<< <i>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 stock market indicies.
Out of a few dozen items, only 2 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 and bailouts. >>
Agreed. Inflation or not, supply and demand still come into play. Nat Gas supplies have increased. Demand for lumber has decreased big big. Just like offshoring manufacturing and technology improvements have counteracted inflation in consumer goods for the past few decades. We are at the point though where there are no more gains to be made with offshoring labor, but technology improvements will continue to retard price increases in industries where efficiency improvements can still be made.
Now that rents are starting to move up I have to wonder if the BLS is going to let the CPI-U stay as is. Rent or imputed rent from actual homeownership is 40% of the CPI-U. It depended on stagnant rental prices over the past 30 yrs while homes prices rose. Seems like it's time to shift the home portion of the CPI back to actual ownership vs. the rental model in order to keep the biggest item in the CPI from rising. Then when the day comes where prices of homes start to rise again, they can shift back to the rental model. Makes sense to me.
Seems like we have this same inflation vs deflation argument every year....and gold is higher every year.
@ RR "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"
i think some just went into some kinda financial black hole. ^^^
@ goingbroke "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"
good point... ^^^^^
Dave, i suppose one could say that if a majority surveyed DID have access to this money then it would mean that there was a lot of money in the system...ie inflationary. that's pretty basic, right?
i think we won't have inflation in the sense we are used to until wages rise.
The Fed doesn't care about rising prices of things. When wages start to rise (called a secondary effect), then they get concerned. They view the commodity rise as a temporary thing that will subside. With unemployment at 9% (or higher depending on what you believe), people just aren't asking for and getting wage increases. Aside from some hi-tech workers at Apple, Facebook, Google, and Microsoft, wages are not rising and they won't either. Muni and Federal employees are giving back in order to keep jobs. Same with Unions.
As far as rising rents, banks could start to rent out some of their REO inventory and that would depress rents.
I don't think the bailout monies went into any financial black holes. They were handed over to someone very real on the other end of those derivative bets. That money is then put to use to push up the price of whatever is being chased after or handed back to someone else in payment of debts. Either way, it's new money available for new bets. Those that were on the losing end of the original bet were either put out of business or had their losses socialized. Was it deflationary that Lehman and BSC went out of business? I don't think so. The anteing up on their losses would appear to be inflationary. If the debt stream never ends, but only continues to be expanded or renegotiated, that's inflationary. Debt becomes deflationary when it's decided the debt is no longer going to be covered or expanded. Then it becomes deflationary in a hurry. Seems we're still on the road to covering up everyone's bad debt. In the pre-fiat days, gold or a legitmate promise/note to pay gold, was the means to extinguish and control debt.
The >$1 TRILL rise in Fed bank reserves over the past 2-1/2 yrs is not seen as inflationary because the money never made it to J6P. But that money kept the too big to fail banks from having to pull in other assets and deflate their operations. So to them, it's definitely inflationary and allowed them to continue to not only maintain their current bets in the markets, but to increase them. The FED also handed out $TRILLIONs of bailout money to thousands of entities other than banks. That's inflationary as well. If I went out and overspent on my c/c by $20,000 over the past 3 yrs and the FED bailed me out by handing me a check for a $10,000, did that change the fact that I spent $20,000 already? That $10,000 exists and someone will spend it whether it's me or someone else in the chain. The debt pile only continues to expand as it shifts from one entity's liability to the next. Transference of debt doesn't eliminate it. Our system currently has had no means to extinguish debt for 40 yrs and that's inherently inflationary.
If I take a few dollars worth of paint and canvas, and paint a painting that sells for a thousand dollars,
or if I take a few dollars worth of metal and plastic, and build a gadget that sells for a hundred dollars,
or if i take a couple dollars worth of food, and prepare and season and serve it as a meal for fifty dollars,
Then haven't I "created" money in the form of value added? Is this or is this not inflationary?
Follow-up question: If the total output of all human economic activity grows, doesn't it make sense that the money supply would also have to increase? >>
No, in your examples you haven't created money. You've convinced someone else to give you their money which already existed.
To answer the second question, the money supply wouldn't have to increase. First of all, there is always barter. I could trade your 2 gallons of gas for dinner. But if you're not hungry, obviously money is what helps lubricate the economy so that you can get your gas and spend the monetary equivalent on dinner when you are hungry with whoever will accept your money. Money is just stored purchasing power. But you can store purchasing power in other things besides the local currency, such as gold, pork bellies, barrels of oil, or gadgets made of metal and plastic. The free market and supply and demand keep everything in balance.
If I take a few dollars worth of paint and canvas, and paint a painting that sells for a thousand dollars,
or if I take a few dollars worth of metal and plastic, and build a gadget that sells for a hundred dollars,
or if i take a couple dollars worth of food, and prepare and season and serve it as a meal for fifty dollars,
Then haven't I "created" money in the form of value added? Is this or is this not inflationary?
Follow-up question: If the total output of all human economic activity grows, doesn't it make sense that the money supply would also have to increase?
Re: Painting - no, you've created a consumable item and it is consumed after the buyer give you his money. No money was created.
Re: Gadget - no, you've created a consumable item or a production device that is either consumed or amortized when you use it. No money was created.
Re: Meal - no, you've created a consumable meal and it was consumed. No money was created.
The "Value Added" requires more money than the raw goods, but it doesn't create money. It just requires more of it before you can utilize it.
As output grows, there is no reason to require an increase in money supply. Why can't the increase in productivity result in lower prices instead of requiring the creation of more money? The injection of more money only serves to give banks first shot at the money which is used to bestow largely unearned profits & executive bonuses on the inflators of the money supply - for doing nothing. They should have to earn it like everyone else.
Adding more money to the system only makes it harder to know whether your product or service is valued more, or less - because the sales numbers and profitability numbers all become moving targets and nobody really knows what the baseline should be.
Q: Are You Printing Money? Bernanke: Not Literally
Money is simply a medium of exchange. Versus wealth, which is something that has real value in meeting needs and/or fulfilling wants. Big difference between the two.
Yes, you've created value. You've created purchasing power.
I assume by 'money' you refer to federal reserve notes. FRN's are a way of storing purchasing power. The difference is that the product you create has an inherent value, whereas the FRN is an IOU which has only perceived value. The purchasing power of the FRN changes on a constant basis in the commodity markets. The purchasing power of the widget you created is probably fairly stable.
As output grows, there is no reason to require an increase in money supply.
here's where we disagree, because the economy is not a "closed system", and people are constantly adding value by inputting human effort, transforming raw materials, producing, moving, and consuming goods, services, and transacting the energy required to get these things done.
In an open system, where inputs increase, the total volume increases, and where the value of the finished goods and services is more than the sum of the parts,
How can you have a fixed money supply? if there are more goods and services, and limited money, the limited money will have to be divided among more goods and services, resulting in price deflation, which will further constrict the money supply and slow economic activity.
this is not to say that the converse (massive, sustained increases in the money supply) is acceptable either, because then there are too many dollars chasing too few goods.
I agree with those economists who contend that there is an optimum average annual inflation rate in prices and growth in money supply in a healthy economy, and this is probably about 3%. The more stable and predictable this is, the better, because businesses and markets don't like uncertainty and will try to hedge against it.
BTW, I do take your points about the meal and maybe the gadget being consumed, but not the art, as it will still exist as an asset.
Imagine you, me, moxie, and proofcollection are the only people in a room. All that each of us has is one buffalo nickel. I spend hours carving mine into a hobo nickel, and now we all agree that it's "worth" 3 regular buffalo nickels.
In an open system, where inputs increase, the total volume increases, and where the value of the finished goods and services is more than the sum of the parts
Agreed. The value has increased because value has been added.
How can you have a fixed money supply?
There's no reason why you can't have a fixed money supply.
if there are more goods and services, and limited money, the limited money will have to be divided among more goods and services, resulting in price deflation,
Yes, I agree that price deflation would occur.
which will further constrict the money supply and slow economic activity
Here's where I don't necessarily agree. There is no reason why the money wouldn't become MORE valuable if the supply of it isn't increased. The fact that money would be MORE valuable simply means that it would have more negotiating power when you went out to participate in your own bit of economic activity. I don't see how it would slow anything down, unless maybe the money got stashed and didn't circulate at all. But that can happen even if the money supply is being inflated (like now).
We've been conditioned to think that an annual 3% money supply rate of increase is "just right" to keep the economy moving. I think that's **bunk**, promulgated by the bankers, who happen to directly benefit from reserve banking rules which are pumped further by an increasing money supply. The government loves inflation because of tax bracket creep and it allows for more socialist spending programs to buy votes without having to face the wrath of the more heavily-taxed voters.
Let's consider "value". Do you remember the days when computing power doubled every year and a half? Prices on computing equipment dropped while "value" in terms of computing power increased almost exponentially. All without having to pump up the money supply. It happened because of increased power and performance, i.e. - technological advancement - not because of credit expansion or monetary expansion. Progressively less money was needed for better and better stuff.
In my opinion, a stable money supply that is indexed to the population would best keep things in perspective and would prevent alot of problems with mis-allocation of resources. People would eventually know the "value" of most things that they bought and sold, and the market would make the necessary price adjustments.
I think it's time to put Keynes back on the shelf and start doing accounting the old-fashioned way, figuring real market values instead of notional values. We're in a heap of trouble because of the way money has been manipulated and debt has mushroomed - and Keynes' screwed-up way of thinking made it all possible.
Q: Are You Printing Money? Bernanke: Not Literally
I agree with those economists who contend that there is an optimum average annual inflation rate in prices and growth in money supply in a healthy economy, and this is probably about 3%. The more stable and predictable this is, the better, because businesses and markets don't like uncertainty and will try to hedge against it.
Even though Keynes believed govts should intervene at times to inject liquidity to help rescue markets when needed, I don't believe he personally subscribed to the +3% money supply increase per year theory. But if it got him and his economists more grant money, then why not say whatever politicians wanted to hear? It's been very rare where the FED has injected liquidity and then removed it all. What usually has happened in recent decades is injecting liquidity at increasing rates, and then slowing down the rate of increases. In the past 60 yrs it's pretty rare to find a year where the money supply actually decreased.
From 1800 to 1906 price inflation was basically flat. While there were blips along the way, I would suspect that the money supply had to stay fairly constant for those 100+ yrs in order to induce a slight price-deflation. Yet during that period we experienced probably the biggest and most rapid industrial boom ever seen in the world. As Jmski52 has mentioned, we don't have to have a designed 2-3% annual inflation to grow, especially when you already had a 10-1 money multiplier designed into the system. It's a great system for the bankers and politicians though. Unfortunately, those 97 years of designed inflation are coming to a head now. The words "inflation" and "unemployment" are more 20th century terms as those really weren't used/applicable in the 19th century. Both of those terms can be linked to the invention of the FED.
You have to remember that every asset is just stored purchasing power. A bushel of corn can be used to purchase other assets, but of course, the number of people you can trade directly with is limited and that corn will eventually rot so you have a limited timeframe to use/spend it.
The only reason you are willing to trade your goods or your time (services) for FRNs is because you know that you can take those FRNs and trade them for some other asset or service. And it's certainly way more convenient for all parties. But if there was a lack of FRNs that might impede commerce but people would resort to alternatives, like gold and silver or other (foreign) currencies or straight barter. There are local barter organizations and they seem to do OK without using FRNs. Believe me, if you've got something I want, I'll find a way to make it happen.
But your scenario about the value of assets or the population growing with a fixed number of FRNs being a problem is probably unrealistic, as the ratio of FRN's to population is pretty immense, so you'd have to be talking about a factor of 100 or 1000 increase in "value" to FRN to even begin to approach that level I believe. While the value of FRNs may start to increase in purchasing power in such a scenario, I'd have to think the increase would be limited and slow, as people would resort to foreign currencies and barter before accepting before thinking that an IOU from the government was worth more today than it was yesterday. My desire to trade my goods for FRNs wouldn't increase if they were becoming more scarce, rather I would seek out alternatives, of which there are many. The FRN may increase in value more because of the 'convenience' factor and tradition rather than scarcity, but I think there are severe limits. It is interesting to think about because you're talking about our economy which is based on exchanging things of value for inherently worthless tokens of debt that only have value because we've all bought into this system we now have. We might as well use rocks or seashells...
I do not believe there is credible economic analysis to support a view that growth in money supply should exceed the real rate of growth in GDP.
Severe price changes, whether deflation or inflation, cause disruptions. A very practical issue related to deflation is that there is not a viable mechanism to re-adjust wages. Also, deflation transfers wealth from debtors to creditors (opposite of inflation), which will discourage even legitimate borrowing.
Because of this, I believe bankers should target money supply growth in line with real growth in GDP, which should result in zero inflation over the long term.
(By the way, I very strongly suspect that a new generation of economists, wiser than the old, will support this conclusion when they analyze the era 1980 - 2010. This analysis will take about 30 years to gain acceptance, but when it does, I think it will discredit central bank activism. It is not ridiculous to think that a future global currency regime may include money supply determined by computer algorithm)
<< <i>I do not believe there is credible economic analysis to support a view that growth in money supply should exceed the real rate of growth in GDP. >>
Because the fed creates money and then lends money to banks who then turn around and lend it out at higher rates, the fed is always getting a nice rate of return, sucking money from the economy. I think because of this the money supply has to continue to increase, otherwise eventually the Fed would own all of the dollars... Now what the money supply growth rate needs to be I'm not sure, but something like 3% is reasonable and is an amount that wouldn't be felt.
A fixed money supply coupled with a growing economy does result in more capital/wealth that has limited money to describe it. Opponents of commodity money say this is "deflation." Our public schools have taught us that deflation ruins an economy. With this logic inflation in necessary and should match growth in the economy.
First, the above circumstance is not deflation.
Deflation is a decrease in the money supply, not a decrease in prices. The decrease in prices is only a result of deflation.
The above circumstance would result in price decreases but this is not intrinsically bad. After all, if prices decrease everyone with savings becomes richer. However, there is a very weak argument that ever decreasing prices would reduce consumption and boost savings, which our public schools have erroneously taught us will certianly result in another depression.
This still doesn't address the issue that we would essentially run out of money to describe the ever growing economy. Most, Keynesians, suggest the only solution to this problem is to make new money. However, this problem goes away if you have a monetary system that is easily divisible. This way as time goes on, change would go much farther. Eventually, a penny would be worth a lot and the mint would make a half penny, or tenth penny and we would be able to describe our every growing economy with smaller and smaller denominations of currency. This is the way money has worked for thousands of years.
Making a case for socialist America and the results going forward.
We must all face the fact the U.S. is already a socialist state. So what must be done to retain our position as the world’s reserve currency so that we can fund our socialism going forward?
I now believe that all of the crazy things we see out of Washington are merely the result of what must be done to maintain our current balance in the financial world and the NEW American social order.
Lets look at a few examples. Why do we give huge amounts of foreign aid to so many countries that obviously do not like us? We must do so to keep the world in DOLLARS.
We already know that we let the Japanese, the Chinese’s and other Asian countries sell their cheap goods here with an agreement to buy our debt, and roll over same.
Why is it that we have no energy policy in this country when we all know we have enough natural reserves to effectively make gasoline $.50 a gallon for decades? We must bribe the Arabs and even Hugo Chavez to continue to take dollars.
Why is it that we continue in the U.N., the IMF. and bail out the banks of foreign countries? So they will continue to take dollars.
Lets face it folks no more reserve currency, and its game over.
Why is it that NOTHING ever changes in Washington no matter who we send? Our representatives do not change things because they no longer can.
The choices are now two very simple one, riots in the streets with guns, or continue the payola!
I believe that we will not have hyperinflation as long as we remain as the world’s reserve currency. We will have inflation, but it will be in the areas where the money is printed and doled out. It will be on those everyday items purchased by those one half of Americans on the dole.
The inflation we will see will be in food, fuel, utilities, medicines, cheaper clothing, etc.
So the next time you see the guys and gals in Washington cave, or the Fed do something that looks really stupid, or countries receive billions of our tax dollars to bribe their politicians remember that with no bribery all that is left is to print trillions of dollars each year to give away.
And, I don't really think any other country really 'wants' to have the reserve currency, even after we reneged on B-W in 71 and the consequences thereof. But if any country did want to take the baton, I believe the world would certainly not look like it does now, as much as we complain.
One other thing, a bunch of these reserve $$ go to fund our soldiers scattered all over the globe. We used to get regular reports on Yahoo how "W" would have to get so many 10s of billions every few months to keep the operations going. I'm sure (?maybe not) that information is in the line items for budget, but how come we don't get the quarterly blow by blow with Anointed One at the helm? hmm...
Our men/women's blood to police the world against 'evil', for the reserve $$ status.
Do your best to avoid circular arguments, as it will help you reason better, because better reasoning is often a result of avoiding circular arguments.
Why is it that we have no energy policy in this country when we all know we have enough natural reserves to effectively make gasoline $.50 a gallon for decades?
We DO have an energy policy in this country: Develop our ability to extract our energy, but continue to import large amounts of petroleum, burn up theirs first, and "save ours for later"..
It would be hugely irresponsible to burn MOST OF OUR OWN OIL in the next couple decades so the current generations can have gas for a half dollar a gallon.
We're all going to be FOR drilling in the Alaska refuge .... someday
Goldsaint, I have to agree for the most part. It's observations like this that make me believe that there really is an elite group that controls what happens. They control our politicians (or enough of them anyway) such that nothing that makes sense ever happens, and we end up with a bunch of things that don't make sense. I have hard time believing that people who are smart enough to win an election and accomplish what many of our politicians have accomplished are so inept, the likes of Barney Frank exempted.
The ultimate goal of the powerful elite is power and control, and in order to do that, the US dollar must be subverted. The last state of any fiat currency is when they start monetizing the debt, which is what is going on now. There is no recovery once this beings, barring a miracle. The dollar is done, and so is the Euro.
We are not much more "free" in the US than they are in Communist China. We have traded our freedom for alleged security. Even though other countries seem to be able to maintain very secure borders, the US with the most advanced army and technology in the world cannot. Anyone who advocates enforcing existing laws is a racist somehow.
This guy has some good points, like having adequate cash for emergencies. He even talks briefly about the $1 QUAD in derivatives. But oddly, he says gold is just too heavy to be portable. For someone with $25 MILL in cash that's about 16,000 ounces or half a ton. Well, that could still fit neatly in a 1 ton pickup truck. Considering that most Americans have considerably less than a $25 MILL net worth, carrying around say 100 lbs of gold is relatively easy, and quite portable in the trunk of your car or under the rear seats. What if John Paulson took his $4 BILL out of GLD in bullion? Now that would weigh 160 tons and would present a significant portability issue.
I don't know about having $25 MILL in portable gem stones. Seems to me you'd lose significantly on transaction fees, assuming you didn't get hosed on the quality. Might end up with half or less of your $25 MILL in the end. And rather than shaving off some gold from a bar to pay for groceries, it's much easier to carry 4-8 ounces of silver with you and pay with that.
he threw me on the gemstone thing, too. who in the heck can grade a gemstone in trade at a Sonic? let alone know what a Kennedy 1/2 dollar is.
"when things get really bad" often that is never explained (i didn't watch the vid)
i can see the cash on hand rationale, too especially in temporary emergencies of a week or less...for natural disasters or cyber terror. but not sleeping on a pillow of 100 Benjamins "when things really get bad" whatever that will be.
<< <i>he threw me on the gemstone thing, too. who in the heck can grade a gemstone in trade at a Sonic? let alone know what a Kennedy 1/2 dollar is. >>
Perfect observation, that dude was entertaining, what a goof ball. I never envisioned carrying all my gold in a backpack looking for a place to buy bananas or Pop-Tarts.
It is simply a store of value during times of transition and can be readily exchanged for the proper currency when appropriate.
From the sound of that interview, it appears that some of the big hitters on Wall Street are getting a bit edgy. This guy advises some pretty rich clients.
Q: Are You Printing Money? Bernanke: Not Literally
A new report prepared for Prime Minister Putin by the Federal Security Service (FSB) says that former International Monetary Fund (IMF) Chief Dominique Strauss-Kahn was charged and jailed in the US for sex crimes on May 14th after his discovery that all of the gold held in the United States Bullion Depository located at Fort Knox was ‘missing and/or unaccounted’ for.
Something else I didn't hear about:
To the practical effects on the global economy should it be proved that the US, indeed, has been lying about its gold reserves, Russia’s Central Bank yesterday ordered the interest rate raised from [3].25 to 3.5 percent and Putin ordered the export ban on wheat and grain crops lifted by July 1st in a move designed to fill the Motherlands coffers with money that normally would have flowed to the US.
Watching "Midway" yesterday, I was struck by a comment from Yamamoto describing the United States circa 1940-41: "Their industrial might is so powerful, we should not awaken them".
Hah. Fancy any foreign power saying that today.
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Half of Last Month's New Jobs Came from a Single Employer — McDonald's 11:13 AM, Jun 3, 2011 • By MARK HEMINGWAY
According to the unemployment data released this morning, the economy added only 54,000 jobs, pushing the unemployment rate up to 9.1 percent. However, this report from Market Watch suggests data is much worse than that:
McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted — in which 62,000 jobs were added. That’s not a net number, of course, and seasonal adjustment will reduce the Hamburglar impact on payrolls. (In simpler terms — restaurants always staff up for the summer; the Labor Department makes allowance for this effect.) Morgan Stanley estimates McDonald’s hiring will boost the overall number by 25,000 to 30,000. The Labor Department won’t detail an exact McDonald’s figure — they won’t identify any company they survey — but there will be data in the report to give a rough estimate.
If Morgan Stanley is correct, about half of last month's job growth came from the venerable fast-food chain. That is hardly the sign of a healthy economy.
The bulk of last month's job "gains" came from 206,000 jobs added via the Birth/Death model computer. How many new businesses would have been added if the seasonal portion of that number were removed? Prior to the recession the BD new business model was assuming/adding about 900,000-1,000,000 new jobs per year. Since the recession began they were still adding in about 400,000-700,000 per year (approx 430K over the past 12 months). The number has been steadily declining but one has to wonder if during a severe decline that the net growth in businesses isn't negative. Is the BLS as quick to root out closed businesses from its roles as it is to just guesstimate how many new businesses are created each month?
Little mention has been given to the $500 BILL in the Monetary Base (M0) growth in the past 6 months. That's the biggest infusion of reserves by the FED since 4th quarter of 2008 when they pumped in $800 BILL to the big banks. While this money hasn't made its way into the economy, it has allowed the big banks to maintain (or even increase) their current investments and speculations. So from that standpoint the big banks have had an addtional $1.3 TRILL in reserves available as collateral/leverage to keep HFT and commodities speculation/manipulation in peak condition. It seems that the PM's get a nice boost for a while following such large M0 increases. The money base (ie TBTF bank margin account) has tripled since the fall of 2008.
Easiest place in the history of the world to make a good living and you screw it up without so much as a whimper ( actually the whimpering is for MORE of the same. How weak. )
Homburg, 8 June 2011 - The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency's credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.
"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. "Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted."
Bradshaw on a roll. Old news but brilliantly (and hopefully, convincingly) presented. Now, if only Americans would finally wake up from their slumber....
.....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
IMF bombshell: Age of America nears end Commentary: China’s economy will surpass the U.S. in 2016
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
I posted a link to market watch but the censor prevented me from posting because of the letter that ends market and start watch. Talk about ridiculous.
Comments
<< <i>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 stock market indicies.
Out of a few dozen items, only 2 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 and bailouts. >>
Agreed. Inflation or not, supply and demand still come into play. Nat Gas supplies have increased. Demand for lumber has decreased big big. Just like offshoring manufacturing and technology improvements have counteracted inflation in consumer goods for the past few decades. We are at the point though where there are no more gains to be made with offshoring labor, but technology improvements will continue to retard price increases in industries where efficiency improvements can still be made.
And don't forget copper... still over $4...
It depended on stagnant rental prices over the past 30 yrs while homes prices rose. Seems like it's time to shift the home portion of the CPI back to actual ownership vs. the rental model in order to keep the biggest item in the CPI from rising. Then when the day comes where prices of homes start to rise again, they can shift back to the rental model. Makes sense to me.
Seems like we have this same inflation vs deflation argument every year....and gold is higher every year.
roadrunner
i think some just went into some kinda financial black hole. ^^^
@ goingbroke "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"
good point... ^^^^^
Dave, i suppose one could say that if a majority surveyed DID have access to this money then it would mean that there was a lot of money in the system...ie inflationary. that's pretty basic, right?
i think we won't have inflation in the sense we are used to until wages rise.
As far as rising rents, banks could start to rent out some of their REO inventory and that would depress rents.
is then put to use to push up the price of whatever is being chased after or handed back to someone else in payment of debts. Either way, it's new money available for new bets.
Those that were on the losing end of the original bet were either put out of business or had their losses socialized. Was it deflationary that Lehman and BSC went out of business?
I don't think so. The anteing up on their losses would appear to be inflationary. If the debt stream never ends, but only continues to be expanded or renegotiated, that's inflationary.
Debt becomes deflationary when it's decided the debt is no longer going to be covered or expanded. Then it becomes deflationary in a hurry. Seems we're still on the road to covering
up everyone's bad debt. In the pre-fiat days, gold or a legitmate promise/note to pay gold, was the means to extinguish and control debt.
The >$1 TRILL rise in Fed bank reserves over the past 2-1/2 yrs is not seen as inflationary because the money never made it to J6P. But that money kept the too big to fail banks from having to pull in other assets and deflate their operations. So to them, it's definitely inflationary and allowed them to continue to not only maintain their current bets in the markets, but to increase them. The FED also handed out $TRILLIONs of bailout money to thousands of entities other than banks. That's inflationary as well. If I went out and overspent on my c/c by $20,000 over the past 3 yrs and the FED bailed me out by handing me a check for a $10,000, did that change the fact that I spent $20,000 already? That $10,000 exists and someone will spend it whether it's me or someone else in the chain. The debt pile only continues to expand as it shifts from one entity's liability to the next. Transference of debt doesn't eliminate it. Our system currently has had no means to extinguish debt for 40 yrs and that's inherently inflationary.
roadrunner
Unemployment
A few of the headlines on Yahoo finance.
If I take a few dollars worth of paint and canvas, and paint a painting that sells for a thousand dollars,
or if I take a few dollars worth of metal and plastic, and build a gadget that sells for a hundred dollars,
or if i take a couple dollars worth of food, and prepare and season and serve it as a meal for fifty dollars,
Then haven't I "created" money in the form of value added? Is this or is this not inflationary?
Follow-up question: If the total output of all human economic activity grows, doesn't it make sense that the money supply would also have to increase?
Liberty: Parent of Science & Industry
<< <i>Let me ask this:
If I take a few dollars worth of paint and canvas, and paint a painting that sells for a thousand dollars,
or if I take a few dollars worth of metal and plastic, and build a gadget that sells for a hundred dollars,
or if i take a couple dollars worth of food, and prepare and season and serve it as a meal for fifty dollars,
Then haven't I "created" money in the form of value added? Is this or is this not inflationary?
Follow-up question: If the total output of all human economic activity grows, doesn't it make sense that the money supply would also have to increase? >>
No, in your examples you haven't created money. You've convinced someone else to give you their money which already existed.
To answer the second question, the money supply wouldn't have to increase. First of all, there is always barter. I could trade your 2 gallons of gas for dinner. But if you're not hungry, obviously money is what helps lubricate the economy so that you can get your gas and spend the monetary equivalent on dinner when you are hungry with whoever will accept your money. Money is just stored purchasing power. But you can store purchasing power in other things besides the local currency, such as gold, pork bellies, barrels of oil, or gadgets made of metal and plastic. The free market and supply and demand keep everything in balance.
and, what's the difference?
Liberty: Parent of Science & Industry
or if I take a few dollars worth of metal and plastic, and build a gadget that sells for a hundred dollars,
or if i take a couple dollars worth of food, and prepare and season and serve it as a meal for fifty dollars,
Then haven't I "created" money in the form of value added? Is this or is this not inflationary?
Follow-up question: If the total output of all human economic activity grows, doesn't it make sense that the money supply would also have to increase?
Re: Painting - no, you've created a consumable item and it is consumed after the buyer give you his money. No money was created.
Re: Gadget - no, you've created a consumable item or a production device that is either consumed or amortized when you use it. No money was created.
Re: Meal - no, you've created a consumable meal and it was consumed. No money was created.
The "Value Added" requires more money than the raw goods, but it doesn't create money. It just requires more of it before you can utilize it.
As output grows, there is no reason to require an increase in money supply. Why can't the increase in productivity result in lower prices instead of requiring the creation of more money? The injection of more money only serves to give banks first shot at the money which is used to bestow largely unearned profits & executive bonuses on the inflators of the money supply - for doing nothing. They should have to earn it like everyone else.
Adding more money to the system only makes it harder to know whether your product or service is valued more, or less - because the sales numbers and profitability numbers all become moving targets and nobody really knows what the baseline should be.
I knew it would happen.
<< <i>have I created "value"?
and, what's the difference? >>
What you've created is wealth.
Money is simply a medium of exchange. Versus wealth, which is something that has real value in meeting needs and/or fulfilling wants. Big difference between the two.
<< <i>have I created "value"?
and, what's the difference? >>
Yes, you've created value. You've created purchasing power.
I assume by 'money' you refer to federal reserve notes. FRN's are a way of storing purchasing power. The difference is that the product you create has an inherent value, whereas the FRN is an IOU which has only perceived value. The purchasing power of the FRN changes on a constant basis in the commodity markets. The purchasing power of the widget you created is probably fairly stable.
here's where we disagree, because the economy is not a "closed system", and people are constantly adding value by inputting human effort, transforming raw materials, producing, moving, and consuming goods, services, and transacting the energy required to get these things done.
In an open system, where inputs increase, the total volume increases, and where the value of the finished goods and services is more than the sum of the parts,
How can you have a fixed money supply? if there are more goods and services, and limited money, the limited money will have to be divided among more goods and services, resulting in price deflation, which will further constrict the money supply and slow economic activity.
this is not to say that the converse (massive, sustained increases in the money supply) is acceptable either, because then there are too many dollars chasing too few goods.
I agree with those economists who contend that there is an optimum average annual inflation rate in prices and growth in money supply in a healthy economy, and this is probably about 3%. The more stable and predictable this is, the better, because businesses and markets don't like uncertainty and will try to hedge against it.
BTW, I do take your points about the meal and maybe the gadget being consumed, but not the art, as it will still exist as an asset.
Imagine you, me, moxie, and proofcollection are the only people in a room. All that each of us has is one buffalo nickel. I spend hours carving mine into a hobo nickel, and now we all agree that it's "worth" 3 regular buffalo nickels.
How can anyone buy it from me?
Liberty: Parent of Science & Industry
Agreed. The value has increased because value has been added.
How can you have a fixed money supply?
There's no reason why you can't have a fixed money supply.
if there are more goods and services, and limited money, the limited money will have to be divided among more goods and services, resulting in price deflation,
Yes, I agree that price deflation would occur.
which will further constrict the money supply and slow economic activity
Here's where I don't necessarily agree. There is no reason why the money wouldn't become MORE valuable if the supply of it isn't increased. The fact that money would be MORE valuable simply means that it would have more negotiating power when you went out to participate in your own bit of economic activity. I don't see how it would slow anything down, unless maybe the money got stashed and didn't circulate at all. But that can happen even if the money supply is being inflated (like now).
We've been conditioned to think that an annual 3% money supply rate of increase is "just right" to keep the economy moving. I think that's **bunk**, promulgated by the bankers, who happen to directly benefit from reserve banking rules which are pumped further by an increasing money supply. The government loves inflation because of tax bracket creep and it allows for more socialist spending programs to buy votes without having to face the wrath of the more heavily-taxed voters.
Let's consider "value". Do you remember the days when computing power doubled every year and a half? Prices on computing equipment dropped while "value" in terms of computing power increased almost exponentially. All without having to pump up the money supply. It happened because of increased power and performance, i.e. - technological advancement - not because of credit expansion or monetary expansion. Progressively less money was needed for better and better stuff.
In my opinion, a stable money supply that is indexed to the population would best keep things in perspective and would prevent alot of problems with mis-allocation of resources. People would eventually know the "value" of most things that they bought and sold, and the market would make the necessary price adjustments.
I think it's time to put Keynes back on the shelf and start doing accounting the old-fashioned way, figuring real market values instead of notional values. We're in a heap of trouble because of the way money has been manipulated and debt has mushroomed - and Keynes' screwed-up way of thinking made it all possible.
I knew it would happen.
Even though Keynes believed govts should intervene at times to inject liquidity to help rescue markets when needed, I don't believe he personally subscribed to the +3% money supply increase per year theory. But if it got him and his economists more grant money, then why not say whatever politicians wanted to hear? It's been very rare where the FED has injected liquidity and then removed it all. What usually has happened in recent decades is injecting liquidity at increasing rates, and then slowing down the rate of increases. In the past 60 yrs it's pretty rare to find a year where the money supply actually decreased.
From 1800 to 1906 price inflation was basically flat. While there were blips along the way, I would suspect that the money supply had to stay fairly constant for those 100+ yrs in order to
induce a slight price-deflation. Yet during that period we experienced probably the biggest and most rapid industrial boom ever seen in the world. As Jmski52 has mentioned, we don't have to have a designed 2-3% annual inflation to grow, especially when you already had a 10-1 money multiplier designed into the system. It's a great system for the bankers and politicians though. Unfortunately, those 97 years of designed inflation are coming to a head now. The words "inflation" and "unemployment" are more 20th century terms as those really weren't used/applicable in the 19th century. Both of those terms can be linked to the invention of the FED.
roadrunner
The only reason you are willing to trade your goods or your time (services) for FRNs is because you know that you can take those FRNs and trade them for some other asset or service. And it's certainly way more convenient for all parties. But if there was a lack of FRNs that might impede commerce but people would resort to alternatives, like gold and silver or other (foreign) currencies or straight barter. There are local barter organizations and they seem to do OK without using FRNs. Believe me, if you've got something I want, I'll find a way to make it happen.
But your scenario about the value of assets or the population growing with a fixed number of FRNs being a problem is probably unrealistic, as the ratio of FRN's to population is pretty immense, so you'd have to be talking about a factor of 100 or 1000 increase in "value" to FRN to even begin to approach that level I believe. While the value of FRNs may start to increase in purchasing power in such a scenario, I'd have to think the increase would be limited and slow, as people would resort to foreign currencies and barter before accepting before thinking that an IOU from the government was worth more today than it was yesterday. My desire to trade my goods for FRNs wouldn't increase if they were becoming more scarce, rather I would seek out alternatives, of which there are many. The FRN may increase in value more because of the 'convenience' factor and tradition rather than scarcity, but I think there are severe limits. It is interesting to think about because you're talking about our economy which is based on exchanging things of value for inherently worthless tokens of debt that only have value because we've all bought into this system we now have. We might as well use rocks or seashells...
Severe price changes, whether deflation or inflation, cause disruptions. A very practical issue related to deflation is that there is not a viable mechanism to re-adjust wages. Also, deflation transfers wealth from debtors to creditors (opposite of inflation), which will discourage even legitimate borrowing.
Because of this, I believe bankers should target money supply growth in line with real growth in GDP, which should result in zero inflation over the long term.
(By the way, I very strongly suspect that a new generation of economists, wiser than the old, will support this conclusion when they analyze the era 1980 - 2010. This analysis will take about 30 years to gain acceptance, but when it does, I think it will discredit central bank activism. It is not ridiculous to think that a future global currency regime may include money supply determined by computer algorithm)
Nicely put
<< <i>I do not believe there is credible economic analysis to support a view that growth in money supply should exceed the real rate of growth in GDP. >>
Because the fed creates money and then lends money to banks who then turn around and lend it out at higher rates, the fed is always getting a nice rate of return, sucking money from the economy. I think because of this the money supply has to continue to increase, otherwise eventually the Fed would own all of the dollars... Now what the money supply growth rate needs to be I'm not sure, but something like 3% is reasonable and is an amount that wouldn't be felt.
First, the above circumstance is not deflation.
Deflation is a decrease in the money supply, not a decrease in prices. The decrease in prices is only a result of deflation.
The above circumstance would result in price decreases but this is not intrinsically bad. After all, if prices decrease everyone with savings becomes richer. However, there is a very weak argument that ever decreasing prices would reduce consumption and boost savings, which our public schools have erroneously taught us will certianly result in another depression.
This still doesn't address the issue that we would essentially run out of money to describe the ever growing economy. Most, Keynesians, suggest the only solution to this problem is to make new money. However, this problem goes away if you have a monetary system that is easily divisible. This way as time goes on, change would go much farther. Eventually, a penny would be worth a lot and the mint would make a half penny, or tenth penny and we would be able to describe our every growing economy with smaller and smaller denominations of currency. This is the way money has worked for thousands of years.
We must all face the fact the U.S. is already a socialist state.
So what must be done to retain our position as the world’s reserve currency so that we can fund our socialism going forward?
I now believe that all of the crazy things we see out of Washington are merely the result of what must be done to maintain our current balance in the financial world and the NEW American social order.
Lets look at a few examples. Why do we give huge amounts of foreign aid to so many countries that obviously do not like us?
We must do so to keep the world in DOLLARS.
We already know that we let the Japanese, the Chinese’s and other Asian countries sell their cheap goods here with an agreement to buy our debt, and roll over same.
Why is it that we have no energy policy in this country when we all know we have enough natural reserves to effectively make gasoline $.50 a gallon for decades?
We must bribe the Arabs and even Hugo Chavez to continue to take dollars.
Why is it that we continue in the U.N., the IMF. and bail out the banks of foreign countries?
So they will continue to take dollars.
Lets face it folks no more reserve currency, and its game over.
Why is it that NOTHING ever changes in Washington no matter who we send?
Our representatives do not change things because they no longer can.
The choices are now two very simple one, riots in the streets with guns, or continue the payola!
I believe that we will not have hyperinflation as long as we remain as the world’s reserve currency.
We will have inflation, but it will be in the areas where the money is printed and doled out. It will be on those everyday items purchased by those one half of Americans on the dole.
The inflation we will see will be in food, fuel, utilities, medicines, cheaper clothing, etc.
So the next time you see the guys and gals in Washington cave, or the Fed do something that looks really stupid, or countries receive billions of our tax dollars to bribe their politicians remember that with no bribery all that is left is to print trillions of dollars each year to give away.
And, I don't really think any other country really 'wants' to have the reserve currency, even after we reneged on B-W in 71 and the consequences thereof. But if any country did want to take the baton, I believe the world would certainly not look like it does now, as much as we complain.
One other thing, a bunch of these reserve $$ go to fund our soldiers scattered all over the globe. We used to get regular reports on Yahoo how "W" would have to get so many 10s of billions every few months to keep the operations going. I'm sure (?maybe not) that information is in the line items for budget, but how come we don't get the quarterly blow by blow with Anointed One at the helm? hmm...
Our men/women's blood to police the world against 'evil', for the reserve $$ status.
We DO have an energy policy in this country: Develop our ability to extract our energy, but continue to import large amounts of petroleum, burn up theirs first, and "save ours for later"..
It would be hugely irresponsible to burn MOST OF OUR OWN OIL in the next couple decades so the current generations can have gas for a half dollar a gallon.
We're all going to be FOR drilling in the Alaska refuge .... someday
Liberty: Parent of Science & Industry
<< <i>GS hammered a bunch out of the park above. >>
i can even wrap my head around that analogy and GS stated it extremely well.
more QE is inevitable, necessary, unstoppable.
i am also glad this thread is more active...
The ultimate goal of the powerful elite is power and control, and in order to do that, the US dollar must be subverted. The last state of any fiat currency is when they start monetizing the debt, which is what is going on now. There is no recovery once this beings, barring a miracle. The dollar is done, and so is the Euro.
We are not much more "free" in the US than they are in Communist China. We have traded our freedom for alleged security. Even though other countries seem to be able to maintain very secure borders, the US with the most advanced army and technology in the world cannot. Anyone who advocates enforcing existing laws is a racist somehow.
This guy has some good points, like having adequate cash for emergencies. He even talks briefly about the $1 QUAD in derivatives. But oddly, he says gold is just too heavy
to be portable. For someone with $25 MILL in cash that's about 16,000 ounces or half a ton. Well, that could still fit neatly in a 1 ton pickup truck. Considering that most
Americans have considerably less than a $25 MILL net worth, carrying around say 100 lbs of gold is relatively easy, and quite portable in the trunk of your car or under the rear
seats. What if John Paulson took his $4 BILL out of GLD in bullion? Now that would weigh 160 tons and would present a significant portability issue.
I don't know about having $25 MILL in portable gem stones. Seems to me you'd lose significantly on transaction fees, assuming you didn't get hosed on the quality. Might end
up with half or less of your $25 MILL in the end. And rather than shaving off some gold from a bar to pay for groceries, it's much easier to carry 4-8 ounces of silver with you and
pay with that.
roadrunner
"when things get really bad" often that is never explained (i didn't watch the vid)
i can see the cash on hand rationale, too especially in temporary emergencies of a week or less...for natural disasters or cyber terror. but not sleeping on a pillow of 100 Benjamins "when things really get bad" whatever that will be.
<< <i>he threw me on the gemstone thing, too. who in the heck can grade a gemstone in trade at a Sonic? let alone know what a Kennedy 1/2 dollar is. >>
Perfect observation, that dude was entertaining, what a goof ball. I never envisioned carrying all my gold in a backpack looking for a place to buy bananas or Pop-Tarts.
It is simply a store of value during times of transition and can be readily exchanged for the proper currency when appropriate.
I knew it would happen.
Now we know what an economy-distorting albatros it's been all along.
Here's a warning parable for coin collectors...
A new report prepared for Prime Minister Putin by the Federal Security Service (FSB) says that former International Monetary Fund (IMF) Chief Dominique Strauss-Kahn was charged and jailed in the US for sex crimes on May 14th after his discovery that all of the gold held in the United States Bullion Depository located at Fort Knox was ‘missing and/or unaccounted’ for.
Something else I didn't hear about:
To the practical effects on the global economy should it be proved that the US, indeed, has been lying about its gold reserves, Russia’s Central Bank yesterday ordered the interest rate raised from [3].25 to 3.5 percent and Putin ordered the export ban on wheat and grain crops lifted by July 1st in a move designed to fill the Motherlands coffers with money that normally would have flowed to the US.
Hah. Fancy any foreign power saying that today.
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11:13 AM, Jun 3, 2011 • By MARK HEMINGWAY
According to the unemployment data released this morning, the economy added only 54,000 jobs, pushing the unemployment rate up to 9.1 percent. However, this report from Market Watch suggests data is much worse than that:
McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted — in which 62,000 jobs were added. That’s not a net number, of course, and seasonal adjustment will reduce the Hamburglar impact on payrolls. (In simpler terms — restaurants always staff up for the summer; the Labor Department makes allowance for this effect.) Morgan Stanley estimates McDonald’s hiring will boost the overall number by 25,000 to 30,000. The Labor Department won’t detail an exact McDonald’s figure — they won’t identify any company they survey — but there will be data in the report to give a rough estimate.
If Morgan Stanley is correct, about half of last month's job growth came from the venerable fast-food chain. That is hardly the sign of a healthy economy.
Two all beef patties special sauce lettuce cheese pickels onions on a sesame seed bun
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Tom Pilitowski
US Rare Coin Investments
800-624-1870
Birth death model tables 2010-2011
Little mention has been given to the $500 BILL in the Monetary Base (M0) growth in the past 6 months. That's the biggest infusion of reserves by the FED since 4th quarter of 2008 when
they pumped in $800 BILL to the big banks. While this money hasn't made its way into the economy, it has allowed the big banks to maintain (or even increase) their current investments and speculations. So from that standpoint the big banks have had an addtional $1.3 TRILL in reserves available as collateral/leverage to keep HFT and commodities speculation/manipulation in peak condition. It seems that the PM's get a nice boost for a while following such large M0 increases. The money base (ie TBTF bank margin account) has tripled since the fall of 2008.
roadrunner
We've got Great Depression-Style Unemployment
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Tom Pilitowski
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Parts 2, 3 and 4 at the end of part 1 . Among the best I've ever read.
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Tom Pilitowski
US Rare Coin Investments
800-624-1870
solar flare blast
I knew it would happen.
So will the neutrinos in the earth's core heat up and react like in the movie 2012.
Box of 20
<< <i>57loaded, are those videos in real time or lapsed time? Fantastic vids! >>
they are recorded from this morning.
Homburg, 8 June 2011 - The Bad Homburg Feri EuroRating & Research AG downgraded the first credit rating agency's credit rating for the United States from AAA to AA. Feri analysts justify the downgrade by the continuing deterioration of the creditworthiness of the country due to high public debt, inadequate fiscal measures, and weaker growth prospects.
"The U.S. government has fought the effects of the financial market crisis primarily by an increase in government debt. We do not see that there is sufficient attention being paid to other measures, "said Dr. Tobias Schmidt, CEO of Feri Rating & Research AG. "Our rating system shows a deterioration in economic health, so the downgrading of the credit ratings of U.S. is warranted."
German Rating Agency Feri Downgrades US Government Bonds: AAA to AA!
German Rating Agency Feri Downgrades US Government Bonds: AAA to AA!
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Tom Pilitowski
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<< <i>German Rating Agency Feri Downgrades US Government Bonds: AAA to AA!
German Rating Agency Feri Downgrades US Government Bonds: AAA to AA! >>
Wake me up when they change the grade to ZZZ.
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
maybe Ron Paul should dip a few bars at Ft Knox?
<< <i>some "current" info on tungsten/gold refining
maybe Ron Paul should dip a few bars at Ft Knox? >>
And why would Dr Paul want to do that?
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Commentary: China’s economy will surpass the U.S. in 2016
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
I posted a link to market watch but the censor prevented me from posting because of the letter that ends market and start watch. Talk about ridiculous.
So put the link together
http://www.market watch.com/story/imf-bombshell-age-of-america-about-to-end-2011-04-25
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http://www.time.com/time/photogallery/0,29307,1975397_2094492,00.html
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<< <i>Why were these cities built?
http://www.time.com/time/photogallery/0,29307,1975397_2094492,00.html >>
To keep construction workers busy?