If congress does not increase the debt ceiling we will NOT default on our debt. Current taxes bring in 200 Billion per month. Current interest on debt is 20 Billion per month.
If we have a rush to redeem notes the Fed will simply print the money, or buy them themselves.
Our system will not crash in one or two years “THEY” can play this game for a very long time. The Chinese, Japanese, Arabs etc. will NOT dump debt, or refuse to roll debt over, or they will lose their right to sell products here.
I believe the END game of the socialists has become quite clear. They cannot get the redistribution of wealth they seek via taxation, so they will get it via inflation.
If we continue to make all the government payments we currently have by simply printing the money, all those receiving transfer payments continue to get paid, while those with paper assets lose value. What is the bond market compared to the gold market? What is the Treasury market compared to the Gold market? What is the mortgage market compared to the Gold market?
Get ready for a very long period of redistribution!
Your explanation assumes that the Ponzi scheme can continue forever. I say it cant. Second, there is more debt than there are dollars. That debt is only supported by higher inflation expectations. If expectations reverse, then debt becomes quite cumbersome and will collapse. This will be massively deflationary. We saw a brief glimpse of the future in 2008, just before the FED jumped in and gave the banks back all the money they had lost.
The Fed jumped in and created enough new money to give the banks back all the money they had lost. That new money diluted the value of the money that already existed. The only expectation you can have under those circumstances is that inflation (money creation out of thin air) will continue.
It gets really dicey when there is no accountability and when electronic bank account balances hold sway over real commodities and real assets. There is really no way to know the amount of electronic money out there, or how much dilution of the dollar has really occurred.
Now all you get is some germ infested cotton rag to carry around. POTD, mhammerman.
Q: Are You Printing Money? Bernanke: Not Literally
<< <i>If congress does not increase the debt ceiling we will NOT default on our debt. Current taxes bring in 200 Billion per month. Current interest on debt is 20 Billion per month.
If we have a rush to redeem notes the Fed will simply print the money, or buy them themselves. >>
What is the current spend rate including the interest? The US can move money around and play with cash flow for some time, but before long they will run out of money unless they borrow more or stop paying someone. And they can only borrow more if they Congress approves it. Please explain if I am wrong on this.
You are talking about QE3, QE4, etc. used to buy treasuries in order to support the treasury market. I agree this will probably happen and these moves are inflationary, not deflationary.
<< <i>Our system will not crash in one or two years “THEY” can play this game for a very long time. The Chinese, Japanese, Arabs etc. will NOT dump debt, or refuse to roll debt over, or they will lose their right to sell products here. >>
Other countries may not dump debt, but they aren't the only holders of our debt. Pimco has already dumped their US debt holdings. And if the Fed starts buying debt, countries might well line up to sell, but the decision will be just as political as it is economical.
Once the fed starts monetizing its own debt (which it is doing), it's only a matter of time before it is all over. There is no recovery from this state - it is a cycle that feeds on itself ultimately the printing becomes parabolic. The fed CANNOT stop printing. I still don't see how an ever-increasing amount of printing will result in FRN purchasing power increasing (deflation).
The timeline is down to 1-2 years. The stability of the world is so fragile right now, it cannot stay stable for long: -The EU is still in trouble. PIGS are not getting better, and there are rumors of Greece leaving the EU. -US states are still in trouble. Although not in the news, CA, IL, and other states have NOT solved their budget problems. CA is 8th(?) largest economy in the world. -The oil fields in the middle east will be turned over to the Muslim brotherhood, and we will be looking at $175-200 oil. Yemen and Syria are about to fall, and Saudi Arabia will not be far behind.
<< <i>I believe the END game of the socialists has become quite clear. They cannot get the redistribution of wealth they seek via taxation, so they will get it via inflation. >>
There are the socialists and then there are the powerful elite. They are aligned somewhat. The end goal of the world elite is to crash the US dollar.
If Congress does not raise the debt ceiling (a distinct possibility with the tea-party-flavored House of Representatives), then the Fed *cannot* print new FRN's in exchange for U.S. bonds, because the U.S. will not be able to issue new bonds for the Fed to monetize.
I see the possibility of an endgame where the U.S. issues non-debt, totally unbacked currency to get around the debt ceiling. If this occurs, the U.S. economy will likely be well on the way to toastland.
<< <i>If Congress does not raise the debt ceiling (a distinct possibility with the tea-party-flavored House of Representatives), then the Fed *cannot* print new FRN's in exchange for U.S. bonds, because the U.S. will not be able to issue new bonds for the Fed to monetize. >>
The US might not be able to issue bonds to monetize, but can't the fed still print FRN's to buy existing bonds, troubled assets, or any other asset?
<< <i>I see the possibility of an endgame where the U.S. issues non-debt, totally unbacked currency to get around the debt ceiling. If this occurs, the U.S. economy will likely be well on the way to toastland. >>
The uber-elite are looking for world-wide control, and the best way to do that is with a world currency. And the one thing standing in the way of that is the USD, which must come down to achieve that goal. Holders of the USD/FRNs will not be rewarded with deflation.
I vehemently disagree that the USA is headed to anything even remotely close Zimbabwe.
And since you think othewise, we will never see eye-to-eye on this. Debt default is deflationary, not inflationary.
I believe the USA (and most of the world) has been and currently is in, a massive inflationary bubble created by fiat currency. This bubble, like all bubbles, will collapse.
Like Goldsaint, I also believe the USA would not default if the debt ceiling were not raised. Bond holders get first dibs on incoming revenues so holders of US debt would get paid. The USA would default on some of its excessive promises--many made by people not even alive today. I see nothing wrong with this default.
I would disagree with Goldsaint in that I think deflation would be much better at wealth distribution. If the price of everything goes down who is better off, rich people who own things, or poor people who own nothing. The wealth gap would narrow.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< << If Congress does not raise the debt ceiling (a distinct possibility with the tea-party-flavored House of Representatives), then the Fed *cannot* print new FRN's in exchange for U.S. bonds, because the U.S. will not be able to issue new bonds for the Fed to monetize. >>
The US might not be able to issue bonds to monetize, but can't the fed still print FRN's to buy existing bonds, troubled assets, or any other asset? >>
Yes it can, but the newly printed FRN's will go to the owners of the assets it buys, not to the U.S. Treasury. So this will not solve the U.S. debt problem.
One possible nightmare scenario would be this:
1. The U.S. Treasury defaults on its securities, unable or unwilling to redeem them for cash (FRN's or their electronic equivalent).
2. The Federal Reserve steps in and buys these defaulted bonds at face value.
3. There is a rush, by foreign governments and others, to sell all their Treasury securities to the Fed before it changes its mind.
4. As a consequence, the world is suddenly flooded with trillions of dollars in FRN's, more than tripling the amount of liquid U.S. money in circulation.
5. Inflation *really* takes off, propelled by the tsunami of newly created dollars seeking a safe haven.
6. Interest rates explode, driven by rapid dollar depreciation and distrust of the U.S. financial system.
7. This process continues until the dollar is destroyed or the U.S. radically changes course.
In the short run, there are two alternatives to the above scenario. Either Congress raises the debt ceiling again, continuing the slow erosion of the dollar. Or the U.S. bypasses the Fed altogether and begins printing totally unbacked currency. Either alternative will buy a little time, but I expect we will still face financial Armageddon in the not too distant future.
What I am saying here is not that we are not eventually headed down a road of total destruction, but that this road is a very long one.
I do not believe that the world elite wants destruction of the dollar. The majority of their assets are denominated in DOLLARS. Sure they have some real estate and maybe a pocket full of gold, but all the bonds, mortgages, notes, stocks, etc. are in dollars.
I am not even sure we will have hyperinflation for a very long time, perhaps ten years at this rate.
If the government PRINTS billions and distributes this printed money to the middle and lower classes, you have inflation in the items we already see, i.e. food, fuel, clothing etc. This is what ordinary folks chase.
I believe that if the congress refuses to raise the debt ceiling the government has trillions in assets to sell before any program is not funded. Look at all the mortgages they hold. Sure there is an end to this, but with outright printing, they can last at least two years.
I think now that the elite have seen what is happening to the Euro zone, they are changing their minds about a one-world currency. Socialist countries like the U.S. just cannot provide all the goodies they would like to their people if other conservative governments in the group hampered them.
So my take here is we will not see a collapse of the dollar but a slow and steady inflation process whereby we give up very little in they way of social programs which are funded by out right printing of funds.
We are now living in a major catch 22. If we cut social programs that the middle and lower classes depend on there will be riots in the streets. Unlike the Greeks our lower class citizens have guns!
No politicians can cut Medicare or Social Security without the wrath of the baby boomers.
So there will be no significant cuts. If the debt is limited then printing the money is what is left.
Paul Volker started this debt process by stopping the printing of cash in the 80’S and by issuing debt instead. That debt issuing process is now coming to an end, and we will now go back to printing cash.
For purposes of discussion, I do not see why either scenarios cancel out the other.
"Or the U.S. bypasses the Fed altogether and begins printing totally unbacked currency." When I read that, I thought of "chits" that I have seen issued from time to time that have value in exchange for goods or services; kind of like the wooden nickels of old..."Good for one cold beer at Willies Tavern". Chits are really unbacked currency but they serve, none the less, as a token of exchange with no backing. We have seen them before also as company store script, it is even collected by some numismatists. Then, there's military script issued overseas to dependents of servicemen or in war time as a currency to be used on base though they were easily redeemable off base. Military script, just like the wooden nickels and company store tokens are all unbacked currency. It would not be our first experience with unbacked currency.
Currency with backing, in the US, actually began in the late 1790's as currency issued by individual, private banks. It was Alexander Hamilton that actually cemented the idea of a national, backed currency that was issued for ALL debts public and private. The transition from the small banks to the national government issuing currency is very nicely drawn out in the book "A Nation of Counterfeiters by Stephen Mihm.
The point being that it is quite concievable that an unbacked, alternate script could be easily issued with minimum disruption to the existing economy as we already have experience with both backed and unbacked currency in the US. For example, food script as in food stamps or living script as in welfare. Those these two scripts are actually backed by frn's, it is not a stretch to see these scripts as unbacked though still usable for goods and services. I see unbacked currency becoming much more common though it will never be called unbacked currency.
Company store script was issued in lieu of cash wages. It is not hard to imagine that rather than paychecks, workers could be issued a certain amount of food script, medical script, or other type of script instead of frn's in addition to some cash. In effect you could receive your wages in 50% script and 50% cash. This would solve a number of problems for the gov. This ratio of cash to script would become the next battleground for congressional fights, somewhat like the minimum wage battles. They would argue this rather than argue actually having to back frn's with gold or debt or treasury notes or anything of value as they do now.
<< I believe that if the congress refuses to raise the debt ceiling the government has trillions in assets to sell before any program is not funded. Look at all the mortgages they hold. Sure there is an end to this, but with outright printing, they can last at least two years. >>
I doubt that they can last that long. A big chunk of the mortgages are already held by the Fed, so they are not available for the government to sell. In addition, many and perhaps most of these mortgages are lower-quality "toxic assets" bought to keep financial institutions from collapsing. They wouldn't fetch anywhere near face value on the open market.
Sales of federal land and buildings might finance a few months worth of deficits, but there is no way the choicest properties (such as National Parks) would ever be put on the market. A mass sale of federal properties would also probably require Congressional approval and would be further slowed down by numerous court challenges.
In short, I don't see any way that the U.S. can finance its deficit for any significant amount of time through asset sales.
In checking with some of the retired and middle class folks here in my small Texas town many receive unemployment, social security, food stamps, tax refunds, etc.etc.etc. In the form of a credit card sent to them, sometimes each month. A lady friend of my wife’s who is now unmarried, and with two children, just got a tax refund on taxes she DID NOT pay In the form of a charge card for $8,600. WOW!
So I guess we cannot have to many dollars chasing to few goods, since “THEY” are not printing dollars! RIGHT? Walla no inflation!
In checking with some of the retired and middle class folks here in my small Texas town many receive unemployment, social security, food stamps, tax refunds, etc.etc.etc. In the form of a credit card sent to them, sometimes each month. A lady friend of my wife’s who is now unmarried, and with two children, just got a tax refund on taxes she DID NOT pay In the form of a charge card for $8,600. WOW!
So I guess we cannot have to many dollars chasing to few goods, since “THEY” are not printing dollars! RIGHT? Walla no inflation! >>
How can one get a REFUND on something never paid!!!! Oh wait, it's called socialism run by an Oligarchy.
I suspect it's time for a stock market correction. Watch for silver and stocks to track together with silver whipping the stock market like gold has been whipping silver. The powers that be can't take this situation long or far so will allow gold to rise.
Keeping FRN's in circulation to a minimum is a great source of control since monitoring, taxing, and creating digi-dollars is far easier. You don't even need a Congress to create digi-dollars. Just go out and do it. That's the way the FED and major banks are handling it.
With CPI rigged and laying low, along with few FRN's in circulation, the FED can always point to that and say, see Joe,...no inflation. If a crisis does occur, Joe is dependent on digi-dollars and has to play along whatever the PTB decide to do. Besides not having tangible assets to fall back on, J6P doesn't even have a small stockpile of FRN's stashed under his mattress.
Fekete with anouther good missive on the value of gold bonds up through 1971. Some interesting perspectives on the early Federal Reserve as well.
As a secondary, (but VERY important), observation...
When the storms hit Alabama on April 27th, there was an immediate need for many people to get trees off houses, and to get covers over damages roofs... ATMs didn't work... (No power)... and many had their cash scattered to the winds... (No paper money)...
Amazingly... More people than you would expect dug up caches of silver that they had buried in their yards, or had stored in small safes that survived the storms...
MORE amazingly... Contractors coming in to the communities already KNEW the 'spot prices' for silver that day, and gladly took silver coins as cash for tree removal/tarp covering of damaged roofs.
A few coins saved the day for many people.
Please get the word out!
SILVER IS CASH!
Get some, as an investment and a tool for immediate survival needs!
I'm not getting this. Does this clear the way for the german's to "merge" with the NYSE and have a majority share?
NEW YORK – Nasdaq and IntercontinentalExchange on Monday withdrew their joint $11 billion bid for the parent of the New York Stock Exchange after the U.S. Department of Justice informed the companies that it would pursue a lawsuit to block the deal.
"NYSE and Nasdaq are iconic...they are fierce competitors," said Christine Varney, Assistant Attorney General of the antitrust division of the Department of Justice, in a conference call. "If these two competitors had merged it would have effectively created a monopoly leading to higher prices, inferior service and less innovation."
The decision by the two exchanges to back off clears an obstacle to NYSE Euronext Inc.'s previous $10 billion deal to combine with the German exchange operator Deutsche Boerse. The withdrawal of the competing bid makes it unlikely that the German exchange will feel compelled to raise its lower bid.
<< "NYSE and Nasdaq are iconic...they are fierce competitors," said Christine Varney, Assistant Attorney General of the antitrust division of the Department of Justice, in a conference call. "If these two competitors had merged it would have effectively created a monopoly leading to higher prices, inferior service and less innovation." >>
If we really had competition, there would be a lot more than two major U.S. exchanges. I would welcome a stock exchange that, for example, did not allow short selling and gave shareholders more control over governance of listed companies.
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil.
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil. >>
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil. >>
His every word drips with liberal elitism. I'm not a GOPer for what it's worth...............MJ
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No consensus in debate over income-tax threshold Currently, 28 percent of wage earners pay individual income tax, but if the amendment is passed, that figure would be reduced to 12 percent while government tax revenues would decrease by 120 billion yuan a year.
The government sees the income-tax cut as a way to tackle the wide earnings gap between rich and poor and to produce a fairer income distribution, both of which are seen as high priorities for the country over the next five years.
May 20, 2011 Dear Reader, I have put my investment plans on hold, except possibly for the purchase of gold, silver and platinum coins. I think the temporary termination of QE (quantitative easing, meaning inflation of the money supply) at the end of June produces a global high risk of new deflationary conditions for a while, followed by more QE. A complete explanation will be in the June EWR. I could be wrong — economics is far from an exact science — but my best guess is that the wildness of the financial roller coaster is about to surpass anything ever seen before. You are on my mind every day. Have faith in the fact that in every global catastrophe, there are some people who emerge at the end in fine shape; there is no reason you and I cannot be among these people. I’ll be with you every step of the way. Richard J. Maybury Early Warning Report
So in other words everyone is broke. Seems like we're in a ripe environment for socialism to take root in America. Voters who are broke will certainly vote for it.
There's no way to evaluate inflation pro or con using that story. There's no context. For example, how does the amount of "financial fragility" today compare with 2007?
A widespread amount of financial distress can occur whether inflation is high or low - check out Zimbabwe. Higher prices result from excess money creation, even if most of that money goes to those already well off.
And, speaking of germ infested cotton rags...why not put ten cents worth of silver in each $1 bill ($10 worth in a ben) and then you could get rid of two problems at once; you would have the antibacterial properties of silver in the cotton and have currency that actually had value. Hummmm...a lot of heavy lifting here.
With the average share held for < 7 seconds or so....we are no longer investors.... we are ALL traders.....this is NOT good for capital formation and application....and that is what Wall Street is supposed to be all about. I believe "U.S. capitalism" has morphed into a U.S. "oligarchy"
Why else would we even be talking about killing Medicare?
Hum...........where are the real capitaists when you need em the most...
Here’s how we can get started to solve the problem everyone has been dancing around!
1. Everything manufactured that enters America will have a 30% tariff.
This is a much more effective means to achieve free and fair trade than debasing the dollar and it will preserve raw material prices. The policy of extremely low interest rates is misallocating capital resources.
2. Restore pre-Bush tax rates and abolish all federal and state corporate taxes.
We simply must generate the revenue. By eliminating corporate taxes (67% do not pay taxes now) you can eliminate all the corporate tax law, corruptive lobbying, and attract some new corporations to the USA.
3.Reduce defense expenditures by a factor of 50% over a three-year period.
This is a 16% reduction each year. Put in these terms it is doable. End the Iraq and Afghanistan wars in year one and two respectively. Close Germany, Korea, Japan and the other 150+ foreign bases or some combination thereof in year 3.
This will make ALL the symptoms go away in 2 to 3 years.
Too simple? Let's give them a try and see!
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There's no way to evaluate inflation pro or con using that story. There's no context. For example, how does the amount of "financial fragility" today compare with 2007?
A widespread amount of financial distress can occur whether inflation is high or low - check out Zimbabwe. Higher prices result from excess money creation, even if most of that money goes to those already well off. >>
I've said 100s of times that the best cure for high prices is high prices. If no one can afford to buy anything then prices will begin to go down. The G can only subsidize spending for so long. We may have a bit longer to go, but eventually it will end.
So in other words everyone is broke. Seems like we're in a ripe environment for socialism to take root in America. Voters who are broke will certainly vote for it.
Very possibly. Which group(s) will cast more votes?
Maybe I should try looking for stories about inflation... >>
And thats the problem. You really have to stop watching American Idol. How many times have you looked for something and never found it? But later, when least expecting it, you did find it?
Its also becoming obvious PC, that although I love your enthusiam for economics, you know very little about it.
Why is it that although Helicopter Ben has dropped Trillions on the economy, prices of most things are lower than 3 years ago? Coffee, cotton and PM are about the only commods higher. I guess people need the cotton to make pillows to hide their silver in, then need coffee to stay up all night worrying? The value of the largest assets people own--stocks and real estate--are lower than 3 years ago. All this money supposedly floating around and yet people have less of it.
The only arguement you have for inflation is that the FED keeps printing money. Well after 2 trillion what has been accomplished? Perhaps someday that arguement will prove, but so far, it hasnt. The days of easy money printing without J6P protesting are soon over.
BTW---I think the people of America finally got it right. Scotty was by far the most consistant and talented.
I would expand the search of commodities from 3 to 5-10 yrs ago to really get a handle on price inflation. A number of commods went through massive rises into 2006-2008 and have been forming consolidation patterns ever since. It seems to me nearly all of them are on an uptrend though with plenty of volatility along the way. It will continue. Does anyone think that $145 oil isn't going to be revisited sometime in the next 1-3 yrs? Ditto for all the other key commodities. The money being dumped into the system will continue to be used to speculate in flash trading stocks and buying and selling commodities. Wherever the banks and hedge funds can make money is where it will go. Commercial and Residential RE is not exactly high up on that list. The prices of weak or dead assets can continue to fall while other hot areas get the attention. As long as fiat remains weak and people need to eat and keep warm, commods should get more than their share of attention, even as prices of durable goods stagnate or even fall. $Trillions of bailout money were paid to "winners" of otc derivative bets from the fallout of BSC, Lehman, and others. That money went to buy gold, oil, stocks, corn, wheat, etc......but not new cars, university endowments, new homes, expanding businesses, nor J6P's pension fund.
Since 2006 all the grains are up from 2X to 3-1/2X with corn leading the way. Even the various soy products have all doubled. In the softs, only OJ didn't at least double since 2006, putting in a mere 50% rise. The massive rises in things like cotton, sugar, and wheat are being worked off but are probably not going away. The commodity markets are one of the recipients of the trillions in slush money created over the past 2-5 yrs. These same trillions have created huge volatility in all markets over the past few years. Longer term trends can be well-hidden under shorter to medium term price movements. One can almost question whether any of these markets perform adequate price discovery any more? 5 oil traders were just cited by the CFTC for manipulating oil prices in 2008. To think they had the nerve to buy the actual product and then sell it....just like the Hunts. I guess that makes each and every one of us just as guilty. But you won't ever see JPM cited for manipulating PM's. Why wasn't the US govt cited for manipulating the US strategic oil reserves in summer of 2008 to bring the price of oil down? I doubt very much if those 5 traders amounted to a hill of beans compared to the reserve oil swaps of the US govt.
Of all the commods listed on finviz.com only Lumber (-10%) and Natural Gas (-65%) show declines since 2006. All the listed PM's and copper are of course up similar amounts to the grains ands softs. Even stocks are up 10-35% based on Dow, S&P, Russel, and Nasdaq. All the meats listed on finviz are up a similar amount as the above stock market indicies.
So out of a few dozen items, only 3 are down. OJ is not exactly a world staple and lumber is tightly attached to a yet-to-bottom world housing market. No real suprises here. Commodities react to world inflation, not necessarily to USA "published" inflation. These bifurcated asset markets were created by depreciating fiat, unlimited derivative wagers, and bailouts. J6P probably has a long wait before reading about price inflation in the newspaper because the CPI-U of today needs to be 2X the level of 1980's CPI to get a comparable level of price inflation. And by that time, it will be way too late. Of course there's always the possibility that we just witness a massive blow off of the commodity trade over the past 1-3 yrs and its now curtains for these items as deflation envelops the world. Somehow I'm not ready to buy into that as the emerging markets of the world continue to grow, and most govt's continue to debase their currencies into the dirt.
<< <i>And thats the problem. You really have to stop watching American Idol. How many times have you looked for something and never found it? But later, when least expecting it, you did find it? >>
I don't watch AI, it was an example to show the pointlessness of your example. Just because I look for gold in my back yard and don't find it doesn't mean there's no gold in the ground somewhere else in the world.
Which city do you live in? It must be the only one in the country where prices are going down. It seems you just choose to look at what you want to, and ignore the inflation articles:
I'll let you Google the rest. That is, if you want to see what's really going on in most of the country.
<< <i>Its also becoming obvious PC, that although I love your enthusiam for economics, you know very little about it. >>
I would say the same about you. Clearly anyone promoting deflation in this environment is lacking some core knowledge. You still think that dollars are destroyed when the stock market goes down.
<< <i>Why is it that although Helicopter Ben has dropped Trillions on the economy, prices of most things are lower than 3 years ago? Coffee, cotton and PM are about the only commods higher. I guess people need the cotton to make pillows to hide their silver in, then need coffee to stay up all night worrying? The value of the largest assets people own--stocks and real estate--are lower than 3 years ago. All this money supposedly floating around and yet people have less of it. >>
What city do you live in again? Because I guarantee it's the only one of the few (if any) in the country where general prices are declining. I've argued before why the RE price argument is invalid, I'm not going to repeat it. As part of my job I buy millions in industrial equipment and prices that have been fairly stable for the past decade have now increased. NOTHING has decreased in price. I debunked your favorite fast food example a few posts ago as well. $1.29 is the new $1 menu, around here anyway. Either that or the double cheeseburge now has one slice of cheese. And do I have to tell you what I pay at the pump vs a year ago? I'd like to visit your town and bring a tanker truck if gas in your town hasn't gone up.
<< <i>The only argument you have for inflation is that the FED keeps printing money. Well after 2 trillion what has been accomplished? Perhaps someday that arguement will prove, but so far, it hasnt. The days of easy money printing without J6P protesting are soon over. >>
It takes time for the money to enter the economy. Around 8 months if directly injected, longer with other methods (like what has been done). Clearly, the opposite will not happen. Printing more money does NOT lead to deflation.
Comments
<< <i>
Maybe you should ask the people of Zimbabwe what happened to the value of their currency as their ponzi scheme imploded... >>
at least they have an accepted underground currency of USD.
what would we do?
Current taxes bring in 200 Billion per month. Current interest on debt is 20 Billion per month.
If we have a rush to redeem notes the Fed will simply print the money, or buy them themselves.
Our system will not crash in one or two years “THEY” can play this game for a very long time. The Chinese, Japanese, Arabs etc. will NOT dump debt, or refuse to roll debt over, or they will lose their right to sell products here.
I believe the END game of the socialists has become quite clear. They cannot get the redistribution of wealth they seek via taxation, so they will get it via inflation.
If we continue to make all the government payments we currently have by simply printing the money, all those receiving transfer payments continue to get paid, while those with paper assets lose value. What is the bond market compared to the gold market? What is the Treasury market compared to the Gold market? What is the mortgage market compared to the Gold market?
Get ready for a very long period of redistribution!
The Fed jumped in and created enough new money to give the banks back all the money they had lost. That new money diluted the value of the money that already existed. The only expectation you can have under those circumstances is that inflation (money creation out of thin air) will continue.
It gets really dicey when there is no accountability and when electronic bank account balances hold sway over real commodities and real assets. There is really no way to know the amount of electronic money out there, or how much dilution of the dollar has really occurred.
Now all you get is some germ infested cotton rag to carry around.
I knew it would happen.
<< <i>If congress does not increase the debt ceiling we will NOT default on our debt.
Current taxes bring in 200 Billion per month. Current interest on debt is 20 Billion per month.
If we have a rush to redeem notes the Fed will simply print the money, or buy them themselves. >>
What is the current spend rate including the interest? The US can move money around and play with cash flow for some time, but before long they will run out of money unless they borrow more or stop paying someone. And they can only borrow more if they Congress approves it. Please explain if I am wrong on this.
You are talking about QE3, QE4, etc. used to buy treasuries in order to support the treasury market. I agree this will probably happen and these moves are inflationary, not deflationary.
<< <i>Our system will not crash in one or two years “THEY” can play this game for a very long time. The Chinese, Japanese, Arabs etc. will NOT dump debt, or refuse to roll debt over, or they will lose their right to sell products here. >>
Other countries may not dump debt, but they aren't the only holders of our debt. Pimco has already dumped their US debt holdings. And if the Fed starts buying debt, countries might well line up to sell, but the decision will be just as political as it is economical.
Once the fed starts monetizing its own debt (which it is doing), it's only a matter of time before it is all over. There is no recovery from this state - it is a cycle that feeds on itself ultimately the printing becomes parabolic. The fed CANNOT stop printing. I still don't see how an ever-increasing amount of printing will result in FRN purchasing power increasing (deflation).
The timeline is down to 1-2 years. The stability of the world is so fragile right now, it cannot stay stable for long:
-The EU is still in trouble. PIGS are not getting better, and there are rumors of Greece leaving the EU.
-US states are still in trouble. Although not in the news, CA, IL, and other states have NOT solved their budget problems. CA is 8th(?) largest economy in the world.
-The oil fields in the middle east will be turned over to the Muslim brotherhood, and we will be looking at $175-200 oil. Yemen and Syria are about to fall, and Saudi Arabia will not be far behind.
<< <i>I believe the END game of the socialists has become quite clear. They cannot get the redistribution of wealth they seek via taxation, so they will get it via inflation. >>
There are the socialists and then there are the powerful elite. They are aligned somewhat. The end goal of the world elite is to crash the US dollar.
I see the possibility of an endgame where the U.S. issues non-debt, totally unbacked currency to get around the debt ceiling. If this occurs, the U.S. economy will likely be well on the way to toastland.
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<< <i>If Congress does not raise the debt ceiling (a distinct possibility with the tea-party-flavored House of Representatives), then the Fed *cannot* print new FRN's in exchange for U.S. bonds, because the U.S. will not be able to issue new bonds for the Fed to monetize. >>
The US might not be able to issue bonds to monetize, but can't the fed still print FRN's to buy existing bonds, troubled assets, or any other asset?
<< <i>I see the possibility of an endgame where the U.S. issues non-debt, totally unbacked currency to get around the debt ceiling. If this occurs, the U.S. economy will likely be well on the way to toastland. >>
It already is. But what about a new world currency?
The uber-elite are looking for world-wide control, and the best way to do that is with a world currency. And the one thing standing in the way of that is the USD, which must come down to achieve that goal. Holders of the USD/FRNs will not be rewarded with deflation.
And since you think othewise, we will never see eye-to-eye on this. Debt default is deflationary, not inflationary.
I believe the USA (and most of the world) has been and currently is in, a massive inflationary bubble created by fiat currency. This bubble, like all bubbles, will collapse.
Like Goldsaint, I also believe the USA would not default if the debt ceiling were not raised. Bond holders get first dibs on incoming revenues so holders of US debt would get paid. The USA would default on some of its excessive promises--many made by people not even alive today. I see nothing wrong with this default.
I would disagree with Goldsaint in that I think deflation would be much better at wealth distribution. If the price of everything goes down who is better off, rich people who own things, or poor people who own nothing. The wealth gap would narrow.
Knowledge is the enemy of fear
<< <i>
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The US might not be able to issue bonds to monetize, but can't the fed still print FRN's to buy existing bonds, troubled assets, or any other asset? >>
Yes it can, but the newly printed FRN's will go to the owners of the assets it buys, not to the U.S. Treasury. So this will not solve the U.S. debt problem.
One possible nightmare scenario would be this:
1. The U.S. Treasury defaults on its securities, unable or unwilling to redeem them for cash (FRN's or their electronic equivalent).
2. The Federal Reserve steps in and buys these defaulted bonds at face value.
3. There is a rush, by foreign governments and others, to sell all their Treasury securities to the Fed before it changes its mind.
4. As a consequence, the world is suddenly flooded with trillions of dollars in FRN's, more than tripling the amount of liquid U.S. money in circulation.
5. Inflation *really* takes off, propelled by the tsunami of newly created dollars seeking a safe haven.
6. Interest rates explode, driven by rapid dollar depreciation and distrust of the U.S. financial system.
7. This process continues until the dollar is destroyed or the U.S. radically changes course.
In the short run, there are two alternatives to the above scenario. Either Congress raises the debt ceiling again, continuing the slow erosion of the dollar. Or the U.S. bypasses the Fed altogether and begins printing totally unbacked currency. Either alternative will buy a little time, but I expect we will still face financial Armageddon in the not too distant future.
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I do not believe that the world elite wants destruction of the dollar. The majority of their assets are denominated in DOLLARS. Sure they have some real estate and maybe a pocket full of gold, but all the bonds, mortgages, notes, stocks, etc. are in dollars.
I am not even sure we will have hyperinflation for a very long time, perhaps ten years at this rate.
If the government PRINTS billions and distributes this printed money to the middle and lower classes, you have inflation in the items we already see, i.e. food, fuel, clothing etc. This is what ordinary folks chase.
I believe that if the congress refuses to raise the debt ceiling the government has trillions in assets to sell before any program is not funded. Look at all the mortgages they hold. Sure there is an end to this, but with outright printing, they can last at least two years.
I think now that the elite have seen what is happening to the Euro zone, they are changing their minds about a one-world currency. Socialist countries like the U.S. just cannot provide all the goodies they would like to their people if other conservative governments in the group hampered them.
So my take here is we will not see a collapse of the dollar but a slow and steady inflation process whereby we give up very little in they way of social programs which are funded by out right printing of funds.
We are now living in a major catch 22. If we cut social programs that the middle and lower classes depend on there will be riots in the streets. Unlike the Greeks our lower class citizens have guns!
No politicians can cut Medicare or Social Security without the wrath of the baby boomers.
So there will be no significant cuts. If the debt is limited then printing the money is what is left.
Paul Volker started this debt process by stopping the printing of cash in the 80’S and by issuing debt instead. That debt issuing process is now coming to an end, and we will now go back to printing cash.
one needs to consider one's unique situation (age, socio-economic...even revisitng many lost mores of our culture) to assess what is best for each.
on a lighter note i was trying to come up with a funny acronym for KITCO and could only spit out "killed in the corner office"
"Or the U.S. bypasses the Fed altogether and begins printing totally unbacked currency."
When I read that, I thought of "chits" that I have seen issued from time to time that have value in exchange for goods or services; kind of like the wooden nickels of old..."Good for one cold beer at Willies Tavern". Chits are really unbacked currency but they serve, none the less, as a token of exchange with no backing. We have seen them before also as company store script, it is even collected by some numismatists. Then, there's military script issued overseas to dependents of servicemen or in war time as a currency to be used on base though they were easily redeemable off base. Military script, just like the wooden nickels and company store tokens are all unbacked currency. It would not be our first experience with unbacked currency.
Currency with backing, in the US, actually began in the late 1790's as currency issued by individual, private banks. It was Alexander Hamilton that actually cemented the idea of a national, backed currency that was issued for ALL debts public and private. The transition from the small banks to the national government issuing currency is very nicely drawn out in the book "A Nation of Counterfeiters by Stephen Mihm.
The point being that it is quite concievable that an unbacked, alternate script could be easily issued with minimum disruption to the existing economy as we already have experience with both backed and unbacked currency in the US. For example, food script as in food stamps or living script as in welfare. Those these two scripts are actually backed by frn's, it is not a stretch to see these scripts as unbacked though still usable for goods and services. I see unbacked currency becoming much more common though it will never be called unbacked currency.
Company store script was issued in lieu of cash wages. It is not hard to imagine that rather than paychecks, workers could be issued a certain amount of food script, medical script, or other type of script instead of frn's in addition to some cash. In effect you could receive your wages in 50% script and 50% cash. This would solve a number of problems for the gov. This ratio of cash to script would become the next battleground for congressional fights, somewhat like the minimum wage battles. They would argue this rather than argue actually having to back frn's with gold or debt or treasury notes or anything of value as they do now.
More soon...
I doubt that they can last that long. A big chunk of the mortgages are already held by the Fed, so they are not available for the government to sell. In addition, many and perhaps most of these mortgages are lower-quality "toxic assets" bought to keep financial institutions from collapsing. They wouldn't fetch anywhere near face value on the open market.
Sales of federal land and buildings might finance a few months worth of deficits, but there is no way the choicest properties (such as National Parks) would ever be put on the market. A mass sale of federal properties would also probably require Congressional approval and would be further slowed down by numerous court challenges.
In short, I don't see any way that the U.S. can finance its deficit for any significant amount of time through asset sales.
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I knew it would happen.
In checking with some of the retired and middle class folks here in my small Texas town
many receive unemployment, social security, food stamps, tax refunds, etc.etc.etc.
In the form of a credit card sent to them, sometimes each month. A lady friend of my wife’s who is now unmarried, and with two children, just got a tax refund on taxes she DID NOT pay In the form of a charge card for $8,600. WOW!
So I guess we cannot have to many dollars chasing to few goods, since “THEY” are not printing dollars! RIGHT? Walla no inflation!
<< <i>I guess money printing is out anyway.
In checking with some of the retired and middle class folks here in my small Texas town
many receive unemployment, social security, food stamps, tax refunds, etc.etc.etc.
In the form of a credit card sent to them, sometimes each month. A lady friend of my wife’s who is now unmarried, and with two children, just got a tax refund on taxes she DID NOT pay In the form of a charge card for $8,600. WOW!
So I guess we cannot have to many dollars chasing to few goods, since “THEY” are not printing dollars! RIGHT? Walla no inflation! >>
How can one get a REFUND on something never paid!!!! Oh wait, it's called socialism run by an Oligarchy.
together with silver whipping the stock market like gold has been whipping silver. The
powers that be can't take this situation long or far so will allow gold to rise.
a Congress to create digi-dollars. Just go out and do it. That's the way the FED and major banks are handling it.
With CPI rigged and laying low, along with few FRN's in circulation, the FED can always point to that and say, see Joe,...no inflation. If a crisis does occur, Joe
is dependent on digi-dollars and has to play along whatever the PTB decide to do. Besides not having tangible assets to fall back on, J6P doesn't even
have a small stockpile of FRN's stashed under his mattress.
Fekete with anouther good missive on the value of gold bonds up through 1971. Some interesting perspectives on the early Federal Reserve as well.
Gold Bond....more than just a mattress brand name
roadrunner
Regarding Silver And Disasters...
May 16, 2011
W.B.
Steve...
As a secondary, (but VERY important), observation...
When the storms hit Alabama on April 27th, there was an immediate need for many people to get trees off houses, and to get covers over damages roofs... ATMs didn't work... (No power)... and many had their cash scattered to the winds... (No paper money)...
Amazingly... More people than you would expect dug up caches of silver that they had buried in their yards, or had stored in small safes that survived the storms...
MORE amazingly... Contractors coming in to the communities already KNEW the 'spot prices' for silver that day, and gladly took silver coins as cash for tree removal/tarp covering of damaged roofs.
A few coins saved the day for many people.
Please get the word out!
SILVER IS CASH!
Get some, as an investment and a tool for immediate survival needs!
W.B.
NEW YORK – Nasdaq and IntercontinentalExchange on Monday withdrew their joint $11 billion bid for the parent of the New York Stock Exchange after the U.S. Department of Justice informed the companies that it would pursue a lawsuit to block the deal.
"NYSE and Nasdaq are iconic...they are fierce competitors," said Christine Varney, Assistant Attorney General of the antitrust division of the Department of Justice, in a conference call. "If these two competitors had merged it would have effectively created a monopoly leading to higher prices, inferior service and less innovation."
The decision by the two exchanges to back off clears an obstacle to NYSE Euronext Inc.'s previous $10 billion deal to combine with the German exchange operator Deutsche Boerse. The withdrawal of the competing bid makes it unlikely that the German exchange will feel compelled to raise its lower bid.
Nasdaq drops bid for NYSE on DOJ's antitrust move
Nasdaq drops bid for NYSE on DOJ's antitrust move
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800-624-1870
If we really had competition, there would be a lot more than two major U.S. exchanges. I would welcome a stock exchange that, for example, did not allow short selling and gave shareholders more control over governance of listed companies.
My Adolph A. Weinman signature
A purge of our Congress.
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil.
Box of 20
<< <i>Change I would like to see:
A purge of our Congress.
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil. >>
<< <i>Change I would like to see:
A purge of our Congress.
There will be campaign refinance reform where elections will only be publicly funded. The Supreme Court decision allowing Corporations to contribute to campaigns will be abolished.
Lobbying will be illegal.
Like George Washington who relinquished his power and could have been king, U.S. Senators and Representatives will only be allowed to serve one term. Power corrupts. "Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men."
The Federal Reserve will be abolished.
The U.S. Empire will be allowed to crumble bringing it back to the borders of the U.S. Declaring war will have to by concensus of the U.S. Citizens, not its Representative or Executive Chief.
The U.N. will be thrown out of the USA.
All Foreign Aid will cease and desist.
Manufacturing will come back to the U.S. We no longer will be exporting our wealth overseas.
A Manhattan Style Project will be implemented finding an alternative energy source which would not make the U.S. dependent on foreign oil. >>
Excellent
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US Rare Coin Investments
800-624-1870
Lobbying is made transparent. All meetings between lobbyists and lawmakers are publicly televised and recorded.
The value of the dollar (or whatever succeeds it) is constitutionally set to a fixed weight of gold.
All government-sponsored monopolies, financial or otherwise, are prohibited.
Government-guaranteed loans of any type are prohibited.
Government borrowing of any type is forbidden. A balanced budget is mandated.
No more government "bailouts" of any kind.
My Adolph A. Weinman signature
Timmy Tool
His every word drips with liberal elitism. I'm not a GOPer for what it's worth...............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......
Currently, 28 percent of wage earners pay individual income tax, but if the amendment is passed, that figure would be reduced to 12 percent while government tax revenues would decrease by 120 billion yuan a year.
The government sees the income-tax cut as a way to tackle the wide earnings gap between rich and poor and to produce a fairer income distribution, both of which are seen as high priorities for the country over the next five years.
No consensus in debate over income-tax threshold
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800-624-1870
The Chinese are coming!
So, lower taxes, less regulations and "voila" a booming economy.
Sounds like Ron Paul should try running over there. They would listen to the message and applaud while laughing at timmy the tool.
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Tom Pilitowski
US Rare Coin Investments
800-624-1870
the revelation of piles of undisclosed debt in local governments that could undercut the country's drive to avoid an international bailout.
Knowledge is the enemy of fear
Worldwide, politicians and bureaucrats seem to need remedial help with their arithmetic.
Dear Reader,
I have put my investment plans on hold, except possibly for the purchase of gold, silver and platinum coins.
I think the temporary termination of QE (quantitative easing, meaning inflation of the money supply) at the end of June produces a global high risk of new deflationary conditions for a while, followed by more QE.
A complete explanation will be in the June EWR.
I could be wrong — economics is far from an exact science — but my best guess is that the wildness of the financial roller coaster is about to surpass anything ever seen before.
You are on my mind every day. Have faith in the fact that in every global catastrophe, there are some people who emerge at the end in fine shape; there is no reason you and I cannot be among these people.
I’ll be with you every step of the way.
Richard J. Maybury
Early Warning Report
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Tom Pilitowski
US Rare Coin Investments
800-624-1870
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<< <i>Too Big To Fail on HBO tonight. Has anything changed? >>
Yes.....they are now, too bigger to fail.
roadrunner
Quarterly gold production rose to 23,466 ounces, from 14,995 ounces, a year earlier.
The Ontario-based company said it produced a record 10,175 ounces of gold for the month of April.
<< <i>Too Big Too Fail on HBO tonight. Has anything changed? >>
Nope, the propaganda especially afterwards was typical.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Knowledge is the enemy of fear
Voters who are broke will certainly vote for it.
<< <i>Try as I might, I just cant find inflation in this story. >>
There's no way to evaluate inflation pro or con using that story. There's no context. For example, how does the amount of "financial fragility" today compare with 2007?
A widespread amount of financial distress can occur whether inflation is high or low - check out Zimbabwe. Higher prices result from excess money creation, even if most of that money goes to those already well off.
My Adolph A. Weinman signature
<< <i>So in other words everyone is broke. Seems like we're in a ripe environment for socialism to take root in America.
>>
To take root? Good G-d man, take root?
Try this,
Forsaking our heritage
Goes point by point, side by side.
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Tom Pilitowski
US Rare Coin Investments
800-624-1870
Why else would we even be talking about killing Medicare?
Hum...........where are the real capitaists when you need em the most...
Here’s how we can get started to solve the problem everyone has been dancing around!
1. Everything manufactured that enters America will have a 30% tariff.
This is a much more effective means to achieve free and fair trade than debasing the dollar and it will preserve raw material prices. The policy of extremely low interest rates is misallocating capital resources.
2. Restore pre-Bush tax rates and abolish all federal and state corporate taxes.
We simply must generate the revenue. By eliminating corporate taxes (67% do not pay taxes now) you can eliminate all the corporate tax law, corruptive lobbying, and attract some new corporations to the USA.
3.Reduce defense expenditures by a factor of 50% over a three-year period.
This is a 16% reduction each year. Put in these terms it is doable. End the Iraq and Afghanistan wars in year one and two respectively. Close Germany, Korea, Japan and the other 150+ foreign bases or some combination thereof in year 3.
This will make ALL the symptoms go away in 2 to 3 years.
Too simple? Let's give them a try and see!
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mariner67, and Mikes coins
<< <i>
<< <i>Try as I might, I just cant find inflation in this story. >>
There's no way to evaluate inflation pro or con using that story. There's no context. For example, how does the amount of "financial fragility" today compare with 2007?
A widespread amount of financial distress can occur whether inflation is high or low - check out Zimbabwe. Higher prices result from excess money creation, even if most of that money goes to those already well off. >>
I've said 100s of times that the best cure for high prices is high prices. If no one can afford to buy anything then prices will begin to go down. The G can only subsidize spending for so long. We may have a bit longer to go, but eventually it will end.
So in other words everyone is broke. Seems like we're in a ripe environment for socialism to take root in America. Voters who are broke will certainly vote for it.
Very possibly. Which group(s) will cast more votes?
Knowledge is the enemy of fear
<< <i>Try as I might, I just cant find inflation in this story. >>
Try as I might, I can't find any inflation in this story either.
Maybe I should try looking for stories about inflation...
<< <i>
<< <i>Try as I might, I just cant find inflation in this story. >>
Try as I might, I can't find any inflation in this story either.
Maybe I should try looking for stories about inflation... >>
And thats the problem. You really have to stop watching American Idol. How many times have you looked for something and never found it? But later, when least expecting it, you did find it?
Its also becoming obvious PC, that although I love your enthusiam for economics, you know very little about it.
Why is it that although Helicopter Ben has dropped Trillions on the economy, prices of most things are lower than 3 years ago? Coffee, cotton and PM are about the only commods higher. I guess people need the cotton to make pillows to hide their silver in, then need coffee to stay up all night worrying? The value of the largest assets people own--stocks and real estate--are lower than 3 years ago. All this money supposedly floating around and yet people have less of it.
The only arguement you have for inflation is that the FED keeps printing money. Well after 2 trillion what has been accomplished? Perhaps someday that arguement will prove, but so far, it hasnt. The days of easy money printing without J6P protesting are soon over.
BTW---I think the people of America finally got it right. Scotty was by far the most consistant and talented.
Knowledge is the enemy of fear
2006-2008 and have been forming consolidation patterns ever since. It seems to me nearly all of them are on an uptrend though with plenty of volatility along the way.
It will continue. Does anyone think that $145 oil isn't going to be revisited sometime in the next 1-3 yrs? Ditto for all the other key commodities. The money being
dumped into the system will continue to be used to speculate in flash trading stocks and buying and selling commodities. Wherever the banks and hedge funds can
make money is where it will go. Commercial and Residential RE is not exactly high up on that list. The prices of weak or dead assets can continue to fall while other
hot areas get the attention. As long as fiat remains weak and people need to eat and keep warm, commods should get more than their share of attention, even as
prices of durable goods stagnate or even fall. $Trillions of bailout money were paid to "winners" of otc derivative bets from the fallout of BSC, Lehman, and others.
That money went to buy gold, oil, stocks, corn, wheat, etc......but not new cars, university endowments, new homes, expanding businesses, nor J6P's pension fund.
Since 2006 all the grains are up from 2X to 3-1/2X with corn leading the way. Even the various soy products have all doubled.
In the softs, only OJ didn't at least double since 2006, putting in a mere 50% rise. The massive rises in things like cotton, sugar, and wheat are being worked off
but are probably not going away. The commodity markets are one of the recipients of the trillions in slush money created over the past 2-5 yrs. These same trillions have
created huge volatility in all markets over the past few years. Longer term trends can be well-hidden under shorter to medium term price movements. One can almost
question whether any of these markets perform adequate price discovery any more? 5 oil traders were just cited by the CFTC for manipulating oil prices in 2008. To think
they had the nerve to buy the actual product and then sell it....just like the Hunts. I guess that makes each and every one of us just as guilty. But you won't ever see JPM
cited for manipulating PM's. Why wasn't the US govt cited for manipulating the US strategic oil reserves in summer of 2008 to bring the price of oil down? I doubt very much
if those 5 traders amounted to a hill of beans compared to the reserve oil swaps of the US govt.
Of all the commods listed on finviz.com only Lumber (-10%) and Natural Gas (-65%) show declines since 2006.
All the listed PM's and copper are of course up similar amounts to the grains ands softs.
Even stocks are up 10-35% based on Dow, S&P, Russel, and Nasdaq.
All the meats listed on finviz are up a similar amount as the above stock market indicies.
So out of a few dozen items, only 3 are down. OJ is not exactly a world staple and lumber is tightly attached to a yet-to-bottom world housing market. No real suprises here.
Commodities react to world inflation, not necessarily to USA "published" inflation. These bifurcated asset markets were created by depreciating fiat, unlimited derivative wagers,
and bailouts. J6P probably has a long wait before reading about price inflation in the newspaper because the CPI-U of today needs to be 2X the level of 1980's CPI to get a
comparable level of price inflation. And by that time, it will be way too late. Of course there's always the possibility that we just witness a massive blow off of the commodity
trade over the past 1-3 yrs and its now curtains for these items as deflation envelops the world. Somehow I'm not ready to buy into that as the emerging markets of the world
continue to grow, and most govt's continue to debase their currencies into the dirt.
roadrunner
<< <i>And thats the problem. You really have to stop watching American Idol. How many times have you looked for something and never found it? But later, when least expecting it, you did find it? >>
I don't watch AI, it was an example to show the pointlessness of your example. Just because I look for gold in my back yard and don't find it doesn't mean there's no gold in the ground somewhere else in the world.
Which city do you live in? It must be the only one in the country where prices are going down. It seems you just choose to look at what you want to, and ignore the inflation articles:
Rent rates up
Tuition Increase
Increasing Costs put some local volunteer fire departments in danger of closing their doors
Travel Costs Increasing
Increasing Costs Stall Street Repair
I'll let you Google the rest. That is, if you want to see what's really going on in most of the country.
<< <i>Its also becoming obvious PC, that although I love your enthusiam for economics, you know very little about it. >>
I would say the same about you. Clearly anyone promoting deflation in this environment is lacking some core knowledge. You still think that dollars are destroyed when the stock market goes down.
<< <i>Why is it that although Helicopter Ben has dropped Trillions on the economy, prices of most things are lower than 3 years ago? Coffee, cotton and PM are about the only commods higher. I guess people need the cotton to make pillows to hide their silver in, then need coffee to stay up all night worrying? The value of the largest assets people own--stocks and real estate--are lower than 3 years ago. All this money supposedly floating around and yet people have less of it. >>
What city do you live in again? Because I guarantee it's the only one of the few (if any) in the country where general prices are declining. I've argued before why the RE price argument is invalid, I'm not going to repeat it. As part of my job I buy millions in industrial equipment and prices that have been fairly stable for the past decade have now increased. NOTHING has decreased in price. I debunked your favorite fast food example a few posts ago as well. $1.29 is the new $1 menu, around here anyway. Either that or the double cheeseburge now has one slice of cheese. And do I have to tell you what I pay at the pump vs a year ago? I'd like to visit your town and bring a tanker truck if gas in your town hasn't gone up.
<< <i>The only argument you have for inflation is that the FED keeps printing money. Well after 2 trillion what has been accomplished? Perhaps someday that arguement will prove, but so far, it hasnt. The days of easy money printing without J6P protesting are soon over. >>
It takes time for the money to enter the economy. Around 8 months if directly injected, longer with other methods (like what has been done). Clearly, the opposite will not happen. Printing more money does NOT lead to deflation.