I have not been betting against silver until yesterday. I am not sure why anyone thinks I have been. In fact, I own several funds that are massively long silver and have been for years....this bet is entirely independent, but on the whole I am more long silver than short and still long precious metals on the whole....
Paul Ryan's 'Land of Austeria': Nothing but Nonsense [View article]
The point is that the future burden from current spending arises only to the extent that govt spending is in excess of productive capacity. There is no such thing as having to pay off our debts. Our grandchildren won't receive a bill just like you don't receive a bill from the US govt to pay off WW2. You might have to pay marginally higher taxes in the future as the country grows and our needs expand, but all in all the median tax rates in the USA have been declining for 30+ years so the argument that we are paying off our grandparent's WW2 burden or whatever is nonsensical. The truth is, our standard of living is SUBSTANTIALLY higher than our grandparent's SOL was.
So, there is no such thing as the govt paying off its debt. The idea is nonsensical. The US govt has expanded its debt every year since its founding. That's how a sovereign currency issuer allows its users to transact or progress in the currency that they require us to transact in.
I hope that sheds some light on it. If not, you might want to read my treatise on the monetary system:
Paul Ryan's 'Land of Austeria': Nothing but Nonsense [View article]
I've criticized and blamed Clinton's surplus for much of the current economic malaise so viewing this article thru your political biases will lead you astray.
This isn't about politics. It's about good economics. Clinton's economics were piss poor in the late 90's and Ryan's are piss poor today. If you want to make it a political argument then that's your bias. Not mine.
Dear Paul Krugman: You Do Not Understand Modern Monetary Theory [View article]
I hope this will be the case. I work in an industry where people get letters behind their name just so they can sell stuff to people. Most of these people are not qualified to discuss 90% of the products they sell yet these distinctions somehow give them "credibility". Don't get me wrong, I have nothing but respect for our teachers and professors. They are, arguably, the most important people in our world today, but a degree does not always qualify one as infallible or intelligent. If you want evidence I suggest you study the body of neo-liberal work that has helped to cause this great economic crisis.
I've worked hard in my life. I've achieved quite a bit in a short period of time. Could I have spent more time in school? Yes. I could have. But I chose to forego that route for other options. If you want to hold that against me then that is your choice. I respect your opinion.
If you find that my work does not stand on its own merit then I hope you'll confront me and challenge me about it. Perhaps we can all learn together. After all, I am not here to push some agenda. I am not here selling subscriptions to a service or newsletters or investment advice. I started writing for one reason only - I saw a great flaw in our economic system during the crisis and felt that I could contribute to the education of all. In end, the real solution to any great economic crisis is knowledge and understanding.
But I hope you will not attempt to denigrate me just because I did not spend 5 years in school obtaining a degree that will never be able to replace the previous 5 years I have spent learning by doing.
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
It is factually incorrect to say that foreigners will one day dump our bonds and crash the US economy. There is simply no such thing as that happening. Foreigners desire to save in USD. So, they receive USD and we get real goods and services. If China wants to run a trade deficit with the USA then they need to consume more of what they produce. In doing so they will reduce their demand for savings in USD and that savings will be shifted. Maybe it gets shifted to Vietnam or Malaysia or domestically. But someone is on the other end of our trade deficit and as long as US consumers continue to demand cheap goods and services my guess is that there will be some emerging market nation willing to employ their people to meet that demand for labor.
This desire to save in USD won't just go away. There is no such thing as dumping UST's. Someone holds those savings. That's how equilibrium works in economics.
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
What is the alternative? Most hard money proponents point to the 1800's as evidence of price stability. Well, price stability also came with SIX depressions....There are good reasons why we chose the lesser of two evils and yes, fiat money is the lesser of two evils.
I should add that I am a proponent of ending the Fed. I think they are a detracting force in the economy and only help to generate instability and disequilibrium in the US economy. So no, I am not just some spend hungry freak who thinks the Fed should crank the presses every time we hit a bump. In fact, I think the Fed and the banking system are only helping to increase the problems across the US economy....
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
China has a savings account at the Fed labeled US Treasuries outstanding. If we wanted to change their account to a checking account we would simply relabel the account and tell them they no longer receive interest. When you transfer money from a checking account to a savings account do you suddenly say that you own the bank? No. It is a liability of the bank, but that entity is always constrained in its ability to pay interest. That situation does not exist for the US govt.
China buys bonds from the USA because they cannot do anything else with those dollars. It is a function of their trade surplus. Not some great funding mechanism. China doesn't own us. In fact, we send them pieces of paper in exchange for real goods and services. We are owning them every time they decide that their citizens should not consume what they produce. So, we get cheap goods and services and they get stupid pieces of paper that they hold in a savings account.
I approach this all from a very unconventional framework which is why it is vulgar to most people, but I assure you it is an accurate portrayal of our monetary system. If you have the time and patience I would recommend the following. But prepare to be confused....
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
This is factually incorrect. If you actually study the bond auctions you'll notice that the primary dealers can ALWAYS take down the entire auction. That's because it is just a reserve drain that is designed in advance of the auction. The fact that foreigners buy some of the bonds at auction does not mean that they are funding our ability to spend or helping us to keep inflation low.
Inflation is low, in large part, because domestic tax rates are too high. It has nothing to do with selling bonds.
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
It's very important that you make the distinction between foreign denominated debt and USD denominated debt. The "debt" is in a currency that only we can issue. We do not owe it to anyone. It is not going to be paid off. It simply represents that accumulation of the growing needs of our country. Our debt has grown every year for the last 200 years and there is no level at which we cannot service that debt since we can always print it. So at this point one has to ask themselves if we are printing well in excess of productive capacity? I would argue no, but I can see why I would get push-back on that....
Personally, I think the USA is more akin to Japan currently than Weimar.....
Despite Current Tragedy, Japan Is Neither Close to Bankruptcy Nor Hyperinflation [View article]
The three cases you cite all involved a ceding of monetary sovereignty via currency pegs, foreign denominated debts or other exogenous factors.
You can't compare them to Japan. Now, if Japan were to peg their currency or call on the IMF for aid then I would probably change my position and agree with you. But for now, they are not at risk of a major fiscal crisis.
On the Myth of Exploding U.S. Money Supply [View article]
I actually maintain that Fed policy is highly destructive in the form of creating market distortions as opposed to fundamental economic fixes.
I'd like to see America move beyond this era of interest rate manipulation and believing that the Fed is the wizard when in reality we all know it's just some old bald man behind the curtain.
Silver to the Moon [View article]
Silver to the Moon [View article]
Paul Ryan's 'Land of Austeria': Nothing but Nonsense [View article]
So, there is no such thing as the govt paying off its debt. The idea is nonsensical. The US govt has expanded its debt every year since its founding. That's how a sovereign currency issuer allows its users to transact or progress in the currency that they require us to transact in.
I hope that sheds some light on it. If not, you might want to read my treatise on the monetary system:
pragcap.com/resources/...
Best,
Cullen
Paul Ryan's 'Land of Austeria': Nothing but Nonsense [View article]
This isn't about politics. It's about good economics. Clinton's economics were piss poor in the late 90's and Ryan's are piss poor today. If you want to make it a political argument then that's your bias. Not mine.
Dear Paul Krugman: You Do Not Understand Modern Monetary Theory [View article]
I've worked hard in my life. I've achieved quite a bit in a short period of time. Could I have spent more time in school? Yes. I could have. But I chose to forego that route for other options. If you want to hold that against me then that is your choice. I respect your opinion.
If you find that my work does not stand on its own merit then I hope you'll confront me and challenge me about it. Perhaps we can all learn together. After all, I am not here to push some agenda. I am not here selling subscriptions to a service or newsletters or investment advice. I started writing for one reason only - I saw a great flaw in our economic system during the crisis and felt that I could contribute to the education of all. In end, the real solution to any great economic crisis is knowledge and understanding.
But I hope you will not attempt to denigrate me just because I did not spend 5 years in school obtaining a degree that will never be able to replace the previous 5 years I have spent learning by doing.
Best,
Cullen Roche, not PhD
Commodity Prices and World Demand: Fun With Government Data [View article]
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
This desire to save in USD won't just go away. There is no such thing as dumping UST's. Someone holds those savings. That's how equilibrium works in economics.
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
I should add that I am a proponent of ending the Fed. I think they are a detracting force in the economy and only help to generate instability and disequilibrium in the US economy. So no, I am not just some spend hungry freak who thinks the Fed should crank the presses every time we hit a bump. In fact, I think the Fed and the banking system are only helping to increase the problems across the US economy....
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
China buys bonds from the USA because they cannot do anything else with those dollars. It is a function of their trade surplus. Not some great funding mechanism. China doesn't own us. In fact, we send them pieces of paper in exchange for real goods and services. We are owning them every time they decide that their citizens should not consume what they produce. So, we get cheap goods and services and they get stupid pieces of paper that they hold in a savings account.
I approach this all from a very unconventional framework which is why it is vulgar to most people, but I assure you it is an accurate portrayal of our monetary system. If you have the time and patience I would recommend the following. But prepare to be confused....
pragcap.com/resources/...
Best,
Cullen
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
Inflation is low, in large part, because domestic tax rates are too high. It has nothing to do with selling bonds.
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
pragcap.com/does-china...
pragcap.com/n-y-fed-ex...
Best,
Cullen
Hyperinflation: More Than Just a Monetary Phenomenon [View article]
Personally, I think the USA is more akin to Japan currently than Weimar.....
Despite Current Tragedy, Japan Is Neither Close to Bankruptcy Nor Hyperinflation [View article]
You can't compare them to Japan. Now, if Japan were to peg their currency or call on the IMF for aid then I would probably change my position and agree with you. But for now, they are not at risk of a major fiscal crisis.
On the Myth of Exploding U.S. Money Supply [View article]
I'd like to see America move beyond this era of interest rate manipulation and believing that the Fed is the wizard when in reality we all know it's just some old bald man behind the curtain.