overvalued/overestimated my win by 100%, then I end up booking a 50% loss. It's not likely that the winning traders will be getting more than 100% of the modeled value. It's very likely the losing traders will be getting a fraction of their modeled value. This has been happening with the FDIC bank failures where most takeovers have shown the bank in question overvaluing their "assets" by 30-100%. If the AIG fiasco was just a matter of cancelling out contracts why wasn't it done? And in the next similar fiasco why would it be done then?
In a SHTF scenario maybe most of the contracts do get cancelled out....along with the losing corporations. It probably won't be financial armageddon, but it will be far worse than expected considering that TPTB have consistently underestimated the effects of the financial daisy-chain. When they finally get one of their predictions right and overestimate a potential problem, I'll get onboard with them.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
This has the effect of keeping interest rates artificially low, but eventually the rates can no longer be kept low (as too much money will need to be printed) and rates will have to snap back to market, which will be devastating.
This has the effect of keeping interest rates artificially low, but eventually the rates can no longer be kept low (as too much money will need to be printed) and rates will have to snap back to market, which will be devastating. >>
Doesn't anybody else want to buy it??????
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
Permanent Open market Operations.....My oh my, smoeone has been doing his homework, Brian
This is facilitated by The Federal reserve Bank of NY......................But of course.................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......
Just like before Yasir Arafat there was a PLO-----
Permanent Latrine Orderly
from the movie "No Time For Sargeants" with a young Andy Taylor.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
<< <i>Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched. >>
I'm not sure exactly how this works, but I don't think you are correct. If I owe you $1T and you owe me $1T, then that does cancel out. But if my grandma owes your uncle $1M and I your uncle owes me $1M, then that doesn't exactly cancel out. It could be restructured such that my grandma owes me $1M and your uncle is debt-free, but someone is still out $1M. >>
Think of these as insurance policies, not IOUs. You wrote a policy to protect to your house for $1 million for 1 year. A potential liability has now been created. Six months later the insurance company comes to you and says here's 1/2 your premium back. We have cancelled your policy. Liability now gone.
<< <i>$9 Trillion of real estate value has been destroyed in the USA alone in the last 4 years. The FED has an awful lot of printing to do to make up those losses, but in the end, is there more money floating around? Did the demand for money increase? >>
I forgot to comment on this the first time I saw this. I realize you said "real estate value" but it appears you are talking about wealth in general. No wealth was destroyed in the real estate collapse - this is a common misconception. Wealth only got transferred, mostly from lenders to sellers of property in recent years. Those dollars have not disappeared. Yes, dollars are destroyed when bank loans are paid off and/or forgiven/written-off, but all of the numbers and charts I have seen have not shown a decrease in total number of USD in the world. In fact, believe QE1's overall purpose was to shore up bank's balance sheets in effect maintaining the number of dollars in existence rather than having any banks write off the bad debt, thus destroying dollars. The only one that can really create or destroy (US) dollars is the Fed. And as far as I know, they have not decreased the amount of digital or physical dollars in circulation in any recent years, and they are intent on doing just the opposite.
I agree PC. Only "on paper" values were reduced. There is more liquidity and money stocks running around today than ever before. When coin collectors lost billions of dollars during the 1990-1996 bear market did the FED have to print money to account for the losses? How about the coin losses during the 2008-2010 bear market?
Think of these as insurance policies, not IOUs. You wrote a policy to protect to your house for $1 million for 1 year. A potential liability has now been created. Six months later the insurance company comes to you and says here's 1/2 your premium back. We have cancelled your policy. Liability now gone.
The concerns I have with this is that with 50-1 leverage there are 50 sets of counterparties involved. Only 2 of them include the original deed/note/property. The other 98 are in a pure paper transaction. In 6 months this home goes into permanent default. Someone has to go out and track down all 98 counterparties to unwind the unneeded bets. Multiply the scope of this by 1,000,000 or 10,000,000...whatever the number is of total otc derivative contracts in existence. Let's assume the orig policy was created by JPM but they securitized it and passed it along. Now AIG and various pension funds and banks are some of the current counter-parties. The original deed/note cannot be located. Maybe JPM or AIG still has it or possibly MERS, or maybe 1 of the 100 counterparties. Just how does this all get unwound? Who returns the unpaid premium? Why do the banks or funds that have winning bets on the impending failure settle for less than their expected pay day? The counter-parties on the losing side of the bet will be most happy to see the contract wiped out as it was going to be a loss on their balance sheet. The winning bank now has to write off an "expected" pay day and bolster reserves to make up for it. Shareholders won't appreciate the hit as the market punishes the stock's price. I've never walked through such a transaction so I have a hard time following it to where it's all neatly unwound with no harm/no foul to anyone.
I found the above link to have a number of useful charts readily available in one place. For instance the average "real" weekly wages earned chart shows a decline since 1973, while total household income has increased. I don't necessarily agree with all the stuff in this article or the author's primary premise, but lots of good material in here.
<< <i>For those who STILL don't think we're experience inflation... came upon this chart today:
>>
If folks still don't want to believe, just hit the grocery store and look at the packaging/sizes.
The granola bars I like, though they haven't really increased in price per box over the past year or 2 or 3, now have 5 bars in the package instead of 6. My spicy cheezits small box is the same price, but a couple ounces less than they were. Average that out through the whole store, and you're spending maybe the same on your weekly groceries, but you're getting a generally unnoticeable 20% less. Sneaky way of not "increasing" costs to the consumer and getting backlash.
Yes. Ingenious. Isn't it. They have been doing this for years now. $3.99 for a bag of Lays full of air too. What's the consumer to do but not buy those products.
<< <i>For those who STILL don't think we're experience inflation... came upon this chart today:
>>
I'll stick with my belief that actual money, you can call it wealth if you want, was destroyed. The banks are responsible for creating velocity in money. You sell your house for $1 million. That $1 milllion came from $100,000 in deposits(money) at bank A. You take that check and deposit it at Bank B. Now bank B has $1 million. So where did the $900,000 come from? The Fed? The Treasury? It came from the banking system and banks are currently undergoing massive deleveraging that will take many more years. For example, the price of an automobile or real estate (in most areas) will be the same in 10 years as it is today. Even college costs will not rise much in the next decade, and if Unions and corporations ever say "no mas" to the insurance companies, prices for health care will stabilize.
I'd like to see the above chart covering a 2 year time frame. I think you'll see prices are down---oil down 38%, gasoline down 39%, heating oil down 40%, wheat down 67%, soybeans down 10%, cocoa down 15%, corn down 50%, even coffee is still lower. CNBC ran a story yesterday about rising beef prices. They forgot to mention that prices are down 28% from 2 years ago. Hogs are down 65%. Now you may say im manipulating the number by using previous peaks, but are you not manipulating prices by using market crash lows? We could also say the stock market is going gangbusters because its up 90% in the last 2 years. WOW, look at that inflation!! But that really just masks the fact that it is still down 21% over the last 3 years.
Im not saying that prices for food are not higher, I've already explained why and isnt due to FED printing. This type of "inflation" you are seeing now is usually transient in nature and rarely sustained. Rising wages are INFLATIONARY, are not transitory and are sustainable. This is the inflation you need to worry about and with capacity utilization at 75%--not inflationary until in excess of 80%--we got a long way to go. We had overbuilt our economy and now excess slack. Until that slack is reigned in, we will not have lower unemployment and increasing wages.
For those who do not believe my numbers, below are the chart symbols for many commodities. Go to Stockcharts.com and see for yourself......
<< <i>I'll stick with my belief that actual money, you can call it wealth if you want, was destroyed. The banks are responsible for creating velocity in money. You sell your house for $1 million. That $1 milllion came from $100,000 in deposits(money) at bank A. You take that check and deposit it at Bank B. Now bank B has $1 million. So where did the $900,000 come from? The Fed? The Treasury? It came from the banking system and banks are currently undergoing massive deleveraging that will take many more years. For example, the price of an automobile or real estate (in most areas) will be the same in 10 years as it is today. Even college costs will not rise much in the next decade, and if Unions and corporations ever say "no mas" to the insurance companies, prices for health care will stabilize. >>
If wealth was destroyed, where did the $1m I sold my house for go? Did someone take it out of my bank account? It's doesn't matter where it came from, to destroy the money the dollars have to no longer exist. If I sold my house for $1M, then presumably I either still have that $1M or I've spent it and other people are now enjoying it. The dollars are still out there in the world until the Fed takes some kind of action to destroy them... unless you have a different theory for what happened to the proceeds of my house sale.
<< <i>I'd like to see the above chart covering a 2 year time frame. I think you'll see prices are down---oil down 38%, gasoline down 39%, heating oil down 40%, wheat down 67%, soybeans down 10%, cocoa down 15%, corn down 50%, even coffee is still lower. CNBC ran a story yesterday about rising beef prices. They forgot to mention that prices are down 28% from 2 years ago. Hogs are down 65%. Now you may say im manipulating the number by using previous peaks, but are you not manipulating prices by using market crash lows? We could also say the stock market is going gangbusters because its up 90% in the last 2 years. WOW, look at that inflation!! But that really just masks the fact that it is still down 21% over the last 3 years.
For those who do not believe my numbers, below are the chart symbols for many commodities. Go to Stockcharts.com and see for yourself...... >>
I accept your challenge but I will use futures charts, year end closing prices. Some charts go back several years, some just a couple... Unless otherwise noted, prices are HIGHER now. Wheat: 2003: 377, 303.5, 339.25, 501, 885, 611, 542, 764 - yes there was a spike in 2007/2008, but higher than 2003-2006 Corn: 2003: 246, 205, 216, 390, 456, 407, 415, 587 - spike mid 2008, but otherwise higher now Coffee: 2008: 112, 136, 217 Crude: 2003: 33, 44, 61, 61, 96, 45, 79, 89 (yes, a spike mid 2007) Heating oil: 2003: .9, 1.3, 1.8, 1.6, 2.6, 1.4, 2.1, 2.5
So in looking at many of these charts, there were spikes in mid-2007 where prices where much higher than today. But those were temporary spikes... parabolic moves... prices collapsed and have recovered and are definitely higher than their "steady state" prices before the spikes. So yes, if you compare prices to 2.5 years ago, you'll get the picture that prices are down. But if you take a look 8 years back, prices are higher. Comparing prices to the 2007-2008 time frame will give you a distorted view of things, which is what I suspect CNBC was trying to do to get the public to stop worrying about inflation.
The 2007-2008 price moves definitely were unsustainable, but the current price moves look much more permanent. Here's corn:
Here are some rambling comments related to cohodk's post above:
(1) It is definitely true that money in the system (define money almost any way you want) far exceeds the amount of money explicitly created by the Fed. This arises from the multiplier process he describes, due to banking and other financial activities.
(2) All academics, business people, finance people, regardless of political inclinations agree on the following -- price inflation is correlated with money.
(3) Beyond the statement in (2) above, things get confusing, in part because the reality is messy, confusing, and not well-defined, and in part because it is profoundly difficult to separate beliefs and assumptions from "science" in economics. So, even though essentially everyone agrees with the statement "price inflation is correlated with money", people do not understand the nature of this correlation (ie, why and how), and there is no formula that can be used in practice to project inflation given a projected volume of money. (there are of course many theories, but they don't lead to credible predictive models)
(4) Some of the reasons things get confusing when one is trying to understand the correlation between money and price inflation include the following: (a) it is not exactly clear what money is. Even in the "purest" of gold standards, human beings come up with things that function as money and afffect economic activity and prices, (b) the correlation between money and prices depends on a velocity of money, which is roughly speaking the extent to which people use the money that is available to them to purchase the things whose prices we want to measure. Even if money is well defined, the factors that affect velocity of money are more than a bit murky
(5) The question from ProofCollection "If wealth was destroyed, where did the $1m I sold my house for go?" is a profoundly important one, but where it came from in the first place really is important. (it is explained, by the way, very clearly in the movie "It's a Wonderful Life" with Jimmy Stewart). To repeat (1) above, unless there are no banks, the amount of money we believe we have far exceeds the amount of money that can ultimately be traced back to the Fed balance sheet. The leveraging of money through bank lending is normal and healthy and necessary for the functioning of an economy. In a severe recession, or in a panic, when banks reduce lending or begin to call in existing loans, the amount of money contracts. At the outset, this reduction in money is likely to involve, for example, businesses that have loans for working capital, or more aggressive foreclosures on impaired mortgages. If this causes disruptions, and banks begin to fail, in absence of deposit insurance, money from depositors is actually destroyed; at this point, we all want cash or gold, and the sudden contraction of money leads to a depression.
(6) It was this type of deleveraging that prompted QE1. Almost certainly 50 years from now financial historians will conclude that some degree of QE type lifeline was required in late 2008 to prevent a global calamity. There is off course plenty of room to disgree on why we got to where we did in 2008, what should have been done differently, whether QE1 was implemented in an effective way, whether there should have been more transparency, the implications of the fiscal situation (deficit), etc.
(7) With regard to QE2, the crux of the policy disagreement can be framed in issues such as "is QE2 needed to prevent catastrophic deveraging", "is QE2 based on an irrational fear of moderate deflation", "can QE2 help jump start a lagging economy", "does QE2 reflect a naive or arrogant belief on the part of the Fed that an economy is somethings that can be directed, fine-tuned, etc", "is the purpose of QE2 primarily to fund the Federal deficit, which is on a monthly basis almost identical to QE2 plans".
Higashiyama, Good post. It is my understanding that wealth in the form of USD can only be destroyed by the Fed, or I suppose by burning a bunch of physical currency, although the amounts will probably still reside on the fed's balance sheet.
Every USD is a federal reserve note (FRN) and represents debt owed by the Fed to the holders of the notes. The notes (i.e., dollars) only disappear once the fed takes possession of the note (it can't owe money to itself).
It is still my contention that it matters not where the money came from (and I am familiar with and understand fractional reserve banking), because all FRNs come from the Fed. Once a FRN is created by the fed and distributed, someone owns it. It matters not if the FRN is lent out and a debt goes bad, the FRN is still floating around in the system somewhere.
Let's look at a scenarios: 1. Let's say I apply for a $200k loan from Wells Fargo to buy a house. Wells Fargo can get the funds from a number of places, and I'll ignore reserve requirements, but WF could borrow $200k from the fed at (let's say) 2% and turn around and give it to me at 6%, thus making 4%. $200k in FRNs are created and given to the seller who gives me the house. I never make a payment and go MIA, the bank forecloses and sells the house for $100k which it gives back to the fed. $100k in FRNs are destroyed by the repayment of debt to the fed. Now the bank still owes the fed $100k, the seller of the home to me still has $200k, and there still a net of $100k recently-created FRNs floating around (seller has $200k, bank has -$100k). $100k of wealth still exists and $100k was destroyed, but not because of the loss on the loan - but because the bank paid back the fed.
Now if the fed uses something like QE to create $100k and then to give WF $100k (at a super low or even negative interest rate), then WF's balance sheets offset the $100k loss they took, and now we're back to still having $200k in newly-created FRNs in the system (bank has $100k, bank owes fed $100k, seller has $200k), and the net result ---> No FRNs destroyed, bank appears healthy.
There are deflationary effects of having money locked up and not moving through the system, but that's money velocity, and is not the same as destruction of wealth.
Every FRN that is issued appears on the fed's balance sheet, and I believe this number is available somewhere. And the whole point of what I am saying is that this number has NOT DECREASED in recent years (thus destroying FRNs/wealth) but rather it has actually INCREASED.
"It is my understanding that wealth in the form of USD can only be destroyed by the Fed"
ProofCollector - This is definitely true as it pertains to literally printed money, but in your WF example, and using no reserve requirement as in your example (and this is a good approach, because it allows me to wildly exaggerate the possibilities in this example ), when WF borrows 200 from the Fed, they can turn around and lend 200 to both you and to me. They can do this by giving us checking accounts with a balance of 200. At this instant in time, WF still has 200 in "cash" - the Fed money - plus 400 in loans that are recorded as assets, and you and I both think we have 200 in something nearly as good as cash. If you and I both buy houses, now the builder or previous homeowners think they have 400. The extra money is real, but is vulnerable to change when the economy slows down, reserve requirements change, etc.
There are many ways to create liquidity that conveniently work around the official money system (ie M0, M1, M2, M3). And the bankers are creating more ingenious ones every day. One can focus on FRN's but they are a drop in the bucket compared to keystroked or contracted liabilities on or off corporate/govt balance sheets. It's about $800 BILL FRN's vs. $1,000+ TRILL. total liabilities Not a fair fight.
I looked at all the important commodities listed on finviz.com and only 2 have shown a downtrend since the 2005-2006 period....lumber and natural gas. Meats were flat. Everything else in metals, grains, & softs are noticeably up, with many up large. Even the S&P is slightly higher. The mania peak in 2008 should be factored out in both directions as it distorts the picture. It was truly a one-off event in both directions. By doing that you get nicely rising curves going back 5+ years. Some of the excess liquidity in the system over the past decade has found its way into the commodities markets (rather than stocks, bonds, forex). That will continue to occur until the currencies get fixed or a depression descends upon us. Historically, metals, grains, and softs have been one of the ways for people (and speculative funds) to try and protect their wealth when the usual means fail.
Excellent posts today! Here are a couple of additional thoughts.
As sated above, “define money almost any way you want” and of course nearly everything in any SHORT supply has been used as money through out time, including seashells to lumps of gold. The term money can be defined as any transportable object that most others will take in exchange for goods and services.
What then destroys any type of money is an over supply. What always destroys the money supply of any country is that countries ability to create endless amounts of money to pay for whatever politicians and bankers deem necessary to fulfill their personal agendas.
Inflation therefore should be defined as the public’s unwillingness to take the same amount of money they did yesterday for the same goods, because the over supply of that particular type of money has become bottomless.
<< Every USD is a federal reserve note (FRN) and represents debt owed by the Fed to the holders of the notes. >>
Not quite. Real U.S. dollars do exist that are dollars in and of themselves, and are not the Fed's or anyone else's debt.
They're called coins.
Even though they're used mainly for convenience and circulate at par with Federal Reserve notes, coins are the only "real" dollars in circulation today. Any holder of Federal Reserve notes who attempts to "redeem" them (as in "will pay to the bearer on demand" slogan found on older FRNs) will find that the only possible way to do so is to accept coins in exchange.
There is probably upwards of $10,000 of dollar-denominated debt for every real (coin) dollar in existence. Talk about leverage!
<< <i>There are many ways to create liquidity that conveniently work around the official money system (ie M0, M1, M2, M3). And the bankers are creating more ingenious ones every day. One can focus on FRN's but they are a drop in the bucket compared to keystroked or contracted liabilities on or off corporate/govt balance sheets. It's about $800 BILL FRN's vs. $1,000+ TRILL. total liabilities Not a fair fight. >>
I guess I didn't specify or make clear, or maybe I am wrong about this, but anything called a dollar and issued by the fed, whether it is a printed paper dollar or electronic entry is a federal reserve note... at least that was my line of thinking.
a decent read. we (Californians) are so screwed up here. in times of tax feast there was zero prudence (is there really any in the public sector?) and the smelt can go to H&LL. a big part of the water issue is farmers do not know far enough in advance how much water they will get to plant what crops. many times the land will go fallow. oh and right now they are releasing water because of storage worries with the upcoming storm. a few more dams would NOT hurt IMHO. there are astro-slamander- weenie-huggers who want Hetch-Hetchy torn down. it's nutz
a decent read. we (Californians) are so screwed up here. in times of tax feast there was zero prudence (is there really any in the public sector?) and the smelt can go to H&LL. a big part of the water issue is farmers do not know far enough in advance how much water they will get to plant what crops. many times the land will go fallow. oh and right now they are releasing water because of storage worries with the upcoming storm. a few more dams would NOT hurt IMHO. there are astro-slamander- weenie-huggers who want Hetch-Hetchy torn down. it's nutz
Comments
Bloomberg says $65 TRILLION of total derivative contracts have been torn up. Let's recall that before the BIS remodeled/remarked the value of all derivatives to maturity in 2008, their total notional value was $1.14 QUADRILLION. That means they have effectively canceled out 5.7% of the original otc derivatives required to be reported to the BIS. There's no way to know how much bigger the $1.14 QUAD was when all otc derivatives are included since many private contracts need not be reported. That $1.14 QUAD number was immediately remodeled to $693 TRILL in 2008 because the number was apparently too humongous and frightening to try and explain. No doubt that $65 TRILL in cancelled contracts represents the low hanging, and easier to deal with fruit. With millions of contracts to deal, many having multiple counter-parties, it's still a mind-boggling task.
Greater than 90% of the otc derivatives still remain after 3 yrs. No doubt a lot of those contracts now canceled were among banks that took over other insolvent banks and corporations. That was one of the primary reasons for swallowing up BSCos, Merrill, GSE's, and others. The hard part is cancelling them out between different entities. Bottom line is that FASB 157 is still allowing banks to value these contracts any way they like.
The recently published June 2010 OOC/BIS reports have also stated that 84% of remaining otc derivatives in US banks are interest rate contracts. These have essentially been untouched since the start of the financial crisis. 25 large US banks that report to the OOC/BIS still have $295 TRILLION outstanding in total otc derivative contracts. These totals have increased another $9 TRILLION in the past 6 months. While not the impressive 40-60% per year growth seen during the boom-boom years of the past decade, nonetheless, growth of that size seems unwarranted. The Bloomberg article does put a nice spin on it to say that things are under control, but it might take 27 more years to deal with the remaining 90%. But there is no mention that > $1 QUAD of these contracts still exist. The amount of CDS ammo that caused the initial shock that nearly killed the financial system in October 2008 is still out there. So are the interest rate contracts that dwarf the remaining combination of CDS, MBS, and Forex contracts.
roadrunner
Great Depression II
–John Adams, 1826
Don't some of these contracts have an expiration date, or are they continually rolled over?
My Adolph A. Weinman signature
Sinclair has said in the past that they are STILL writing these things and that there are more of them now than when the financial system almost went down in 2008. And, the "financial reform" didn't even slow this down. I'm thinking that they get rolled over, but the ones that the Treasury is buying from Fannie and Freddie (via the Fed) may never see the light of day, even after they expire. It's a mess, and getting bigger by the moment.
I knew it would happen.
I've always thought that he is pretty accurate, and his commentary has become more and more worrisome over the past few years, and much more critical of the government & bankers. Like I said, he's been pretty accurate.
I knew it would happen.
Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched.
$9 Trillion of real estate value has been destroyed in the USA alone in the last 4 years. The FED has an awful lot of printing to do to make up those losses, but in the end, is there more money floating around? Did the demand for money increase?
Will there there more financial panics in the future? Of course. Somehow human kind has always survived, whether they owned gold or not. Im not against gold, heck I have friends sitting on tons and tons of silver and several hundred pounds of gold. Over the next 20 years gold could go wildly higher, just as it could become a "barbarous relic" as in the 1990's.
One can decide to live in fear or create his prosperity. Or do both like the newsletter writers do.
Knowledge is the enemy of fear
<< <i>Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched. >>
I'm not sure exactly how this works, but I don't think you are correct. If I owe you $1T and you owe me $1T, then that does cancel out. But if my grandma owes your uncle $1M and I your uncle owes me $1M, then that doesn't exactly cancel out. It could be restructured such that my grandma owes me $1M and your uncle is debt-free, but someone is still out $1M.
Can you compare anything in the past that was equal to the financial mess we are in today? I hope we can survive but there will be a lot of pain I fear coming in the next few years.
Box of 20
Part of the problem is that both sides of the contract value it differently. If 2 separate entities are involved, it's unlikely they just cancel. Someone has to win, someone has to lose. If I'm the "winner" of the contract cancelation, but the counter-party cannot pay, then I don't win. And that expected "win" is already booked based on my modeled value of the contract. The fact that each side of the party values these contracts to their own liking sort of suggests that even the winners will be losers when the contracts are netted out. If I were expecting to receive $100 MILL for my winning contract, that's what it's on the books for. If I only get $50 MILL because I overvalued/overestimated my win by 100%, then I end up booking a 50% loss. It's not likely that the winning traders will be getting more than 100% of the modeled value. It's very likely the losing traders will be getting a fraction of their modeled value. This has been happening with the FDIC bank failures where most takeovers have shown the bank in question overvaluing their "assets" by 30-100%. If the AIG fiasco was just a matter of cancelling out contracts why wasn't it done? And in the next similar fiasco why would it be done then?
In a SHTF scenario maybe most of the contracts do get cancelled out....along with the losing corporations. It probably won't be financial armageddon, but it will be far worse than expected considering that TPTB have consistently underestimated the effects of the financial daisy-chain. When they finally get one of their predictions right and overestimate a potential problem, I'll get onboard with them.
roadrunner
Because they are still playing the game. If they cancelled out contracts, the CDS game would be up. It still continues.
Box of 20
I knew it would happen.
NY Fed to Buy $105 Billion in Treasurys Over Next Month
This has the effect of keeping interest rates artificially low, but eventually the rates can no longer be kept low (as too much money will need to be printed) and rates will have to snap back to market, which will be devastating.
roadrunner
<< <i>All I know is, it's never good when the fed monitizes debt.:
NY Fed to Buy $105 Billion in Treasurys Over Next Month
This has the effect of keeping interest rates artificially low, but eventually the rates can no longer be kept low (as too much money will need to be printed) and rates will have to snap back to market, which will be devastating. >>
Doesn't anybody else want to buy it??????
<< <i>The FED's buying amounts to between $4-9 BILL per day over 15 days of buying in the next 30 days. Go POMO!
roadrunner >>
POMO? please explain
This is facilitated by The Federal reserve Bank of NY......................But of course.................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......
<< <i>Doesn't anybody else want to buy it?????? >>
Exactly... But to answer your question, not at the rates the Fed wants to sell at.
Permanent Latrine Orderly
from the movie "No Time For Sargeants" with a young Andy Taylor.
Andy Griffith's undercover identity?
My Adolph A. Weinman signature
Richard Maybury's Early Warning Report
Chaostan
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
<< <i>Point is, while I dont dispute there is a potential enormous overhang of derivatives, all of these could be cancelled out if things really got ugly. Now if things really got ugly that would probably still help the price of PMs, but the notion that derivatives will destroy the world is just a bit far fetched. >>
I'm not sure exactly how this works, but I don't think you are correct. If I owe you $1T and you owe me $1T, then that does cancel out. But if my grandma owes your uncle $1M and I your uncle owes me $1M, then that doesn't exactly cancel out. It could be restructured such that my grandma owes me $1M and your uncle is debt-free, but someone is still out $1M. >>
Think of these as insurance policies, not IOUs. You wrote a policy to protect to your house for $1 million for 1 year. A potential liability has now been created. Six months later the insurance company comes to you and says here's 1/2 your premium back. We have cancelled your policy. Liability now gone.
Knowledge is the enemy of fear
<< <i>$9 Trillion of real estate value has been destroyed in the USA alone in the last 4 years. The FED has an awful lot of printing to do to make up those losses, but in the end, is there more money floating around? Did the demand for money increase? >>
I forgot to comment on this the first time I saw this. I realize you said "real estate value" but it appears you are talking about wealth in general. No wealth was destroyed in the real estate collapse - this is a common misconception. Wealth only got transferred, mostly from lenders to sellers of property in recent years. Those dollars have not disappeared. Yes, dollars are destroyed when bank loans are paid off and/or forgiven/written-off, but all of the numbers and charts I have seen have not shown a decrease in total number of USD in the world. In fact, believe QE1's overall purpose was to shore up bank's balance sheets in effect maintaining the number of dollars in existence rather than having any banks write off the bad debt, thus destroying dollars. The only one that can really create or destroy (US) dollars is the Fed. And as far as I know, they have not decreased the amount of digital or physical dollars in circulation in any recent years, and they are intent on doing just the opposite.
Think of these as insurance policies, not IOUs. You wrote a policy to protect to your house for $1 million for 1 year. A potential liability has now been created. Six months later the insurance company comes to you and says here's 1/2 your premium back. We have cancelled your policy. Liability now gone.
The concerns I have with this is that with 50-1 leverage there are 50 sets of counterparties involved. Only 2 of them include the original deed/note/property. The other 98 are in a pure paper transaction. In 6 months this home goes into permanent default. Someone has to go out and track down all 98 counterparties to unwind the unneeded bets. Multiply the scope of this by 1,000,000 or 10,000,000...whatever the number is of total otc derivative contracts in existence. Let's assume the orig policy was created by JPM but they securitized it and passed it along. Now AIG and various pension funds and banks are some of the current counter-parties. The original deed/note cannot be located. Maybe JPM or AIG still has it or possibly MERS, or maybe 1 of the 100 counterparties. Just how does this all get unwound? Who returns the unpaid premium? Why do the banks or funds that have winning bets on the impending failure settle for less than their expected pay day? The counter-parties on the losing side of the bet will be most happy to see the contract wiped out as it was going to be a loss on their balance sheet. The winning bank now has to write off an "expected" pay day and bolster reserves to make up for it. Shareholders won't appreciate the hit as the market punishes the stock's price. I've never walked through such a transaction so I have a hard time following it to where it's all neatly unwound with no harm/no foul to anyone.
roadrunner
He has an ability to simply and effectively communicate.
To no avail, I try to get my nieces and nephews to read any of his Uncle Eric books.
I found the above link to have a number of useful charts readily available in one place. For instance the average "real" weekly wages earned chart shows a decline since 1973, while total household income has increased. I don't necessarily agree with all the stuff in this article or the author's primary premise, but lots of good material in here.
roadrunner
<< <i>Richard Maybury's Early Warning Report
He has an ability to simply and effectively communicate.
To no avail, I try to get my nieces and nephews to read any of his Uncle Eric books. >>
Keep trying! Now if there was only something like it for 4 year olds.
Uncle Eric's Books and more
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>For those who STILL don't think we're experience inflation... came upon this chart today:
If folks still don't want to believe, just hit the grocery store and look at the packaging/sizes.
The granola bars I like, though they haven't really increased in price per box over the past year or 2 or 3, now have 5 bars in the package instead of 6. My spicy cheezits small box is the same price, but a couple ounces less than they were. Average that out through the whole store, and you're spending maybe the same on your weekly groceries, but you're getting a generally unnoticeable 20% less. Sneaky way of not "increasing" costs to the consumer and getting backlash.
Box of 20
or, your own eyes?
Camelot
<< <i>For those who STILL don't think we're experience inflation... came upon this chart today:
I'll stick with my belief that actual money, you can call it wealth if you want, was destroyed. The banks are responsible for creating velocity in money. You sell your house for $1 million. That $1 milllion came from $100,000 in deposits(money) at bank A. You take that check and deposit it at Bank B. Now bank B has $1 million. So where did the $900,000 come from? The Fed? The Treasury? It came from the banking system and banks are currently undergoing massive deleveraging that will take many more years. For example, the price of an automobile or real estate (in most areas) will be the same in 10 years as it is today. Even college costs will not rise much in the next decade, and if Unions and corporations ever say "no mas" to the insurance companies, prices for health care will stabilize.
I'd like to see the above chart covering a 2 year time frame. I think you'll see prices are down---oil down 38%, gasoline down 39%, heating oil down 40%, wheat down 67%, soybeans down 10%, cocoa down 15%, corn down 50%, even coffee is still lower. CNBC ran a story yesterday about rising beef prices. They forgot to mention that prices are down 28% from 2 years ago. Hogs are down 65%. Now you may say im manipulating the number by using previous peaks, but are you not manipulating prices by using market crash lows? We could also say the stock market is going gangbusters because its up 90% in the last 2 years. WOW, look at that inflation!! But that really just masks the fact that it is still down 21% over the last 3 years.
Im not saying that prices for food are not higher, I've already explained why and isnt due to FED printing. This type of "inflation" you are seeing now is usually transient in nature and rarely sustained. Rising wages are INFLATIONARY, are not transitory and are sustainable. This is the inflation you need to worry about and with capacity utilization at 75%--not inflationary until in excess of 80%--we got a long way to go. We had overbuilt our economy and now excess slack. Until that slack is reigned in, we will not have lower unemployment and increasing wages.
For those who do not believe my numbers, below are the chart symbols for many commodities. Go to Stockcharts.com and see for yourself......
Knowledge is the enemy of fear
<< <i>I'll stick with my belief that actual money, you can call it wealth if you want, was destroyed. The banks are responsible for creating velocity in money. You sell your house for $1 million. That $1 milllion came from $100,000 in deposits(money) at bank A. You take that check and deposit it at Bank B. Now bank B has $1 million. So where did the $900,000 come from? The Fed? The Treasury? It came from the banking system and banks are currently undergoing massive deleveraging that will take many more years. For example, the price of an automobile or real estate (in most areas) will be the same in 10 years as it is today. Even college costs will not rise much in the next decade, and if Unions and corporations ever say "no mas" to the insurance companies, prices for health care will stabilize. >>
If wealth was destroyed, where did the $1m I sold my house for go? Did someone take it out of my bank account? It's doesn't matter where it came from, to destroy the money the dollars have to no longer exist. If I sold my house for $1M, then presumably I either still have that $1M or I've spent it and other people are now enjoying it. The dollars are still out there in the world until the Fed takes some kind of action to destroy them... unless you have a different theory for what happened to the proceeds of my house sale.
<< <i>I'd like to see the above chart covering a 2 year time frame. I think you'll see prices are down---oil down 38%, gasoline down 39%, heating oil down 40%, wheat down 67%, soybeans down 10%, cocoa down 15%, corn down 50%, even coffee is still lower. CNBC ran a story yesterday about rising beef prices. They forgot to mention that prices are down 28% from 2 years ago. Hogs are down 65%. Now you may say im manipulating the number by using previous peaks, but are you not manipulating prices by using market crash lows? We could also say the stock market is going gangbusters because its up 90% in the last 2 years. WOW, look at that inflation!! But that really just masks the fact that it is still down 21% over the last 3 years.
For those who do not believe my numbers, below are the chart symbols for many commodities. Go to Stockcharts.com and see for yourself...... >>
I accept your challenge but I will use futures charts, year end closing prices. Some charts go back several years, some just a couple... Unless otherwise noted, prices are HIGHER now.
Wheat: 2003: 377, 303.5, 339.25, 501, 885, 611, 542, 764 - yes there was a spike in 2007/2008, but higher than 2003-2006
Corn: 2003: 246, 205, 216, 390, 456, 407, 415, 587 - spike mid 2008, but otherwise higher now
Coffee: 2008: 112, 136, 217
Crude: 2003: 33, 44, 61, 61, 96, 45, 79, 89 (yes, a spike mid 2007)
Heating oil: 2003: .9, 1.3, 1.8, 1.6, 2.6, 1.4, 2.1, 2.5
So in looking at many of these charts, there were spikes in mid-2007 where prices where much higher than today. But those were temporary spikes... parabolic moves... prices collapsed and have recovered and are definitely higher than their "steady state" prices before the spikes. So yes, if you compare prices to 2.5 years ago, you'll get the picture that prices are down. But if you take a look 8 years back, prices are higher. Comparing prices to the 2007-2008 time frame will give you a distorted view of things, which is what I suspect CNBC was trying to do to get the public to stop worrying about inflation.
The 2007-2008 price moves definitely were unsustainable, but the current price moves look much more permanent. Here's corn:
(1) It is definitely true that money in the system (define money almost any way you want) far exceeds the amount of money explicitly created by the Fed. This arises from the multiplier process he describes, due to banking and other financial activities.
(2) All academics, business people, finance people, regardless of political inclinations agree on the following -- price inflation is correlated with money.
(3) Beyond the statement in (2) above, things get confusing, in part because the reality is messy, confusing, and not well-defined, and in part because it is profoundly difficult to separate beliefs and assumptions from "science" in economics. So, even though essentially everyone agrees with the statement "price inflation is correlated with money", people do not understand the nature of this correlation (ie, why and how), and there is no formula that can be used in practice to project inflation given a projected volume of money. (there are of course many theories, but they don't lead to credible predictive models)
(4) Some of the reasons things get confusing when one is trying to understand the correlation between money and price inflation include the following: (a) it is not exactly clear what money is. Even in the "purest" of gold standards, human beings come up with things that function as money and afffect economic activity and prices, (b) the correlation between money and prices depends on a velocity of money, which is roughly speaking the extent to which people use the money that is available to them to purchase the things whose prices we want to measure. Even if money is well defined, the factors that affect velocity of money are more than a bit murky
(5) The question from ProofCollection "If wealth was destroyed, where did the $1m I sold my house for go?" is a profoundly important one, but where it came from in the first place really is important. (it is explained, by the way, very clearly in the movie "It's a Wonderful Life" with Jimmy Stewart). To repeat (1) above, unless there are no banks, the amount of money we believe we have far exceeds the amount of money that can ultimately be traced back to the Fed balance sheet. The leveraging of money through bank lending is normal and healthy and necessary for the functioning of an economy. In a severe recession, or in a panic, when banks reduce lending or begin to call in existing loans, the amount of money contracts. At the outset, this reduction in money is likely to involve, for example, businesses that have loans for working capital, or more aggressive foreclosures on impaired mortgages. If this causes disruptions, and banks begin to fail, in absence of deposit insurance, money from depositors is actually destroyed; at this point, we all want cash or gold, and the sudden contraction of money leads to a depression.
(6) It was this type of deleveraging that prompted QE1. Almost certainly 50 years from now financial historians will conclude that some degree of QE type lifeline was required in late 2008 to prevent a global calamity. There is off course plenty of room to disgree on why we got to where we did in 2008, what should have been done differently, whether QE1 was implemented in an effective way, whether there should have been more transparency, the implications of the fiscal situation (deficit), etc.
(7) With regard to QE2, the crux of the policy disagreement can be framed in issues such as "is QE2 needed to prevent catastrophic deveraging", "is QE2 based on an irrational fear of moderate deflation", "can QE2 help jump start a lagging economy", "does QE2 reflect a naive or arrogant belief on the part of the Fed that an economy is somethings that can be directed, fine-tuned, etc", "is the purpose of QE2 primarily to fund the Federal deficit, which is on a monthly basis almost identical to QE2 plans".
Good post. It is my understanding that wealth in the form of USD can only be destroyed by the Fed, or I suppose by burning a bunch of physical currency, although the amounts will probably still reside on the fed's balance sheet.
Every USD is a federal reserve note (FRN) and represents debt owed by the Fed to the holders of the notes. The notes (i.e., dollars) only disappear once the fed takes possession of the note (it can't owe money to itself).
It is still my contention that it matters not where the money came from (and I am familiar with and understand fractional reserve banking), because all FRNs come from the Fed. Once a FRN is created by the fed and distributed, someone owns it. It matters not if the FRN is lent out and a debt goes bad, the FRN is still floating around in the system somewhere.
Let's look at a scenarios:
1. Let's say I apply for a $200k loan from Wells Fargo to buy a house. Wells Fargo can get the funds from a number of places, and I'll ignore reserve requirements, but WF could borrow $200k from the fed at (let's say) 2% and turn around and give it to me at 6%, thus making 4%. $200k in FRNs are created and given to the seller who gives me the house. I never make a payment and go MIA, the bank forecloses and sells the house for $100k which it gives back to the fed. $100k in FRNs are destroyed by the repayment of debt to the fed. Now the bank still owes the fed $100k, the seller of the home to me still has $200k, and there still a net of $100k recently-created FRNs floating around (seller has $200k, bank has -$100k). $100k of wealth still exists and $100k was destroyed, but not because of the loss on the loan - but because the bank paid back the fed.
Now if the fed uses something like QE to create $100k and then to give WF $100k (at a super low or even negative interest rate), then WF's balance sheets offset the $100k loss they took, and now we're back to still having $200k in newly-created FRNs in the system (bank has $100k, bank owes fed $100k, seller has $200k), and the net result ---> No FRNs destroyed, bank appears healthy.
There are deflationary effects of having money locked up and not moving through the system, but that's money velocity, and is not the same as destruction of wealth.
Every FRN that is issued appears on the fed's balance sheet, and I believe this number is available somewhere. And the whole point of what I am saying is that this number has NOT DECREASED in recent years (thus destroying FRNs/wealth) but rather it has actually INCREASED.
Someone please chime in if I am wrong.
ProofCollector - This is definitely true as it pertains to literally printed money, but in your WF example, and using no reserve requirement as in your example (and this is a good approach, because it allows me to wildly exaggerate the possibilities in this example
I looked at all the important commodities listed on finviz.com and only 2 have shown a downtrend since the 2005-2006 period....lumber and natural gas. Meats were flat. Everything else in metals, grains, & softs are noticeably up, with many up large. Even the S&P is slightly higher. The mania peak in 2008 should be factored out in both directions as it distorts the picture. It was truly a one-off event in both directions. By doing that you get nicely rising curves going back 5+ years. Some of the excess liquidity in the system over the past decade has found its way into the commodities markets (rather than stocks, bonds, forex). That will continue to occur until the currencies get fixed or a depression descends upon us. Historically, metals, grains, and softs have been one of the ways for people (and speculative funds) to try and protect their wealth when the usual means fail.
roadrunner
Here are a couple of additional thoughts.
As sated above, “define money almost any way you want” and of course nearly everything in any SHORT supply has been used as money through out time, including seashells to lumps of gold. The term money can be defined as any transportable object that most others will take in exchange for goods and services.
What then destroys any type of money is an over supply. What always destroys the money supply of any country is that countries ability to create endless amounts of money to pay for whatever politicians and bankers deem necessary to fulfill their personal agendas.
Inflation therefore should be defined as the public’s unwillingness to take the same amount of money they did yesterday for the same goods, because the over supply of that particular type of money has become bottomless.
Not quite. Real U.S. dollars do exist that are dollars in and of themselves, and are not the Fed's or anyone else's debt.
They're called coins.
Even though they're used mainly for convenience and circulate at par with Federal Reserve notes, coins are the only "real" dollars in circulation today. Any holder of Federal Reserve notes who attempts to "redeem" them (as in "will pay to the bearer on demand" slogan found on older FRNs) will find that the only possible way to do so is to accept coins in exchange.
There is probably upwards of $10,000 of dollar-denominated debt for every real (coin) dollar in existence. Talk about leverage!
My Adolph A. Weinman signature
<< <i>There are many ways to create liquidity that conveniently work around the official money system (ie M0, M1, M2, M3). And the bankers are creating more ingenious ones every day. One can focus on FRN's but they are a drop in the bucket compared to keystroked or contracted liabilities on or off corporate/govt balance sheets. It's about $800 BILL FRN's vs. $1,000+ TRILL. total liabilities Not a fair fight. >>
I guess I didn't specify or make clear, or maybe I am wrong about this, but anything called a dollar and issued by the fed, whether it is a printed paper dollar or electronic entry is a federal reserve note... at least that was my line of thinking.
Two California's
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>A part of California's "economy". Where are the useful idiots that support this government on this one?
Two California's >>
a decent read. we (Californians) are so screwed up here. in times of tax feast there was zero prudence (is there really any in the public sector?) and the smelt can go to H&LL. a big part of the water issue is farmers do not know far enough in advance how much water they will get to plant what crops. many times the land will go fallow. oh and right now they are releasing water because of storage worries with the upcoming storm. a few more dams would NOT hurt IMHO. there are astro-slamander- weenie-huggers who want Hetch-Hetchy torn down. it's nutz
what the idiots did in November and other rants about California
everything will be just fine. Of course, donut eating bears are OK, they can stay.
Camelot
<< <i>There is nothing wrong with California. As soon as we get rid of all the people
everything will be just fine. Of course, donut eating bears are OK, they can stay. >>
the grizzy bear doesn't live in CA anymore and the brown bear is not the one on the Republic of California flag, so i think you are safe
<< <i>
<< <i>A part of California's "economy". Where are the useful idiots that support this government on this one?
Two California's >>
a decent read. we (Californians) are so screwed up here. in times of tax feast there was zero prudence (is there really any in the public sector?) and the smelt can go to H&LL. a big part of the water issue is farmers do not know far enough in advance how much water they will get to plant what crops. many times the land will go fallow. oh and right now they are releasing water because of storage worries with the upcoming storm. a few more dams would NOT hurt IMHO. there are astro-slamander- weenie-huggers who want Hetch-Hetchy torn down. it's nutz
what the idiots did in November and other rants about California >>
Don't beat yourself up on the "it's so screwed up here". It's everywhere. It's become like a disease and they get dumber by the day.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
<< <i>There is nothing wrong with California. As soon as we get rid of all the people
everything will be just fine. Of course, donut eating bears are OK, they can stay. >>
the grizzy bear doesn't live in CA anymore and the brown bear is not the one on the Republic of California flag, so i think you are safe >>
"Republic of California"...surprised that hasn't been changed by now.
As soon as I can sell this house and 5 acres, I'm out of this stupid state.
How about you pay me to take it off your hands. I want at least a years worth of tax money so I can get a head start.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870