he said gold's overall track record over a long period of time was not good. He says it has no intrinsic value, and the demand is driven only by peoples economic fears, etc.
If that's his reasoning, he is only giving you selected information and half-truth. Unless he had a much better case, he is dead wrong. Gold has had long periods of viability and some stretches when its price languished. The past 10 years have been quite impressive, even without alot of fanfare.
But, my point is that gold is not the story here. Having a stash of physical gold won't result in more wealth, except on a relative basis. The rest of the world (those who don't own gold and rely on paper currency as their reservoir of savings) is getting poorer. Those who hold gold are breaking even.
The only winners are the ones in government who get paid for redistributing your tax money to those who don't wanna work, aren't educated or trained to work, and those who cannot provide for themselves - sometimes for valids reasons but just as often, for not-so-valid reasons.
Dave Ramsey would like to have you buy stocks. His advertisers would like to have you buy stocks. When you buy stocks, his advertisers get commissions and fees. That would be ok if the game weren't rigged in ways that make it almost impossible to win, but that's another story and a considerably longer thread.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>Just listened to Tuesdays Dave Ramsey show, and he read that entire article on his show, then, very emphatically advised people absolutely not to buy gold. Wow. He did make a pretty good argument
I'd be interested to know what Dave Ramsey's argument for emphatically advising people not to buy gold. He must have some reason, and if you can't post what that reason was, then it doesn't make for a very interesting debate. >>
I'd be glad to detail his advice, but I cant remember all his reasoning....I do remember he said gold's overall track record over a long period of time was not good. He says it has no intrinsic value, and the demand is driven only by peoples economic fears, etc. . Again, I listened to him on this about 4 years ago ,and sold off some of my gold when it was $650 an ounce...and it has been going up ever since. After that, I didnt even listen to Ramsey for a coupla years. Fortunately, I began buying back in before it hit $800 and I've kinda been buying a little at a time...and I have decided to hold on. >>
He has some very good other points of financial advice, for folks in special circumstances but this is not one of them.
<< <i>roadrunner, how does the amount of liquidity (money?) being Pumped into the Economy compare to the amount of wealth (money) Destroyed in the real estate credit bubble pop? >>
No money was destroyed. The people who sold real estate at the inflated prices still have those dollars or spent them into the economy and they still exist. >>
If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existance. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!!
Now when the unions finally cave to lower wages, jobs will come back to America. We have only ourselves to blame for sending jobs overseas. Oh, The Age of Austerity. >>
i was reading that one, too. besides unemployment figures not including those who have given up looking you also have the $150k guy who spoons froth at Starbucks now. He's employed, but at minimum wage. His purchasing power...kaput, in relative terms to where he was before. this a'int over by any stretch of the idea. >>
And thats the thing 57, many Americans, dare I say most, have been grossly overpaid for too long. Americans have priced themselves out of jobs.
<< <i>Now here is inflation. Hats off to Illinois for addressing the problem. California, your next. >>
Raising taxes does NOT address the problem. The problem is spending and pension obligations which AFAIK they did not seriously address. Raising taxes by that amount only creates more problems, such as the affluent and businesses moving away and closing down, as well as tax evasion techniques. Think anyone is going to move to IL now?
<< <i>If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existence. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!! >>
Only the fed can create or destroy dollars with the exception of someone physically destroying currency.
If the stock market went to zero... no dollars would be destroyed. Example, you buy 100 shares of SP500 from me at $1282, so you hand me $102,820 and I give you a stock certificate. The next day the SP500 goes to zero. I still have your money. You have a worthless piece of paper. How did any dollars get destroyed? They didn't, they got transferred from you to me.
Let's back up to another stock example. I start a widget company all by myself. I go public with it and IPO 100% of the company in 1M shares for $1M ($1 ea.) to 2 investors for 500k shares each. Now I have $1M cash in my pocket, and investors have stock certificates. Investor A sells 500k shares to Investor C for $2/share. Now I have $1M, Investor A has $1M, and Investor B and C have stock certificates. Then a fire breaks out and destroys the company and it is worth $0. I still have $1M, Investor A still has $1M, and Investors B and C still have stock certificates. No DOLLARS have been destroyed. Dollars were simply transferred from Inv B & C to A and myself.
Now if you can explain in these two examples how dollars were whisked out of existence, I would like to know.
Dollars are not destroyed when stock certificates change hands. But thanks to the fractional-reserve system, dollars can be destroyed when debtors default on their bank loans.
My take on the process is this: By itself, the exchange of money for stock certificates would not directly cause dollars to be destroyed. But if the stock market went to zero, it would touch off a huge wave of loan defaults, which in turn would cause a massive destruction of bank-created money, as the gears of the fractional-reserve system slam into reverse.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>Dollars are not destroyed when stock certificates change hands. But thanks to the fractional-reserve system, dollars can be destroyed when debtors default on their bank loans. >>
The key word is *can*. If the bank used depositor's money to fund the loan, then no dollars are destroyed. And my understanding (correct me if I'm wrong), is that if a debtor defaults on a loan to a bank, the bank is still on the hook to re-pay those dollars to the federal reserve. Only if the federal reserve forgives or gives up on that debt do the dollars get destroyed. That's is why banks don't want to loan money to people who won't pay it back.
<< <i>My take on the process is this: By itself, the exchange of money for stock certificates would not directly cause dollars to be destroyed. But if the stock market went to zero, it would touch off a huge wave of loan defaults, which in turn would cause a massive destruction of bank-created money, as the gears of the fractional-reserve system slam into reverse. >>
Sort of. Defaulting on a loan hastens the destruction of dollars. If I take a loan and pay it back over 10 years, those dollars are destroyed over 10 years. If I take out a 10 year loan and default after year 1, the bank I borrowed it from will move the loan from a performing asset (making money on the spread between the fed's interest rate and the rate they are charging you) to a liability that the bank now owes (to the fed). If the bank settles the debt with the fed immediately, the dollars are destroyed immediately when the debt is settled.
<< <i>Now here is inflation. Hats off to Illinois for addressing the problem. California, your next. >>
Raising taxes does NOT address the problem. The problem is spending and pension obligations which AFAIK they did not seriously address. Raising taxes by that amount only creates more problems, such as the affluent and businesses moving away and closing down, as well as tax evasion techniques. Think anyone is going to move to IL now?
<< <i>If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existence. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!! >>
Only the fed can create or destroy dollars with the exception of someone physically destroying currency.
If the stock market went to zero... no dollars would be destroyed. Example, you buy 100 shares of SP500 from me at $1282, so you hand me $102,820 and I give you a stock certificate. The next day the SP500 goes to zero. I still have your money. You have a worthless piece of paper. How did any dollars get destroyed? They didn't, they got transferred from you to me.
Let's back up to another stock example. I start a widget company all by myself. I go public with it and IPO 100% of the company in 1M shares for $1M ($1 ea.) to 2 investors for 500k shares each. Now I have $1M cash in my pocket, and investors have stock certificates. Investor A sells 500k shares to Investor C for $2/share. Now I have $1M, Investor A has $1M, and Investor B and C have stock certificates. Then a fire breaks out and destroys the company and it is worth $0. I still have $1M, Investor A still has $1M, and Investors B and C still have stock certificates. No DOLLARS have been destroyed. Dollars were simply transferred from Inv B & C to A and myself.
Now if you can explain in these two examples how dollars were whisked out of existence, I would like to know. >>
In each of your examples you are using physical greenbacks. If gold is money, then a house is money, labor is money, an IOU is money as these are all mediums of exchange and all will have different values in different situations.
In each of your examples you are converting something into dollars, so how about this.... If we were to convert all the worlds assets into greenbacks in 2007, we would have had about 80 trillion. This same exercise today will net about 60 trillion. Where did the other 20 trillion go?
There are less than $1 trillion (greenbacks) in physical existance. If the world were to convert all its assets into dollars, would the FED have to print $59 trillion more?
In each of your examples you are converting something into dollars, so how about this.... If we were to convert all the worlds assets into greenbacks in 2007, we would have had about 80 trillion. This same exercise today will net about 60 trillion. Where did the other 20 trillion go?
To properly address your question, you must first ask "where did all those trillions of $$$'s come from in the first place? Is it not also the case that many of these trillions exist as bogus bookkeeping entries, and their issuer is hoping that they never have to be repaid, at least not in this lifetime?
Q: Are You Printing Money? Bernanke: Not Literally
I saw on my local news today that our Governor of Wisconsin hasn't wasted any time capitalising on that IL. tax increase! He has spammed all the big business in the state of IL. with money (TAX) saving offers if they move up here. It has realy made the IL. government upset!
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There are less than $1 trillion (greenbacks) in physical existance. If the world were to convert all its assets into dollars, would the FED have to print $59 trillion more?
this is a fascinating concept, because all those assets would then still exist, in addition to the new dollars. So would the world assets double that easily?
no, the dollars, whether cash paper, bond paper, or even electronic "dollars" simply represent fungible "value" that can be exchanged for a good or service, or can be obtained by tendering a good or service, or can be obtained by promising to deliver a good or service in the future.
One could make the case that the dollars that my house increased in value, and then "gave back" when it decreased again (we did not sell or refinance) never really existed.
My understanding is that nearly all bank loans are made against their deposit base, rather than borrowings from the Fed. (TARP was a highly publicized exception, but most of that money has been or is being paid back.)
So if a bank receives a $100 deposit, it keeps a small amount in reserves (maybe 10% or less), and loans out the other $90. Both the $100 and the $90 are considered to be "money", so the bank has, in effect, just "created" $90 without borrowing anything from the Fed. Some or all of the "new" $90 can also be deposited in a bank, which can then lend out an additional $81 based on this deposit. And so on.
The reverse can also happen if bank customers lose their assets (i.e., if the stock market goes to zero) and these customers have to withdraw their bank deposits for living expenses and debt repayments. For example, the original client that deposited $100 in the new bank now withdraws his $100. The bank's reserves have now declined by that amount, so it now has less than 10% in reserves. To bring loans and reserves back into balance, the bank must collect $90 in loan repayments without re-lending that money. So the bank has, in effect, just "destroyed" $90 without "repaying" the Fed.
This example is oversimplified, but the point is that banks can create and destroy money (purchasing power) without dealing directly with the Fed.
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>In each of your examples you are using physical greenbacks. If gold is money, then a house is money, labor is money, an IOU is money as these are all mediums of exchange and all will have different values in different situations. In each of your examples you are converting something into dollars, so how about this.... If we were to convert all the worlds assets into greenbacks in 2007, we would have had about 80 trillion. This same exercise today will net about 60 trillion. Where did the other 20 trillion go?
There are less than $1 trillion (greenbacks) in physical existance. If the world were to convert all its assets into dollars, would the FED have to print $59 trillion more? >>
Interesting questions, good conversation. Difficult and complicated.
First, I would argue that physical or electronic dollars are the same thing. I can pay for a pack of gum with a greenback or my debit card, there is no difference.
The world's assets, consisting of food, land, buildings, forests, metals, cars, etc. are relatively constant. Food gets consumed but is grown to replace it, cars wear out and are replaced, and there is a huge supply of labor to convert raw materials to goods, adding value. But overall, the world's assets are fairly constant, and probably growing slowly. And while you and I may measure our wealth by the size of our bank account in USD, what really matters is hard assets, because in the end the USD is just a piece of paper.
The real estate bubble did not destroy any of the world's assets. All of the land, buildings, metals, etc. are still around. To say that one minute the world is worth $60T and the other minute it is $80T is only a change in accounting. We're still talking about the same quantity of real assets.
As previously stated, a lot of those dollars never existed. As the example mentioned before, my house went up a few hundred grand and came back down to where it started, but in the end I still live in the same house. I didn't make any money when my house went up and I didn't lose any now that it's come back down. I still own a house. You may have said my net worth was $x00,000, and now it is $x00,000-200,000, but it's meaningless because I just own a house. No wealth was ever created or destroyed, it's just accounting.
<< <i>My understanding is that nearly all bank loans are made against their deposit base, rather than borrowings from the Fed. (TARP was a highly publicized exception, but most of that money has been or is being paid back.) ...
This example is oversimplified, but the point is that banks can create and destroy money (purchasing power) without dealing directly with the Fed. >>
You need to watch the videos that were linked at the end of page 98.
Banks cannot CREATE or DESTROY money. While they can lend out money from their deposits, most banks don't have the resources (deposits) to do this. To your example, I believe to lend out $100 the bank must keep $10 on hand. The $100 usually comes from the fed. They borrow at say 1% and lend it to you at 5% and they make 4% on the spread.
If you meet the regulatory requirements, anyone including you can own and operate a bank. That doesn't mean you can start printing money, if only it were that easy. Only the fed can do that
If you meet the regulatory requirements, anyone including you can own and operate a bank. That doesn't mean you can start printing money, if only it were that easy. Only the fed can do that
The world's top banks found a way to create/print their own money. They did that with otc derivatives on 30-1 to 50-1 leverage/notional value. Out there somewhere is $1,000+ TRILLION in recorded otc derivatives. The number including those not reported is even larger. With 50-1 leverage that implies that $20 TRILLION in negotiable "monetary" value was created. That's more money than all the world's banks together printed over the past decade. The bankers did indeed find a way to print their own money outside the sphere of the formal monetary system. And they got rich doing it by taking commissions and fees on that $1 QUAD in notional value. The commodity futures modernization act of 2000 gave the banks the authorization to create their own unregulated "monetary" system. They took full advantage of the opportunity. Not only did it make the banksters trillions, it allowed them to manipulate the price of capital around the world.
yes, those people created that electronic "money" out of the thin air of derivatives.. but this is the key point..
they can't "spend" it without eventually changing it into material goods or consuming a service...
only a transaction will make the money "real" money and only "real" money can bid up prices for things.
once the digital money is spent for something real, the entity that had the real thing before now has money, and the money is freed up to chase something else, or be sat on as a credit awaiting use
Put another way, only money that is "moving" is of economic value. Static money might as well not exist as far as "the economy" goes, except the potential it contains to become real money by being spent into the economy,
where it can be moved around, satisfying peoples needs and wants, and, of course, be taxed
The bankers have already made oodles of money on these derivative transactions by posting hundreds of billions in profits the past 10 yrs and lining their pockets with fat bonuses each and every year. In order to do that they had to create a monetary system that they could profit from and was also unauditable. The profits have already been booked and delivered. Now it's time to socialize the losses such a system created and pass that along to Joe Taxpayer. The only gravy remaining from the system would to be on the right side of the remaining otc derivative contracts to cash out as sovereign, state, and municipal contracts implode. US and European banks reaped trillions through the back door payouts of AIG, all rigged by the otc derivative contracts. By some accounts approx $10-$20 TRILLION in world-wide payouts have already been distributed to the hungry banksters. Who needs to earn a piddly interest on $8.8 TRILL in M2 when you can make that entire amount of money via the shadow banking system?
Those hundreds of billions in almost guaranteed profits came from knowing that interest rates and currency trends were rigged and prime for the taking via nearly risk free trades. Having control of the gold and silver markets via hundreds of billion in otc derivatives also played into helping to control currencies.
Good clarification RR. I did not include the banks' abilities to "print" money in the "non-traditional" way as you described. I believe that money for loans still originates with the old fashioned federal reservel loan to bank process (for the most part).
I couldn't help but notice on the heritage auctions that the numismatic premiums are almost non existent for generic and even some of the nicer stuff like $5 S indians. So, Credit Suisse or pre '33.....hummmmmmm this might get the coin bidness moving a little. Someone else here commented on this phenomenon recently.
they can't "spend" it without eventually changing it into material goods or consuming a service...
only a transaction will make the money "real" money and only "real" money can bid up prices for things.
They don't have to change it to anything but debt instruments as long as the Treasury buys it. As long as the Treasury buys it, your sweat and toil goes into paying off that debt in the form of over-taxation by you-know-who. The whole thing is a scam and you can't excape it unless the system is made honest.
Q: Are You Printing Money? Bernanke: Not Literally
Hasn't the size of that 89c plain burger shrunk over the years? And those have been used as "gimmicks" to get people into the restaurant so they can make money on the fries and soft drinks. It worked for me when I was still eating them >2 yrs ago. The Whopper Junior at 99c was an even better value as was the Wendy's 99c cheese deluxe.
I miss them all....but not the trans fats, salt, high fructose corn syrup, hormones, and whatever else gets put into them to keep you addicted.
HEY! talk about costs going up, I was a 2-3 pack a day smoker now that's allot of money!. I started "Vaping" recently and now I don't smoke cigs anymore. Costs are now $6.00 a month for my habit!. I got a Joye 510 and I recommend them to all smokers!. Not only do you save tones of money but you have no cravings I was amazed!
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Inflation in the stock market has been great!!!!!! As has inflation in PMs.
Grains prces have been dead from 1980 to 2007. They gots lots of catching up to. And now there are 3 billion more people who want to eat more than 1 meal a day. Its good to be a farmer and bad to live in a 2nd world country---transferring all that new found wealth to the Heartland of America.
<< <i>Grains prces have been dead from 1980 to 2007. They gots lots of catching up to. And now there are 3 billion more people who want to eat more than 1 meal a day. Its good to be a farmer and bad to live in a 2nd world country---transferring all that new found wealth to the Heartland of America. >>
If by heartland of America you mean the multi-national corporations that have taken over the US farming industry, then yes. There are very few traditional farms left.
Yes, there are very large farms that are owned and operated by large corporations. This has been a result of producing a commodity that has had stable prices for a generation. Why would a family want to struggle to make a living? But there are still 1000s and 1000s of small farms all across the county that are benefitting. Fortunately these farms are not unionized, which has helped keep the prices lower for the rest of us.
If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. China may be able to make cheap crap efficiently, but there is no one, no one, who is more efficient than the American farmer.
There is nothing wrong with commodity traders making money. Traders do not push prices higher. A trader buys and sells, he does not create imbalances. Investors do. Investors cornering 90% of markets. Thats the problem. There is however , something wrong with municipal workers double dipping. With unskilled union workers making $25/hr, with corporations not resisting ridiculous health insurance premiums, ect.
Farmers are not making the $, commodity traders are.
Yes, especially when those "commodity traders" are named JP Morgan and Goldman Sachs....who incidently get to hang a shingle outside their offices that say "commercial producer," with all the benefits.....such as hedging for free.
We converted from a small farm to a small nursery... perishables is a tough business.
We still a sell a small amount of fruit, but its almost a hobby at this point. We held prices to the same level as last year; we could have raised them by roughly 25%... I decided against it. It has worked out well I think, as the losses (lack of payment / 'unauthorized late night harvest') is much less than last year. We can even operate an "honor stand" (self-serve)... which is kind of quaint. I digress...
I believe that PTB would love to keep commodities low -- regardless of means/fairness. Anything it takes to keep the consumers happy with 'low inflation'. Just keep the stock market up... kick the can down the road... if shortages happen... blame it on the weather. If prices go up... blame it on greedy speculators (hedge funds).
I don't think we will convert from small nursery to small farm... but we have to do something... keeping the property zoned 'agriculture' is the only way we know to keep the property taxes... digestible.
<< <i>If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. >>
Unfortunately, growing federal regulations on food producers (funded by food corporation lobbyists) are making it near impossible for the small, independent food producer to survive. In a related event the local news just reported a church group was ticketed by the police for providing free meals to the homeless. Seems you have to have a permit to feed more than 11 people!
Entertaining read, this Organ fellow....he's calling for the Comex, followed by SLV and GLD, followed by the Bank of England, then lastly the financial system in the USA, to all collapse, but all is not lost. It appears we have at least until next month , thank goodness.
<< <i>If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. >>
Unfortunately, growing federal regulations on food producers (funded by food corporation lobbyists) are making it near impossible for the small, independent food producer to survive. In a related event the local news just reported a church group was ticketed by the police for providing free meals to the homeless. Seems you have to have a permit to feed more than 11 people! >>
Then I risk being arrested every year for celebrating Thankgiving and providing dinner!!
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< I find it interesting that Japan's credit rating was lowered today and PMs dropped. >>
If a major economy's credit rating is lowered and all major economies are based on credit and fiat currencies, I take that to mean that the bankers of the world are beginning not to trust each other - again. This is exactly what happened when Libor went over 4% in 2008.
This is a troublesome sign, but don't worry - they will figure out their next move this week in Davos.
It's a shell game and someone is going to be stung. Don't be that guy.
Q: Are You Printing Money? Bernanke: Not Literally
Comments
If that's his reasoning, he is only giving you selected information and half-truth. Unless he had a much better case, he is dead wrong. Gold has had long periods of viability and some stretches when its price languished. The past 10 years have been quite impressive, even without alot of fanfare.
But, my point is that gold is not the story here. Having a stash of physical gold won't result in more wealth, except on a relative basis. The rest of the world (those who don't own gold and rely on paper currency as their reservoir of savings) is getting poorer. Those who hold gold are breaking even.
The only winners are the ones in government who get paid for redistributing your tax money to those who don't wanna work, aren't educated or trained to work, and those who cannot provide for themselves - sometimes for valids reasons but just as often, for not-so-valid reasons.
Dave Ramsey would like to have you buy stocks. His advertisers would like to have you buy stocks. When you buy stocks, his advertisers get commissions and fees. That would be ok if the game weren't rigged in ways that make it almost impossible to win, but that's another story and a considerably longer thread.
I knew it would happen.
<< <i>
<< <i>Just listened to Tuesdays Dave Ramsey show, and he read that entire article on his show, then, very emphatically advised people absolutely not to buy gold. Wow. He did make a pretty good argument
I'd be interested to know what Dave Ramsey's argument for emphatically advising people not to buy gold. He must have some reason, and if you can't post what that reason was, then it doesn't make for a very interesting debate. >>
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I'd be glad to detail his advice, but I cant remember all his reasoning....I do remember he said gold's overall track record over a long period of time was not good. He says it has no intrinsic value, and the demand is driven only by peoples economic fears, etc. . Again, I listened to him on this about 4 years ago ,and sold off some of my gold when it was $650 an ounce...and it has been going up ever since. After that, I didnt even listen to Ramsey for a coupla years. Fortunately, I began buying back in before it hit $800 and I've kinda been buying a little at a time...and I have decided to hold on. >>
He has some very good other points of financial advice, for folks in special circumstances but this is not one of them.
Knowledge is the enemy of fear
<< <i>
<< <i>roadrunner, how does the amount of liquidity (money?) being Pumped into the Economy compare to the amount of wealth (money) Destroyed in the real estate credit bubble pop? >>
No money was destroyed. The people who sold real estate at the inflated prices still have those dollars or spent them into the economy and they still exist. >>
If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existance. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!!
Knowledge is the enemy of fear
<< <i>
<< <i>To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall.
Now when the unions finally cave to lower wages, jobs will come back to America. We have only ourselves to blame for sending jobs overseas. Oh, The Age of Austerity. >>
i was reading that one, too. besides unemployment figures not including those who have given up looking you also have the $150k guy who spoons froth at Starbucks now. He's employed, but at minimum wage. His purchasing power...kaput, in relative terms to where he was before. this a'int over by any stretch of the idea. >>
And thats the thing 57, many Americans, dare I say most, have been grossly overpaid for too long. Americans have priced themselves out of jobs.
Knowledge is the enemy of fear
<< <i>Now here is inflation. Hats off to Illinois for addressing the problem. California, your next. >>
Raising taxes does NOT address the problem. The problem is spending and pension obligations which AFAIK they did not seriously address. Raising taxes by that amount only creates more problems, such as the affluent and businesses moving away and closing down, as well as tax evasion techniques. Think anyone is going to move to IL now?
<< <i>If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existence. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!! >>
Only the fed can create or destroy dollars with the exception of someone physically destroying currency.
If the stock market went to zero... no dollars would be destroyed. Example, you buy 100 shares of SP500 from me at $1282, so you hand me $102,820 and I give you a stock certificate. The next day the SP500 goes to zero. I still have your money. You have a worthless piece of paper. How did any dollars get destroyed? They didn't, they got transferred from you to me.
Let's back up to another stock example. I start a widget company all by myself. I go public with it and IPO 100% of the company in 1M shares for $1M ($1 ea.) to 2 investors for 500k shares each. Now I have $1M cash in my pocket, and investors have stock certificates. Investor A sells 500k shares to Investor C for $2/share. Now I have $1M, Investor A has $1M, and Investor B and C have stock certificates. Then a fire breaks out and destroys the company and it is worth $0. I still have $1M, Investor A still has $1M, and Investors B and C still have stock certificates. No DOLLARS have been destroyed. Dollars were simply transferred from Inv B & C to A and myself.
Now if you can explain in these two examples how dollars were whisked out of existence, I would like to know.
My take on the process is this: By itself, the exchange of money for stock certificates would not directly cause dollars to be destroyed. But if the stock market went to zero, it would touch off a huge wave of loan defaults, which in turn would cause a massive destruction of bank-created money, as the gears of the fractional-reserve system slam into reverse.
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part 1
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"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>Dollars are not destroyed when stock certificates change hands. But thanks to the fractional-reserve system, dollars can be destroyed when debtors default on their bank loans. >>
The key word is *can*. If the bank used depositor's money to fund the loan, then no dollars are destroyed. And my understanding (correct me if I'm wrong), is that if a debtor defaults on a loan to a bank, the bank is still on the hook to re-pay those dollars to the federal reserve. Only if the federal reserve forgives or gives up on that debt do the dollars get destroyed. That's is why banks don't want to loan money to people who won't pay it back.
<< <i>My take on the process is this: By itself, the exchange of money for stock certificates would not directly cause dollars to be destroyed. But if the stock market went to zero, it would touch off a huge wave of loan defaults, which in turn would cause a massive destruction of bank-created money, as the gears of the fractional-reserve system slam into reverse. >>
Sort of. Defaulting on a loan hastens the destruction of dollars. If I take a loan and pay it back over 10 years, those dollars are destroyed over 10 years. If I take out a 10 year loan and default after year 1, the bank I borrowed it from will move the loan from a performing asset (making money on the spread between the fed's interest rate and the rate they are charging you) to a liability that the bank now owes (to the fed). If the bank settles the debt with the fed immediately, the dollars are destroyed immediately when the debt is settled.
<< <i>
<< <i>Now here is inflation. Hats off to Illinois for addressing the problem. California, your next. >>
Raising taxes does NOT address the problem. The problem is spending and pension obligations which AFAIK they did not seriously address. Raising taxes by that amount only creates more problems, such as the affluent and businesses moving away and closing down, as well as tax evasion techniques. Think anyone is going to move to IL now?
<< <i>If you are talking about dollars created by the FED then I'll agree. Those dollars are still in existence. But if you are talking about the dollars created by the Banks, then I'll disagree because the dollars created by banks are balanced by IOUs. Someone is one the hook when those IOUs evaporate. That is whats happening today. To follow on your thinking, if the stock market went to zero, you would say no money has been destroyed. I would say that not only has money been destroyed, but so have millions of lives.
Liquidity has been drained from this economy in a way that has never been seen before. If for the only reason that liquidity was pumped into the economy in a way never seen before through banks taking on 50-1 leverage. Those days are long, long gone. And of you ask me, good riddance!! >>
Only the fed can create or destroy dollars with the exception of someone physically destroying currency.
If the stock market went to zero... no dollars would be destroyed. Example, you buy 100 shares of SP500 from me at $1282, so you hand me $102,820 and I give you a stock certificate. The next day the SP500 goes to zero. I still have your money. You have a worthless piece of paper. How did any dollars get destroyed? They didn't, they got transferred from you to me.
Let's back up to another stock example. I start a widget company all by myself. I go public with it and IPO 100% of the company in 1M shares for $1M ($1 ea.) to 2 investors for 500k shares each. Now I have $1M cash in my pocket, and investors have stock certificates. Investor A sells 500k shares to Investor C for $2/share. Now I have $1M, Investor A has $1M, and Investor B and C have stock certificates. Then a fire breaks out and destroys the company and it is worth $0. I still have $1M, Investor A still has $1M, and Investors B and C still have stock certificates. No DOLLARS have been destroyed. Dollars were simply transferred from Inv B & C to A and myself.
Now if you can explain in these two examples how dollars were whisked out of existence, I would like to know. >>
In each of your examples you are using physical greenbacks. If gold is money, then a house is money, labor is money, an IOU is money as these are all mediums of exchange and all will have different values in different situations.
In each of your examples you are converting something into dollars, so how about this.... If we were to convert all the worlds assets into greenbacks in 2007, we would have had about 80 trillion. This same exercise today will net about 60 trillion. Where did the other 20 trillion go?
There are less than $1 trillion (greenbacks) in physical existance. If the world were to convert all its assets into dollars, would the FED have to print $59 trillion more?
Knowledge is the enemy of fear
To properly address your question, you must first ask "where did all those trillions of $$$'s come from in the first place? Is it not also the case that many of these trillions exist as bogus bookkeeping entries, and their issuer is hoping that they never have to be repaid, at least not in this lifetime?
I knew it would happen.
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this is a fascinating concept, because all those assets would then still exist, in addition to the new dollars. So would the world assets double that easily?
no, the dollars, whether cash paper, bond paper, or even electronic "dollars" simply represent fungible "value" that can be exchanged for a good or service, or can be obtained by tendering a good or service, or can be obtained by promising to deliver a good or service in the future.
One could make the case that the dollars that my house increased in value, and then "gave back" when it decreased again (we did not sell or refinance) never really existed.
(yet I still miss them!)
Liberty: Parent of Science & Industry
So if a bank receives a $100 deposit, it keeps a small amount in reserves (maybe 10% or less), and loans out the other $90. Both the $100 and the $90 are considered to be "money", so the bank has, in effect, just "created" $90 without borrowing anything from the Fed. Some or all of the "new" $90 can also be deposited in a bank, which can then lend out an additional $81 based on this deposit. And so on.
The reverse can also happen if bank customers lose their assets (i.e., if the stock market goes to zero) and these customers have to withdraw their bank deposits for living expenses and debt repayments. For example, the original client that deposited $100 in the new bank now withdraws his $100. The bank's reserves have now declined by that amount, so it now has less than 10% in reserves. To bring loans and reserves back into balance, the bank must collect $90 in loan repayments without re-lending that money. So the bank has, in effect, just "destroyed" $90 without "repaying" the Fed.
This example is oversimplified, but the point is that banks can create and destroy money (purchasing power) without dealing directly with the Fed.
My Adolph A. Weinman signature
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>In each of your examples you are using physical greenbacks. If gold is money, then a house is money, labor is money, an IOU is money as these are all mediums of exchange and all will have different values in different situations. In each of your examples you are converting something into dollars, so how about this.... If we were to convert all the worlds assets into greenbacks in 2007, we would have had about 80 trillion. This same exercise today will net about 60 trillion. Where did the other 20 trillion go?
There are less than $1 trillion (greenbacks) in physical existance. If the world were to convert all its assets into dollars, would the FED have to print $59 trillion more? >>
Interesting questions, good conversation. Difficult and complicated.
First, I would argue that physical or electronic dollars are the same thing. I can pay for a pack of gum with a greenback or my debit card, there is no difference.
The world's assets, consisting of food, land, buildings, forests, metals, cars, etc. are relatively constant. Food gets consumed but is grown to replace it, cars wear out and are replaced, and there is a huge supply of labor to convert raw materials to goods, adding value. But overall, the world's assets are fairly constant, and probably growing slowly. And while you and I may measure our wealth by the size of our bank account in USD, what really matters is hard assets, because in the end the USD is just a piece of paper.
The real estate bubble did not destroy any of the world's assets. All of the land, buildings, metals, etc. are still around. To say that one minute the world is worth $60T
and the other minute it is $80T is only a change in accounting. We're still talking about the same quantity of real assets.
As previously stated, a lot of those dollars never existed. As the example mentioned before, my house went up a few hundred grand and came back down to where it started, but in the end I still live in the same house. I didn't make any money when my house went up and I didn't lose any now that it's come back down. I still own a house. You may have said my net worth was $x00,000, and now it is $x00,000-200,000, but it's meaningless because I just own a house. No wealth was ever created or destroyed, it's just accounting.
<< <i>My understanding is that nearly all bank loans are made against their deposit base, rather than borrowings from the Fed. (TARP was a highly publicized exception, but most of that money has been or is being paid back.)
...
This example is oversimplified, but the point is that banks can create and destroy money (purchasing power) without dealing directly with the Fed. >>
You need to watch the videos that were linked at the end of page 98.
Banks cannot CREATE or DESTROY money. While they can lend out money from their deposits, most banks don't have the resources (deposits) to do this. To your example, I believe to lend out $100 the bank must keep $10 on hand. The $100 usually comes from the fed. They borrow at say 1% and lend it to you at 5% and they make 4% on the spread.
If you meet the regulatory requirements, anyone including you can own and operate a bank. That doesn't mean you can start printing money, if only it were that easy. Only the fed can do that
The world's top banks found a way to create/print their own money. They did that with otc derivatives on 30-1 to 50-1 leverage/notional value. Out there somewhere is $1,000+ TRILLION in recorded otc derivatives. The number including those not reported is even larger. With 50-1 leverage that implies that $20 TRILLION in negotiable "monetary" value was created. That's more money than all the world's banks together printed over the past decade. The bankers did indeed find a way to print their own money outside the sphere of the formal monetary system. And they got rich doing it by taking commissions and fees on that $1 QUAD in notional value. The commodity futures modernization act of 2000 gave the banks the authorization to create their own unregulated "monetary" system. They took full advantage of the opportunity. Not only did it make the banksters trillions, it allowed them to manipulate the price of capital around the world.
How otc interest rate derivatives have skewed markets
rodarunner
they can't "spend" it without eventually changing it into material goods or consuming a service...
only a transaction will make the money "real" money and only "real" money can bid up prices for things.
once the digital money is spent for something real, the entity that had the real thing before now has money, and the money is freed up to chase something else, or be sat on as a credit awaiting use
Put another way, only money that is "moving" is of economic value. Static money might as well not exist as far as "the economy" goes, except the potential it contains to become real money by being spent into the economy,
where it can be moved around, satisfying peoples needs and wants, and, of course, be taxed
Liberty: Parent of Science & Industry
Those hundreds of billions in almost guaranteed profits came from knowing that interest rates and currency trends were rigged and prime for the taking via nearly risk free trades. Having control of the gold and silver markets via hundreds of billion in otc derivatives also played into helping to control currencies.
roadrunner
only a transaction will make the money "real" money and only "real" money can bid up prices for things.
They don't have to change it to anything but debt instruments as long as the Treasury buys it. As long as the Treasury buys it, your sweat and toil goes into paying off that debt in the form of over-taxation by you-know-who. The whole thing is a scam and you can't excape it unless the system is made honest.
I knew it would happen.
The Kudlow Report: Donald Trump Interview on China
The only thing I disagree about is Trumps' comments on OPEC and oil prices.
McDonald's may raise prices as food costs rise
Inflation? What inflation?
I miss them all....but not the trans fats, salt, high fructose corn syrup, hormones, and whatever else gets put into them to keep you addicted.
roadrunner
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<< <i>One of Cohodk's inflation indicators has always been the ability to buy a hamburger for $1. Well, those days may be over.
McDonald's may raise prices as food costs rise
Inflation? What inflation? >>
Well its about time!!!! Only been like 25 years.
Inflation in the stock market has been great!!!!!!
Grains prces have been dead from 1980 to 2007. They gots lots of catching up to. And now there are 3 billion more people who want to eat more than 1 meal a day. Its good to be a farmer and bad to live in a 2nd world country---transferring all that new found wealth to the Heartland of America.
Knowledge is the enemy of fear
<< <i>Grains prces have been dead from 1980 to 2007. They gots lots of catching up to. And now there are 3 billion more people who want to eat more than 1 meal a day. Its good to be a farmer and bad to live in a 2nd world country---transferring all that new found wealth to the Heartland of America. >>
If by heartland of America you mean the multi-national corporations that have taken over the US farming industry, then yes. There are very few traditional farms left.
If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. China may be able to make cheap crap efficiently, but there is no one, no one, who is more efficient than the American farmer.
There is nothing wrong with commodity traders making money. Traders do not push prices higher. A trader buys and sells, he does not create imbalances. Investors do. Investors cornering 90% of markets. Thats the problem. There is however , something wrong with municipal workers double dipping. With unskilled union workers making $25/hr, with corporations not resisting ridiculous health insurance premiums, ect.
I think 2.2 million is more than very few.
nullThe number of farms, particularly small farms, is increasing, reversing a decades-long trend
Drive across I-80 thru Pennsylvania or I-90 thru New York and you'll see hundreds of these farms.
Knowledge is the enemy of fear
Yes, especially when those "commodity traders" are named JP Morgan and Goldman Sachs....who incidently get to hang a shingle outside their offices that say "commercial producer," with all the benefits.....such as hedging for free.
roadrunner
<< <i>Farmers are not making the $, commodity traders are. >>
the farmers i know trade commodities, too
We still a sell a small amount of fruit, but its almost a hobby at this point. We held prices to the same level as last year; we could have raised them by roughly 25%... I decided against it. It has worked out well I think, as the losses (lack of payment / 'unauthorized late night harvest') is much less than last year. We can even operate an "honor stand" (self-serve)... which is kind of quaint. I digress...
I believe that PTB would love to keep commodities low -- regardless of means/fairness. Anything it takes to keep the consumers happy with 'low inflation'. Just keep the stock market up... kick the can down the road... if shortages happen... blame it on the weather. If prices go up... blame it on greedy speculators (hedge funds).
I don't think we will convert from small nursery to small farm... but we have to do something... keeping the property zoned 'agriculture' is the only way we know to keep the property taxes... digestible.
But do they trade in the size and speed that the banksters do?
roadrunner
Knowledge is the enemy of fear
<< <i>If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. >>
Unfortunately, growing federal regulations on food producers (funded by food corporation lobbyists) are making it near impossible for the small, independent food producer to survive. In a related event the local news just reported a church group was ticketed by the police for providing free meals to the homeless. Seems you have to have a permit to feed more than 11 people!
Rampant currency debasement will be the most important investment trend of this decade, and it will devastate most people.
- Nick Giambruno Buy dollar insurance now, because the policy will cost more as the dollar becomes worth less.
<< <i>I find it interesting that Japan's credit rating was lowered today and PMs dropped. >>
How do you know there's a direct link?
Huge Drop in comex gold open interest, huge deliveries on silver
<< <i>the farmers i know trade commodities, too
But do they trade in the size and speed that the banksters do?
roadrunner >>
of course not
<< <i>
<< <i>If Jimmy Rogers is correct, the small farmer may have a resurgence in the next generation. >>
Unfortunately, growing federal regulations on food producers (funded by food corporation lobbyists) are making it near impossible for the small, independent food producer to survive. In a related event the local news just reported a church group was ticketed by the police for providing free meals to the homeless. Seems you have to have a permit to feed more than 11 people! >>
Then I risk being arrested every year for celebrating Thankgiving and providing dinner!!
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>
<< <i>I find it interesting that Japan's credit rating was lowered today and PMs dropped. >>
How do you know there's a direct link? >>
Did I say there was a link? Did I write something that is not factual?
Someone may have an interest in this.
Knowledge is the enemy of fear
If a major economy's credit rating is lowered and all major economies are based on credit and fiat currencies, I take that to mean that the bankers of the world are beginning not to trust each other - again. This is exactly what happened when Libor went over 4% in 2008.
This is a troublesome sign, but don't worry - they will figure out their next move this week in Davos.
It's a shell game and someone is going to be stung. Don't be that guy.
I knew it would happen.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
roadrunner
<< <i>Saw that video last week. Is it put out by the FED? >>
The American Dream Website
Youtube channel
<< <i>Saw that video last week. Is it put out by the FED?
roadrunner >>
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
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